<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(mark one)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1999
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION PERIOD FROM ____ TO ____
COMMISSION FILE NUMBER 1-12854
MCWHORTER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3919940
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 EAST COTTAGE PLACE
CARPENTERSVILLE, ILLINOIS 60110 847-428-2657
(Address of principal executive offices, (Registrant's telephone number
including zip code) including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Exchange on
Title of Each Class Which Registered
- ------------------------------- -----------------------
Common Stock, $0.01 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
As of June 11, 1999, 10,059,629 shares of common stock were outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
The accompanying interim financial statements of McWhorter Technologies,
Inc. (the Company or McWhorter) do not include all disclosures normally provided
in annual financial statements. These financial statements are unaudited but
include all adjustments that McWhorter's management considers necessary for a
fair presentation. These adjustments consist of normal recurring accruals.
Interim results are not necessarily indicative of the results expected for the
year. The financial statements and the accompanying discussion and analysis of
results of operations and financial condition should be read in conjunction with
the financial statements and notes contained in McWhorter's Annual Report on
Form 10-K for the fiscal year ended October 31, 1998. All references to years
are to fiscal years ended October 31. Unless otherwise stated, per share
information is on a diluted basis.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
April 30, April 30,
---------------------------- ----------------------------
1999 1998 1999 1998
(Note 1) (Note 1)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 113,494 $ 115,614 $ 209,729 $ 213,734
Costs and expenses:
Cost of sales (Note 2) 94,434 96,763 176,000 181,894
Research 3,113 2,741 5,978 5,395
Selling, general and administrative 7,686 7,462 15,529 14,501
Other (income) expense, net 44 (208) (23) (476)
------------- ------------- ------------- -------------
Income from operations 8,217 8,856 12,245 12,420
Interest expense, net 2,025 1,821 4,006 3,421
------------- ------------- ------------- -------------
Income before income taxes 6,192 7,035 8,239 8,999
Income tax expense (Note 3) 2,539 675 3,378 1,430
------------- ------------- ------------- --------------
Net income $ 3,653 $ 6,360 $ 4,861 $ 7,569
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Earnings per share - basic (Note 4) $ .36 $ .62 $ .47 $ .74
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Earnings per share - diluted (Note 4) $ .36 $ .61 $ .47 $ .73
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE>
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
April 30, October 31,
1999 1998
(Note 1)
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 3,961 $ 4,099
Accounts receivable 79,214 82,765
Inventories (Note 5) 41,666 40,207
Other current assets 12,111 12,193
----------- -----------
136,952 139,264
Property, plant and equipment 202,340 198,900
Accumulated depreciation (65,246) (58,384)
----------- -----------
Net property, plant and equipment 137,094 140,516
Intangibles, net 72,520 76,117
Other assets 7,623 6,568
----------- -----------
$ 354,189 $ 362,465
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 20,438 $ 26,474
Trade accounts payable 48,520 49,808
Accrued liabilities 12,833 17,812
----------- -----------
81,791 94,094
Long-term debt, less current portion 136,487 130,128
Deferred income taxes 24,196 23,695
Accrued environmental liabilities 1,230 1,566
Other liabilities 5,531 5,538
Shareholders' equity:
Common stock (par value $.01 per share;
authorized 30,000,000 shares;
issued 10,965,547 shares at April 30,
1999 and October 31, 1998) 110 110
Additional paid-in capital 11,111 10,931
Retained earnings 110,685 105,824
Currency translation adjustments (1,883) 2,381
Treasury stock, at cost (873,918 shares at April 30, 1999
and 644,451 shares at October 31, 1998) (13,804) (10,471)
Other (1,265) (1,331)
----------- -----------
104,954 107,444
----------- -----------
$ 354,189 $ 362,465
----------- -----------
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Additional Currency Total
Common Paid-in Retained Translation Treasury Shareholders'
Stock Capital Earnings Adjustments Stock Other Equity
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance October 31, 1997 $ 110 $10,867 $ 92,980 $ (940) $ (9,716) $(1,633) $ 91,668
Comprehensive income:
Net income 12,844 12,844
Foreign currency translation
adjustments 3,321 3,321
-----------
Total comprehensive income 16,165
-----------
Issuance of common stock for
restricted stock awards 55 100 (94) 61
Deferred compensation stock plan (322) 396 74
Exercise of stock options 9 139 148
Purchase of treasury shares (672) (672)
-------------------------------------------------------------------------------------
Balance October 31, 1998 $ 110 $10,931 $105,824 $ 2,381 $ (10,471) $(1,331) $ 107,444
Comprehensive income:
Net income 4,861 4,861
Foreign currency translation
adjustments (4,264) (4,264)
-----------
Total comprehensive income 597
-----------
Issuance of common stock for
restricted stock awards 180 505 685
Deferred compensation stock plan (37) 66 29
Purchase of treasury shares (3,801) (3,801)
-------------------------------------------------------------------------------------
Balance April 30, 1999 $ 110 $11,111 $110,685 $ (1,883) $ (13,804) $(1,265) $ 104,954
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended April 30,
----------------------------
1999 1998
(Note 1)
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 4,861 $ 7,569
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation and amortization 8,883 7,738
Deferred income taxes (163) (840)
Other, net 290 (37)
Changes in working capital:
Accounts and notes receivable 1,085 (4,281)
Inventories (2,254) (1,449)
Trade accounts payable and accrued liabilities (2,891) (1,360)
Other current assets (412) 977
------------ ------------
Net cash provided by operating activities 9,399 8,317
INVESTING ACTIVITIES
Acquisition spending, net of cash acquired (55,231)
Capital expenditures (7,867) (10,992)
Investment in and advances to joint ventures (1,607)
Other, net 117 (420)
------------ ------------
Net cash used by investing activities (7,750) (68,250)
FINANCING ACTIVITIES
Increase in debt, net 2,014 57,509
Purchase of treasury stock (3,801)
Proceeds from exercise of stock options 58
------------ ------------
Net cash provided (used) by financing activities (1,787) 57,567
Decrease in cash (138) (2,366)
Cash at beginning of period 4,099 3,929
------------ ------------
Cash at end of period $ 3,961 $ 1,563
------------ ------------
------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. On April 1, 1998, the Company completed the acquisition of substantially
all of the assets of Accurate Coatings and Dispersions, Inc. (Accurate)
for approximately $39,400,000 and the assumption of $6,500,000 in debt.
The acquisition was accounted for using the purchase method. The excess
of the purchase price over the net book value of the assets acquired was
approximately $35,000,000, the largest component of which was allocated
to goodwill. The results of Accurate have been included in the
consolidated results of the Company since the date of acquisition. The
pro forma operating results, including Accurate for the entire second
quarter and six months ended April 30, 1998, would not have been
materially different from the consolidated results of the Company.
2. Second quarter 1998 results included a pretax charge of approximately
$500,000 ($300,000 after taxes, or 3 cents per share) related to the
one-time write-off of the excess of fair value over net book value
associated with inventories acquired as part of the purchase of
Accurate.
3. Second quarter 1998 results included a reduction in income tax expense
of $2,311,000 (22 cents per share) relating to the impact on deferred
income taxes of changes in the Italian income tax regulations.
4. Earnings per share is computed by dividing net income by the weighted
average number of shares of stock (basic) plus stock equivalents
(diluted) outstanding during the year. Stock equivalents consist
primarily of stock options and are included in the calculation of
weighted average shares outstanding using the treasury stock method.
Basic weighted average shares reconciles to diluted weighted average
shares as follows:
<TABLE>
<CAPTION>
Quarter ended April 30, Six months ended April 30,
1999 1998 1999 1998
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic weighted
average shares outstanding 10,177,375 10,241,666 10,236,778 10,241,777
Dilutive effect of
common stock equivalents 31,593 169,553 60,409 160,753
----------------------------------------------------------------------------------------------------
Diluted weighted
average shares outstanding 10,208,968 10,411,219 10,297,187 10,402,530
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
</TABLE>
5. The major classes of inventories consist of the following:
<TABLE>
<CAPTION>
April 30, October 31,
DOLLARS IN THOUSANDS 1999 1998
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Manufactured products $27,453 $26,339
Raw materials, supplies and work-in-process 14,213 13,868
--------------------------------------------------------------------------------------------------------
$41,666 $40,207
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
</TABLE>
6. During the first quarter of 1999, the Company adopted Statement of
Financial Accounting Standard (SFAS) No. 130, "Reporting Comprehensive
Income". In accordance with SFAS No. 130, the Company has reported
comprehensive income and its components in the Company's Consolidated
Statement of Shareholders' Equity. Adoption of this statement had no
material effect on the Company's financial position, results of
operations, or cash flows.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
McWhorter is a leading manufacturer of surface coating resins and colorants and
is a manufacturer of resins used in the reinforced fiberglass plastics industry.
Surface coating resins are a primary component of paints and coatings. Colorants
are used to disperse pigments in paints and coatings. Resins used for reinforced
fiberglass plastics are a primary component for various fiberglass products. On
April 1, 1998, the Company completed the acquisition of Accurate Coatings and
Dispersions, Inc. (Accurate). Accurate, located in South Holland, Illinois,
manufactures and distributes colorants for the coatings industry. The
acquisition of Accurate expands McWhorter's presence in the colorant market and
better enables the Company to serve its customers. McWhorter purchased Arizona
Chemical's customer list and technology related to its European alkyd resin
business in April 1998. The Company strengthened its global presence with the
purchase of the equity interests of its joint venture partners in McWhorter
Technologies Europe (McWhorter Europe) in the first quarter of 1998. As a
result, the Company increased its equity interest in McWhorter Europe from 33
percent to 100 percent.
RESULTS OF OPERATIONS
Net sales decreased 2 percent in the second quarter of 1999 to $113,494,000
compared to $115,614,000 in the same period of 1998. For the first six months of
1999, net sales decreased 2 percent to $209,729,000 compared to $213,734,000 in
the same period last year. The decrease in net sales resulted from lower volumes
in the Company's European liquid coating resins business and was offset by the
inclusion of Accurate sales for the entire second quarter of 1999 and improved
volumes in the Company's composite polymers business.
The Company's gross profit margin for the second quarter of 1999 was 16.8
percent compared to 16.3 percent in last year's second quarter. For the first
six months of 1999, gross profit margin increased to 16.1 percent in 1999 from
14.9 percent in the comparable period last year. Margins were favorably impacted
by lower raw material costs, product mix, and internal process improvements in
the U.S. Favorable U.S. margin improvements were partially offset by absorption
issues in the Company's European liquid coatings business resulting from lower
than anticipated volumes. 1998 Margins were unfavorably impacted by the one-time
write-off of inventory acquired as part of the Accurate purchase discussed in
Note 2 of the Notes to Consolidated Financial Statements.
Operating expenses (research, and selling, general and administrative) for the
second quarter of 1999 were 9.5 percent of net sales compared to 8.8 percent in
the prior year's second quarter. For the first six months of 1999, operating
expenses were 10.3 percent of net sales compared to 9.3 percent last year. The
inclusion of Accurate and higher professional services expense in the U.S. base
businesses were partially offset by lower expenses in the Company's European
businesses.
Net interest expense was $2,025,000 in the second quarter of 1999 compared to
$1,821,000 in
7
<PAGE>
the prior year's second quarter. For the first six months of 1999,
net interest expense was $4,006,000 compared to $3,421,000 in the prior year.
The increase is due to debt borrowed to fund the Accurate acquisition.
The effective tax rate for the second quarter and first six months of 1999 was
41.0 percent versus 42.0 percent in the comparable periods a year ago, excluding
the favorable adjustments to 1998 income tax expense discussed in Note 3 of the
Notes to Consolidated Financial Statements. The effective tax rate decreased as
a result of the foreign and domestic earnings mix.
Net income for the second quarter of 1999 was $3,653,000, or 36 cents per share
compared to last year's second quarter net income of $6,360,000, or 61 cents per
share. For the first six months of 1999, net income was $4,861,000, or 47 cents
per share compared to last year's $7,569,000, or 73 cents per share.
FINANCIAL CONDITION
At April 30, 1999 the Company's working capital was $55,161,000 and the current
ratio was 1.7. At October 31, 1998 the Company's working capital was $45,170,000
and the current ratio was 1.5. In the first six months of 1999, cash provided by
operations was $9,399,000 compared to cash provided by operations of $8,317,000
in the comparable period a year ago. Working capital changes accounted for the
improvement.
Investing activities used cash of $7,750,000 in the first six months of 1999 and
$68,250,000 in the same period a year ago. The change resulted primarily from
the purchase of the equity interests of the Company's joint venture partners in
McWhorter Europe in the first quarter of 1998 and the acquisition of Accurate in
the second quarter of 1998. Capital expenditures of $7,867,000 in the first six
months of 1999 were primarily for implementation of an Enterprise Resource
Planning package and productivity improvements. Capital expenditures of
$10,992,000 in the first six months of 1998 were primarily for the construction
of the new research and development facility, powder capacity expansion, and
productivity improvements. Capital spending for the fiscal year 1999 is
currently anticipated to be between $20,000,000 and $25,000,000.
Financing activities used cash of $1,787,000 in the first six months of 1999
compared to cash provided of $57,567,000 in the comparable period a year ago.
The decrease was primarily attributed to borrowings in the first quarter and
second quarter of 1998 to fund the purchases of the equity interests of the
Company's joint venture partners in McWhorter Europe and Accurate. Debt as a
percentage of invested capital was 59.9 percent at April 30, 1999 up from 59.3
percent at October 31, 1998. Total debt increased to $156,925,000 at April 30,
1999 from $156,602,000 at October 31, 1998.
The Company has a $150,000,000 unsecured revolving credit facility that
terminates on July 30, 2002. At April 30, 1999, approximately $20,200,000 was
available under this facility. The Company's European subsidiaries, primarily
the Italian subsidiary, have short-term lines of credit that are cancelable at
any time of approximately $24,633,000 of which approximately $11,300,000 is
available for future use at April 30, 1999. The credit facilities and internally
generated funds are expected to be adequate to finance McWhorter's capital
expenditures and
8
<PAGE>
other operating requirements.
The resolution, adopted by the Board of Directors in May 1998, authorizing the
repurchase by the Company of up to an aggregate of 500,000 shares of its common
stock expired in May 1999. The Company purchased 293,300 shares at a cost of
$4,473,000 under this plan, as of April 30, 1999. The Board of Directors adopted
a new resolution in May 1999 authorizing the repurchase by the Company of up to
an aggregate of 500,000 shares of its common stock. The new resolution expires
in May 2000.
With respect to environmental liabilities, management reviews each site, taking
into consideration the numerous factors that influence the costs that will
likely be incurred. Reserves are adjusted as additional information becomes
available to better estimate the total remediation costs at individual sites.
While uncertainties exist with respect to the amounts and timing of McWhorter's
ultimate environmental liabilities, management believes that such liabilities,
individually and in the aggregate, will not have a material adverse effect on
the Company's financial condition or results of operations.
IMPACT OF YEAR 2000
During 1999, the Company continued its program to prepare its information
technology (IT) and non-information technology (non-IT) systems for year 2000
compliance. The year 2000 issue relates to computer systems that use two digits
rather than four to define the applicable year and whether such systems will
properly process information when the year changes to 2000.
The Company has completed an assessment of the impact of the year 2000 on its
purchased and internally developed IT systems. The current purchased and
internally developed software is year 2000 compliant. The Company is currently
in the process of modifying and testing its non-IT systems to ensure that these
systems will function properly with respect to dates in the year 2000. Non-IT
systems are expected to be compliant by October 1999. The Company has begun
formal communications with significant suppliers and customers to determine the
extent to which the Company's activities would be impacted by those third
parties' failure to remediate their own year 2000 issues.
The estimated costs related to testing and modifying existing systems for year
2000 compliance are approximately $575,000, of which $370,000 has been spent or
committed to date. Approximately $525,000 of the total compliance costs are
expected to be capital expenditures. No significant information systems projects
have been deferred to accommodate the year 2000 issues.
Year 2000 compliance is expected to be achieved no later than October 1999. The
Company believes that with the planned modifications, year 2000 issues will not
have a material impact on operations. However, if these modifications are not
made, or are not completed on a timely basis, year 2000 issues could result in
the temporary inability to process orders, send invoices, or engage in similar
business activities, which would have a material impact on the Company's
operations. Failure by significant suppliers and customers to be year 2000
compliant could also have a material impact on the Company. The amounts of
potential liability and lost revenue
9
<PAGE>
resulting from the failure to be year 2000 compliant cannot be reasonably
estimated at this time.
The Company's contingency plans will be finalized as the testing of systems is
completed. Contingency plans are expected to be completed by July 1999. These
plans include the manual processes required to perform critical business
functions that could be affected by year 2000 issues.
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
Management's discussion and analysis contains forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Such statements relate to, among other things, expenditures, cost
reductions, cash flow, operating improvements, and year 2000 compliance, and are
indicated by words such as "estimates", "expects", and similar words and
phrases. Such statements are subject to inherent uncertainties and risks which
could cause actual results to vary materially from expected results, including
but not limited to the following: levels of industrial activity and economic
conditions in the U.S. and other countries around the world, pricing pressures
and other competitive factors, and levels of capital spending in certain
industries, all of which could have a material impact on the Company's order
rates and product sale prices; McWhorter's ability to integrate and operate
acquired businesses on a profitable basis; the relationship of the U.S. dollar
to other currencies and its impact on pricing and cost competitiveness; interest
rates; utilization of McWhorter's capacity and the effect of capacity
utilization on McWhorter's costs; labor market conditions and raw material
costs; developments with respect to contingencies, such as environmental matters
and litigation; year 2000 compliance; and other risks detailed from time to time
in the Company's filings with the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in information relating to market risk since
the Company's disclosure included in Item 7A of Form 10-K as filed with the
Securities and Exchange Commission on January 26, 1999.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. None.
ITEM 2. CHANGES IN SECURITIES. Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.
10
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On February 17, 1999, the annual meeting of stockholders of the Company was
held. The following individuals were elected directors at the meeting and the
voting results were as follows:
<TABLE>
<CAPTION>
Directors Votes For Votes Withheld
- --------- --------- --------------
<S> <C> <C>
Michelle L. Collins 7,544,308 13,703
Edward M. Giles 7,544,677 13,334
D. George Harris 7,544,503 13,508
John G. Johnson, Jr. 7,544,677 13,334
Jeffrey M. Nodland 7,541,922 16,089
John R. Stevenson 7,545,158 12,853
Heinn F. Tomfohrde III 7,544,586 13,425
</TABLE>
In addition, the following proposal was submitted to stockholders as described
in the Company's Proxy Statement dated January 4, 1999 and was voted upon and
approved by the stockholders at the meeting, with the voting results as follows:
<TABLE>
<CAPTION>
Proposal Votes For Votes Against Abstentions
- -------- --------- ------------- -----------
<S> <C> <C> <C>
Ratification of Ernst & Young
LLP as auditors 7,528,088 27,930 1,993
</TABLE>
ITEM 5. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The exhibits listed in the accompanying "Exhibit Index" are
filed as part of this report.
(b) No reports on Form 8-K were filed during the second quarter of
1999.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
McWhorter Technologies, Inc.
/s/ Louise M. Tonozzi-Frederick
------------------------------------------
Louise M. Tonozzi-Frederick
Vice President and Chief Financial Officer
Date: June 11, 1999
12
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Incorporated Herein
Number Description by Reference to
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
3.1 Certificate of Incorporation, as amended Form 10-K Registration Statement for the fiscal
year ended October 31, 1994
3.2 By-Laws, as amended Form 10-K Registration Statement for the fiscal
year ended October 31, 1996
4.1 Form of Common Stock Certificate Form 10-K Registration Statement for the fiscal
year ended October 31, 1994
4.2 Rights Agreement Form 10-K Registration Statement for the fiscal
year ended October 31, 1994
4.2.1 First Amendment to Rights Agreement
10.1 Distribution Agreement Form S-1 Registration Statement (Registration
No. 33-75726) originally filed on February 25,
1994
10.2 Environmental Matters Agreement Form S-1 Registration Statement (Registration
No. 33-75726) originally filed on February 25,
1994
10.3 Amended and Restated Technology License Agreement Form 10-K Registration Statement for the fiscal
year ended October 31, 1994
10.4 Tax Sharing Agreement Form S-1 Registration Statement (Registration
No. 33-75726) originally filed on February 25,
1994
10.5 Amended and Restated Master Tolling Agreement Form 10-K Registration Statement for the fiscal
year ended October 31, 1994
10.8 1994 Stock Incentive Plan Form S-1 Registration Statement (Registration
No. 33-75726) originally filed on February 25,
1994
10.8.1 Amendment to 1994 Stock Incentive Plan Form 10-Q for the quarterly period ended April
30, 1995
10.9 Employee Stock Ownership Plan and Trust Form 10-K Registration Statement for the fiscal
year ended October 31, 1994
10.9.1 Amendment to Employee Stock Ownership Trust Form 10-K Registration Statement for the fiscal
year ended October 31, 1998
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Exhibit Incorporated Herein
Number Description by Reference to
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.10.1 Amendment to 401(k) Savings Plan Trust Form 10-K Registration Statement for the fiscal
year ended October 31, 1998
10.11 Sale and Purchase of Assets Agreement between Cargill, Registration Statement on Form 10 (File No.
Incorporated and McWhorter, Inc. dated as of May 19, 1-12638) filed on December 3, 1993
1993, as subsequently modified and amended
10.12 Agreement Containing Consent Order executed as of Registration Statement on Form 10 (File No.
September 30, 1993 by the Federal Trade Commission, 1-12638) filed on December 3, 1993
The Valspar Corporation and McWhorter, Inc.
10.16.2 Indemnification Agreement dated November 12, 1998 Form 10-Q for the quarterly period ended January
between McWhorter Technologies, Inc. and John R. 31, 1999
Stevenson
10.16.2 Indemnification Agreement dated November 12, 1998 Form 10-K Registration Statement for the fiscal
between McWhorter Technologies, Inc. and John R. year ended October 31, 1998
Stevenson
10.17 Indemnification Agreement dated May 17, 1995 between Form 10-Q for the quarterly period ended April
McWhorter Technologies, Inc. and Jeffrey M. Nodland. 30, 1995
10.17.1 Amendment to Indemnification Agreement dated May 17, Form 10-Q for the quarterly period ended July
1995 between McWhorter Technologies, Inc. and Jeffrey 31, 1996
M. Nodland
10.18.1 Amendment to Indemnification Agreement dated May 17, Form 10-Q for the quarterly period ended July
1995 between McWhorter Technologies, Inc. and Michelle 31, 1996
L. Collins
10.19 Indemnification Agreement dated May 17, 1995 between Form 10-Q for the quarterly period ended April
McWhorter Technologies, Inc. and Edward M. Giles 30, 1995
10.19.1 Amendment to Indemnification Agreement dated May 17, Form 10-Q for the quarterly period ended July
1995 between McWhorter Technologies, Inc. and Edward M. 31, 1996
Giles
10.20 Indemnification Agreement dated May 17, 1995 between Form 10-Q for the quarterly period ended April
McWhorter Technologies, Inc. and D. George Harris 30, 1995
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Exhibit Incorporated Herein
Number Description by Reference to
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.20.1 Amendment to Indemnification Agreement dated May 17, Form 10-Q for the quarterly period ended July
1995 between McWhorter Technologies, Inc. and D. George 31, 1996
Harris
10.21 Indemnification Agreement dated May 17, 1995 between Form 10-Q for the quarterly period ended April
McWhorter Technologies, Inc. and Heinn F. Tomfohrde III 30, 1995
10.21.1 Amendment to Indemnification Agreement dated May 17, Form 10-Q for the quarterly period ended July
1995 between McWhorter Technologies, Inc. and Heinn F. 31, 1996
Tomfohrde III
10.23 Indemnification Agreement dated December 13, 1995 Form 10-K Registration Statement for the fiscal
between McWhorter Technologies, Inc. and John G. year ended October 31, 1995
Johnson, Jr.
10.23.1 Amendment to Indemnification Agreement dated December Form 10-Q for the quarterly period ended July
13, 1995 between McWhorter Technologies, Inc. and John 31, 1996
G. Johnson, Jr.
10.24 1996 Incentive Stock Plan Form 10-K Registration Statement for the fiscal
year ended October 31, 1996
10.25 1996 Nonemployee Director Stock Option and Award Plan Form 10-K Registration Statement for the fiscal
year ended October 31, 1996
10.26 Stockholders Agreement for McWhorter Technologies Form 10-K Registration Statement for the fiscal
Europe year ended October 31, 1996
10.27 Deferred Compensation Plan Form 10-K Registration Statement for the fiscal
year ended October 31, 1996
10.27.1 Amendment to Deferred Compensation Plan
10.28 $150,000,000 Credit Agreement dated July 30, 1997 Form 10-Q for the quarterly period ended July
among McWhorter Technologies, Inc., the banks listed 31, 1997
therein and Wachovia Bank of Georgia, N.A., as agent
10.29 Stock Purchase Agreement by and between McWhorter Form 8-K dated August 11, 1997
Technologies, Inc. and Antonio Napoli & C.s.a.p.a. and
Gestin S.r.l.
10.30 Warrant Purchase Agreement between McWhorter Form 8-K dated August 11, 1997
Technologies, Inc. and Cable Beach Holdings Ltd.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Exhibit Incorporated Herein
Number Description by Reference to
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.31 Waiver and First Amendment to the $150,000,000 Credit Form 10-K Registration Statement for fiscal year
Agreement ended October 31, 1997
10.32 Asset Purchase Agreement by and among Accurate Form 10-Q for the quarterly period ended April
Coatings & Dispersions, Inc., the principal 30, 1998
stockholders thereof and McWhorter Technologies, Inc.
dated as of March 23, 1998
10.40 Change of Control Agreement dated February 17, 1999
between McWhorter Technologies, Inc. and Jeffrey M.
Nodland
10.41 Change of Control Agreement dated February 17, 1999
between McWhorter Technologies, Inc. and Louise M.
Tonozzi-Frederick
10.42 Change of Control Agreement dated February 17, 1999
between McWhorter Technologies, Inc. and Douglas B.
Rahrig
10.43 Change of Control Agreement dated February 17, 1999
between McWhorter Technologies, Inc. and Douglas J.
Graff
10.44 Change of Control Agreement dated February 17, 1999
between McWhorter Technologies, Inc. and Patrick T.
Heffernan
10.45 Change of Control Agreement dated February 17, 1999
between McWhorter Technologies, Inc. and Donald J.
Crawford
10.46 Change of Control Agreement dated May 1, 1999 between
McWhorter Technologies, Inc. and Warren Grayson
27.1 Financial Data Schedule
</TABLE>
16
<PAGE>
EXHIBIT 4.2.1 FIRST AMENDMENT TO RIGHTS AGREEMENT
FIRST AMENDMENT, dated April 27, 1999, to the Rights Agreement, dated as of
February 1, 1994 (the "Rights Agreement"), between McWhorter Technologies, Inc.,
a Delaware corporation (the "Company"), and Wachovia Bank of North Carolina,
N.A., a North Carolina corporation, as Rights Agent (the "Rights Agent").
WHEREAS, the Company and the Rights Agent entered into the Rights Agreement
specifying the terms of the Rights (as defined therein);
WHEREAS, the Company and the Rights Agent desire to amend the Rights
Agreement in accordance with Section 27 of the Rights Agreement;
WHEREAS, the Board of Directors of the Company has voted in favor of this
Amendment pursuant to a unanimous written consent;
NOW, THEREFORE, in consideration of the premises and mutual agreements set
forth in the Rights Agreement and this First Amendment, the parties hereby agree
as follows:
1. Section 1(a) of the Rights Agreement is hereby amended by adding the
following sentence at the end of such Section:
"Notwithstanding the foregoing provisions contained in this Section
1(a), with respect solely to Shapiro Capital Management Company, Inc.
("Shapiro") together with all its Affiliates and Associates, all
references to "fifteen percent (15%)" shall be replaced with "17.5%",
so that all such provisions in this Section 1(a) shall apply to
Shapiro together with all its Affiliates and Associates as so
modified."
2. This First Amendment shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
3. This First Amendment may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
4. Except as expressly set forth herein, this First Amendment shall not
by implication or otherwise alter, modify, amend, or in any other way affect any
of the terms, conditions, obligations, covenants, or agreements contained in the
Rights Agreement, all of which are ratified and affirmed in all respects and
shall continue in full force and effect.
* * * *
<PAGE>
IN WITNESS WHEREOF, the parties have caused this First Amendment to be duly
executed as of the first date above written.
McWHORTER TECHNOLOGIES, INC.
Attest:
By /s/ Louise M. Tonozzi-Fredorick By /s/ Jeffrey M. Nodland
----------------------------------- --------------------------
Its: Secretary Its: Chief Executive Officer
WACHOVIA BANK OF NORTH
CAROLINA, N.A.
Attest:
By /s/ Susan N. Turner By /s/ Deborah N. Keaton
------------------------- -------------------------
Its: Assistant Secretary Its: Vice President
<PAGE>
Exhibit 10.40
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") is made as of February
17, 1999 by and between McWhorter Technologies, Inc., a Delaware corporation
(the "Company") and Jeffrey M. Nodland (the "Employee").
WHEREAS, Company considers the maintenance of a motivated management
group to be essential to protecting and enhancing the best interests of Company
and its stockholders and to that end Company has determined to provide benefits
to certain management employees in the event their employment is terminated
following a Change in Control of Company; and
WHEREAS, Employee is a member of Company's management group and
Company has determined that to reinforce and encourage the continued attention
and dedication of Employee to his duties, free from distractions which could
arise in anticipation of or subsequent to a Change in Control of Company, it
should enter into this Agreement with the Employee;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Company and Employee agree as follows:
1. TERM AND NATURE OF AGREEMENT. This Agreement shall commence as
of the date hereof and shall continue in effect until February 17, 2002. As of
February 17, 2002 and each third February 17th occurring thereafter, this
Agreement shall be automatically renewed for a term of three (3) years unless
Company gives written notice to Employee at least 90 days prior to the renewal
date that this Agreement will not be extended. Notwithstanding the foregoing,
if a Change in Control (as hereinafter defined) occurs during the last two (2)
years of any term of this Agreement, the term of this Agreement shall
automatically be extended for a period of twenty-four (24) months after the end
of the month in which the Change in Control occurs. Furthermore, Employee may
terminate this Agreement at any time by giving Company 30 days' advance written
notice. This Agreement shall be construed and enforced under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") as an unfunded
welfare benefit plan. The Agreement shall be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee").
2. SEVERANCE BENEFITS FOLLOWING A CHANGE IN CONTROL. If
Employee's employment with Company is terminated within twenty-four (24) months
following a Change in Control, Employee shall be entitled to the following
severance benefits (in addition to any non-severance compensation and benefits
provided for under any of Company's employee benefit plans, policies and
practices or under the terms of any other contracts, but in lieu of any
severance pay under any Company employee benefit plan, policy and practice or
under the terms of any other contract including any employment contract):
(a) If Employee's employment is terminated by reason of Employee's
disability, retirement or death of by Employee other than for Good Reason, the
Company shall pay Employee his full base salary through the Date of Termination
at the rate in effect at the time of termination (or the date of death in the
case of Employee's death), plus any bonus or incentive
<PAGE>
compensation award which, pursuant to the terms of any compensation or
incentive plan, Employee is entitled to receive but which has not yet been
paid.
(b) If Employee's employment is terminated for Cause, Company shall
pay Employee his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given plus any bonus or incentive
compensation award which, pursuant to the terms of any compensation or incentive
plan, Employee is entitled to receive but which has not yet been paid.
(c) If Employee's employment is terminated by Company other than
for Cause or by Employee for Good Reason, then:
(i) Within five (5) days after the Date of Termination, Company
shall pay Employee his full base salary through the Date of Termination at
the greater of the rate in effect at the time the Change in Control
occurred or the rate in effect when the Notice of Termination was given
plus an amount equal to 100% of Employee's Target Annual Bonus (as defined
below).
(ii) Company shall pay Employee a gross severance benefit equal
to (i) 3 times Employee's Annual Base Salary at the greater of the rate in
effect at the time the Change in Control occurred or the rate in effect
when Notice of Termination was given plus (ii) 3 times Employee's Target
Annual Bonus. The severance benefit shall be paid in a lump sum within 30
days of Employee's Termination. Employee's "Annual Base Salary" shall mean
the yearly salary rate established from time to time by Company as
Employee's regular salary for the next succeeding twelve (12) month period,
payable pursuant to the Company's payroll on a periodic basis and
Employee's "Target Annual Bonus" shall mean the maximum available normal
bonus Employee could earn under Company's bonus program for the year in
which his Date of Termination occurs.
(iii) Any outstanding options to purchase stock of Company held by
Employee shall immediately vest and become exercisable in full in
accordance with their terms and the provisions of the Company's 1994 Stock
Incentive Plan and 1996 Incentive Stock Plan and any other stock option
plan or arrangement of the Company.
(iv) The restrictions on any shares of restricted stock held by
Employee which have not yet terminated will terminate immediately.
(v) Company shall pay the costs of a reasonable outplacement
service until Employee is employed on a full time basis.
(vi) For all purposes of Employee's participation in the
Company's Deferred Compensation Plan (the "Plan"): (a) the definition of
Change in Control contained in this Agreement shall govern and be deemed to
be the definition of "Change in Control" applicable to the Plan,
notwithstanding any provisions of the Plan, including Section 1.17, to the
contrary, and (b) the provisions of Section 3.9 (d) of the Plan and any
similar successor provisions shall not be applicable.
<PAGE>
(vii) Until the earlier of the second anniversary of the
Termination or the date on which Employee becomes employed by a new
employer, Company shall, at its expense, provide Employee and Employee's
family members with medical, dental, life insurance, disability and
accidental death and dismemberment benefits at the highest level provided
to Employee and Employee's family members during the period beginning
immediately prior to the Change of Control and ending on the Date of
Termination, PROVIDED, HOWEVER, that if Employee become employed by a new
employer which maintains a major medical plan that either (i) does not
cover Employee and Employee's family members with respect to a pre-existing
condition which was covered under the Company's major medical plan, or (ii)
does not cover Employee and Employee's family members for a designated
waiting period, Employee's coverage under the Company's major medical plan
shall continue (but shall be limited in the event of noncoverage due to a
preexisting condition, to the preexisting condition itself) until the
earlier of the end of the applicable period of noncoverage under the new
employer's plan or the second anniversary of the Date of Termination.
3. EXCISE TAX 280G GROSS UP. In the event it shall be determined
that any payment or benefit provided under Paragraph 2(c) above together with
any other payments or benefits Employee is entitled to receive by reason of his
termination (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986 ("Code"), or any interest or penalties
are incurred by Employee with respect to such excise tax (such excise tax,
together with any such interest and penalties, hereinafter collectively referred
to as the "Excise Tax"), Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by Employee
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Employee retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payment. Payment of the Gross-Up Payment shall be subject
to the following:
(a) Subject to paragraph 3(b) below, the determination of
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment shall be made by an accounting firm (the "Accounting
Firm") selected by the Company from among the following: Arthur Andersen &
Co., KPMG Peat Marwick, Price Waterhouse Coopers, and Deloitte & Touche.
The Company will notify Employee of the identity of the Accounting Firm
within fifteen (15) business days of Employee's Termination and the
Accounting Firm shall provide detailed supporting calculations to Company
and Employee within thirty (30) business days of being requested by
Employee to make a Gross-Up Payment determination. If the Accounting Firm
determines that a Gross-Up Payment is required, the Gross-Up Payment so
determined shall be paid within five (5) days after the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by Employee, it shall so advise Employee in writing.
The Accounting Firm's determinations shall be binding upon Company and
Employee. If, following the exhaustion of Company's remedies under
paragraphs (b) and (c) below, Employee is required to pay an Excise Tax,
the Accounting Firm shall make a determination of the amount of any
underpayment in any previous Gross-Up Payment and any underpayment shall be
paid promptly by Company to Employee.
<PAGE>
(b) Employee shall notify Company in writing of any claim by the
Internal Revenue Service that, if successful, would require Company to make
a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after Employee is
informed in writing of such claim and shall apprise Company of the nature
of such claim and the date on which such claim is requested to be paid.
Employee shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which it give such notice to Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If Company notifies Employee in writing
prior to the expiration of such period that it desires to contest such
claim, Employee shall (i) give Company any information reasonably requested
by Company relating to such claim, (ii) take such action in connection with
contesting such claim as Company shall reasonably request in writing,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by Company, (iii)
cooperate with Company in good faith in order to effectively contest such
claim and (iv) permit Company to participate in any proceedings relating to
such claim; provided, however, that Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold Employee
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect hereto) imposed as a result
of such representation and payment of costs and expenses.
(c) Without limitation on the foregoing provisions of this
Section 3, Company shall control all proceedings taken in connection with
contesting a claim by the Internal Revenue Service and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option either direct Employee to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as Company shall determine; provided, however, that
if Company directs Employee to pay such claim and sue for a refund, Company
shall advance the amount of such payment to Employee on an interest-free
basis, and shall indemnify and hold Employee harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and provided, further
that if Employee is required to extend the statute of limitations to enable
Company to contest such claim, Employee may limit this extension solely to
such contested amount. Company's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder and Employee shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by Employee of an amount advanced by
Company pursuant to paragraph 3(c) above, Employee becomes entitled to
receive any refund with respect to such claim, Employee shall (subject to
Company's complying with the requirements of paragraphs 3(b) and (c))
promptly pay to Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).
<PAGE>
(e) If, after the receipt by Employee of any amount advanced by
Company under paragraph 3(c), a determination is made that Employee shall
not be entitled to any refund with respect to such claim and Company does
not notify Employee in writing of its intent to contest such denial of
refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
4. NON-SOLICITATION AND NON-COMPETITION. In consideration for the
severance benefits called for under paragraph 2(c) and Section 3 above, Employee
agrees that during the 24-month period following his Date of Termination (the
"Severance Period"), Employee:
(a) will not, without the prior written consent of Company,
alone or in association with others, solicit on behalf of Employee, or any
other person, firm, corporation or entity, any employee of Company, or any
of its operating divisions, subsidiaries or affiliates, for employment with
a person, firm, corporation or entity which competes with Company, or any
of its divisions, subsidiaries or affiliates.
(b) will not, without the prior written consent of Company,
directly or indirectly, engage or invest in, counsel or advise or be
employed by any other person, firm, corporation or entity engaged in or
conducting business which is the same as, or competing with, the business
being conducted by Company, or any of its operating divisions, subsidiaries
or affiliates, in any area or territory in which Company, or such operating
divisions, subsidiaries or affiliates, shall be conducting business during
the Severance Period. Notwithstanding the foregoing, Employee shall be
entitled to passively own not more than four and nine-tenths percent (4.9%)
of any publicly held entity engaged in any business in which Company, or
any of its operating divisions, subsidiaries or affiliates, shall be
engaged during said period.
Should Employee fail to comply with the non-solicitation and/or non-competition
restrictions contained in this Section 4, this Agreement shall immediately
terminate and Employee shall forfeit any remaining unpaid benefits under this
Agreement.
5. OTHER EMPLOYMENT. Employee shall not be required to mitigate
the amount of any payment or benefit provided for under this Agreement by
seeking other employment or otherwise nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation earned by
Employee as a result of other employment. Payment to Employee pursuant to this
Agreement shall constitute the entire obligation of Company for severance pay
and full settlement of any claim for severance pay under law or in equity that
Employee might otherwise assert against Company or any of its employees,
officers or directors on account of Employee's termination.
6. CHANGE IN CONTROL. For purposes of this Agreement a "Change in
Control" shall have occurred if:
(a) any "Person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"))
other than Company, any corporation owned, directly or indirectly, by the
stockholders of Company in
<PAGE>
substantially the same proportions as their ownership of stock of
Company, and any trustee or other fiduciary holding securities under a
Company employee benefit plan or such proportionately owned corporation,
becomes the "beneficial owner" (as defined in rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Company
representing 20% or more of the combined voting power of Company's then
outstanding securities;
(b) during any period of not more than 24 months, individuals
who at the beginning of such period constitute the Board of Directors of
the Company, and any new director (other than a director designated by a
Person who has entered into an agreement with Company to effect a
transaction described in paragraph (a), (c), or (d) of this Section 6)
whose election by the board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directs
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(c) the stockholders of Company approve a merger or
consolidation of Company with any other corporation, other than (i) a
merger or consolidation which would result in the voting securities of
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 60% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of Company
(or similar transaction) in which no Person acquires more than 20% of the
combined voting power of Company's then outstanding securities; or
(d) the stockholders of Company approve a plan of compete
liquidation of Company or an agreement for sale or disposition by Company
of all or substantially all of its assets (or any transaction having a
similar effect).
Company may also determine, in its discretion, that a sale of a substantial
portion of its assets or one of its businesses constitutes a "Change of Control"
with respect to Employee if Employee is employed in the affected operation.
7. TERMINATIONS FOR CAUSE AND GOOD REASON. Employee will be
considered to have been terminated for "Cause" if the termination is by reason
of Employee willfully engaging in conduct demonstrably and materially injurious
to the Company, Employee being convicted of or pleading guilty or nolo contendre
to a crime involving moral turpitude or Employee's willful and continued failure
for a significant period of time to perform Employee's duties after a demand for
substantial performance has been delivered to Employee by the Board of Directors
of Company which demand specifically identifies the manner in which the Boar
believes that Employee has not substantially performed his duties. Employee's
termination shall be considered to have been for "Good Reason" if Employee's
termination is by reason of the occurrence of any of the following events within
24 moths following a Change in Control without Employee's express written
consent:
(a) any change in Employee's authorities, duties,
responsibilities (including reporting responsibilities) or performance
criteria or objectives or a change of more than
<PAGE>
20 miles in Employee's place of employment which, in Employee's
judgment, represents an adverse change; the assignment to Employee of
any duties or work responsibilities which, in his reasonable judgment,
are inconsistent with such authorities or responsibilities; or any
removal of Employee from, or failure to reappoint or reelect him to any
of such positions, except if any such changes are because of disability,
retirement or Cause;
(b) a reduction in or failure to pay any portion of Employee's
Annual Base Salary as in effect on the date of the Change in Control or as
the same may be increased from time to time thereafter;
(c) the failure by Company to provide Employee with compensation
and benefits (including, without limitation, incentive, bonus and other
compensation plans and any vacation, medical, hospitalization, life
insurance, dental or disability benefit plan), or cash compensation in lieu
thereof, which are, in the aggregate, no less favorable than those provided
by Company to Employee immediately prior to the occurrence of the Change in
Control;
(d) any breach by Company of any provision of this Agreement;
and
(e) the failure of Company to obtain a satisfactory agreement
from any successor or assign of Company to assume and agree to perform this
Agreement, as required in Section 9 of this Agreement.
Employee's continued employment after the expiration of six months from any
action which would constitute Good Reason under paragraph 7(a) above shall
constitute a waiver of rights with respect to such action constituting Good
Reason under this Agreement.
8. NOTICE OF TERMINATION. Any purported termination of employment
by Company or by Employee shall be communicated by a written Notice of
Termination to the other party which notice is given in accordance with Section
11 of this Agreement. No termination shall be effective without such a Notice
of Termination. The Notice of Termination shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Employee's employment and shall specify the Date of Termination. The "Date of
Termination" shall mean the date specified in the Notice of Termination provided
that in no case shall the date be less than thirty (30) days or more than sixty
(60) days after the date of Notice of Termination is given. If within thirty
(30) days after any Notice of Termination is given the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which the dispute
is finally determined wither by mutual written agreement of the parties, or by
the final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been taken).
9. SUCCESSORS. Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Company to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
Company would be required to perform if no such succession or assignment had
taken place. As used in this Agreement, "Company" shall include
<PAGE>
any successor or assign to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or otherwise. This
Agreement shall inure to the benefit of and be enforceable by Employee's
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Employee should die while any
amounts would still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Employee's named beneficiary
and if there is no such named beneficiary, to Employee's estate in a lump sum.
10. FEES AND EXPENSES. Company shall pay all reasonable legal fees
and related expenses (including the reasonable costs of experts, evidence and
counsel), when and as incurred by Employee, as a result of contesting or
disputing any termination of employment of Employee following a Change in
Control whether or not such contest or dispute is resolved in Employee's favor
but only if Employee was seeking in good faith to obtain or enforce any right or
benefit provided by this Agreement or by any other plan or arrangement
maintained by the Company under with Employee is or may be entitled to receive
benefits.
11. NOTICE. Any notice or other communication provided for or
required by this Agreement shall be in writing and shall be deemed to have been
duly given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by
each party to the other or to such other address as either party may have
furnished to the other in writing.
12. MODIFICATIONS, WAIVERS AND SURVIVAL OF OBLIGATIONS. No
provision of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in writing and signed by Employee
and Company. A waiver of any condition or provision of this Agreement shall be
limited to the terms an conditions of such waiver and shall not be construed as
a waiver of any similar or dissimilar provisions or conditions at any time. The
obligations of Company under Sections 2 and 3 shall survive the expiration of
the term of this Agreement.
13. CLAIMS PROCEDURE. Any claim for benefits under this Agreement
by Employee shall be made in writing.
14. GOVERNING LAW. The laws of Illinois shall be controlling in
all matters relating to this Agreement to the extent not preempted by ERISA.
15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. ENTIRE AGREEMENT. The Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreement,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
17. ACTION BY COMPANY. Any action required of or permitted by
Company under this Agreement shall be by resolution of its Board of Directors,
by resolution of a duly authorized
<PAGE>
committee of its Board of Directors, or by a person or persons authorized by
resolutions of its Board of Directors or such committee.
18. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
19. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit Employee's continuing or future participation in any benefit,
bonus, incentive or other plan or program provide by Company and for which
Employee may qualify, nor shall anything herein limit or reduce such rights as
Employee may have under any other agreements with Company. Amounts which are
vested benefits or which Employee is otherwise entitled to receive under any
plan or program of Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.
McWHORTER TECHNOLOGIES, INC.
By: /s/ Louise M. Tonozzi-Frederick
---------------------------
Its: Vice President and Chief Financial Officer
/s/ Jeffrey M. Nodland
------------------
Employee
<PAGE>
Exhibit 10.41
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") is made as of February
17, 1999 by and between McWhorter Technologies, Inc., a Delaware corporation
(the "Company") and Louise M. Tonozzi-Frederick (the "Employee").
WHEREAS, Company considers the maintenance of a motivated management
group to be essential to protecting and enhancing the best interests of Company
and its stockholders and to that end Company has determined to provide benefits
to certain management employees in the event their employment is terminated
following a Change in Control of Company; and
WHEREAS, Employee is a member of Company's management group and
Company has determined that to reinforce and encourage the continued attention
and dedication of Employee to his duties, free from distractions which could
arise in anticipation of or subsequent to a Change in Control of Company, it
should enter into this Agreement with the Employee;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Company and Employee agree as follows:
1. TERM AND NATURE OF AGREEMENT. This Agreement shall commence as of
the date hereof and shall continue in effect until February 17, 2002. As of
February 17, 2002 and each third February 17th occurring thereafter, this
Agreement shall be automatically renewed for a term of three (3) years unless
Company gives written notice to Employee at least 90 days prior to the
renewal date that this Agreement will not be extended. Notwithstanding the
foregoing, if a Change in Control (as hereinafter defined) occurs during the
last two (2) years of any term of this Agreement, the term of this Agreement
shall automatically be extended for a period of twenty-four (24) months after
the end of the month in which the Change in Control occurs. Furthermore,
Employee may terminate this Agreement at any time by giving Company 30 days'
advance written notice. This Agreement shall be construed and enforced under
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") as
an unfunded welfare benefit plan. The Agreement shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
"Committee").
2. SEVERANCE BENEFITS FOLLOWING A CHANGE IN CONTROL. If Employee's
employment with Company is terminated within twenty-four (24) months
following a Change in Control, Employee shall be entitled to the following
severance benefits (in addition to any non-severance compensation and
benefits provided for under any of Company's employee benefit plans, policies
and practices or under the terms of any other contracts, but in lieu of any
severance pay under any Company employee benefit plan, policy and practice or
under the terms of any other contract including any employment contract):
(a) If Employee's employment is terminated by reason of Employee's
disability, retirement or death of by Employee other than for Good Reason,
the Company shall pay Employee his full base salary through the Date of
Termination at the rate in effect at the time of
<PAGE>
termination (or the date of death in the case of Employee's death), plus any
bonus or incentive compensation award which, pursuant to the terms of any
compensation or incentive plan, Employee is entitled to receive but which has
not yet been paid.
(b) If Employee's employment is terminated for Cause, Company shall pay
Employee his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given plus any bonus or incentive
compensation award which, pursuant to the terms of any compensation or
incentive plan, Employee is entitled to receive but which has not yet been
paid.
(c) If Employee's employment is terminated by Company other than for
Cause or by Employee for Good Reason, then:
(i) Within five (5) days after the Date of Termination, Company
shall pay Employee his full base salary through the Date of Termination at
the greater of the rate in effect at the time the Change in Control
occurred or the rate in effect when the Notice of Termination was given
plus an amount equal to 100% of Employee's Target Annual Bonus (as defined
below).
(ii) Company shall pay Employee a gross severance benefit equal
to (i) 2 times Employee's Annual Base Salary at the greater of the rate in
effect at the time the Change in Control occurred or the rate in effect
when Notice of Termination was given plus (ii) 2 times Employee's Target
Annual Bonus. The severance benefit shall be paid in a lump sum within 30
days of Employee's Termination. Employee's "Annual Base Salary" shall mean
the yearly salary rate established from time to time by Company as
Employee's regular salary for the next succeeding twelve (12) month period,
payable pursuant to the Company's payroll on a periodic basis and
Employee's "Target Annual Bonus" shall mean the maximum available normal
bonus Employee could earn under Company's bonus program for the year in
which his Date of Termination occurs.
(iii) Any outstanding options to purchase stock of Company held by
Employee shall immediately vest and become exercisable in full in
accordance with their terms and the provisions of the Company's 1994 Stock
Incentive Plan and 1996 Incentive Stock Plan and any other stock option
plan or arrangement of the Company.
(iv) The restrictions on any shares of restricted stock held by
Employee which have not yet terminated will terminate immediately.
(v) Company shall pay the costs of a reasonable outplacement
service until Employee is employed on a full time basis.
(vi) For all purposes of Employee's participation in the
Company's Deferred Compensation Plan (the "Plan"): (a) the definition of
Change in Control contained in this Agreement shall govern and be deemed to
be the definition of "Change in Control" applicable to the Plan,
notwithstanding any provisions of the Plan, including Section 1.17, to the
contrary, and (b) the provisions of Section 3.9 (d) of the Plan and any
similar successor provisions shall not be applicable.
<PAGE>
(vii) Until the earlier of the second anniversary of the
Termination or the date on which Employee becomes employed by a new
employer, Company shall, at its expense, provide Employee and Employee's
family members with medical, dental, life insurance, disability and
accidental death and dismemberment benefits at the highest level provided
to Employee and Employee's family members during the period beginning
immediately prior to the Change of Control and ending on the Date of
Termination, PROVIDED, HOWEVER, that if Employee become employed by a new
employer which maintains a major medical plan that either (i) does not
cover Employee and Employee's family members with respect to a pre-existing
condition which was covered under the Company's major medical plan, or (ii)
does not cover Employee and Employee's family members for a designated
waiting period, Employee's coverage under the Company's major medical plan
shall continue (but shall be limited in the event of noncoverage due to a
preexisting condition, to the preexisting condition itself) until the
earlier of the end of the applicable period of noncoverage under the new
employer's plan or the second anniversary of the Date of Termination.
3. EXCISE TAX 280G GROSS UP. In the event it shall be determined that
any payment or benefit provided under Paragraph 2(c) above together with any
other payments or benefits Employee is entitled to receive by reason of his
termination (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986 ("Code"), or any interest
or penalties are incurred by Employee with respect to such excise tax (such
excise tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Employee shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, Employee retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment.
Payment of the Gross-Up Payment shall be subject to the following:
(a) Subject to paragraph 3(b) below, the determination of
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment shall be made by an accounting firm (the "Accounting
Firm") selected by the Company from among the following: Arthur Andersen &
Co., KPMG Peat Marwick, Price Waterhouse Coopers, and Deloitte & Touche.
The Company will notify Employee of the identity of the Accounting Firm
within fifteen (15) business days of Employee's Termination and the
Accounting Firm shall provide detailed supporting calculations to Company
and Employee within thirty (30) business days of being requested by
Employee to make a Gross-Up Payment determination. If the Accounting Firm
determines that a Gross-Up Payment is required, the Gross-Up Payment so
determined shall be paid within five (5) days after the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by Employee, it shall so advise Employee in writing.
The Accounting Firm's determinations shall be binding upon Company and
Employee. If, following the exhaustion of Company's remedies under
paragraphs (b) and (c) below, Employee is required to pay an Excise Tax,
the Accounting Firm shall make a determination of the amount of any
underpayment in any previous Gross-Up Payment and any underpayment shall be
paid promptly by Company to Employee.
<PAGE>
(b) Employee shall notify Company in writing of any claim by the
Internal Revenue Service that, if successful, would require Company to make
a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after Employee is
informed in writing of such claim and shall apprise Company of the nature
of such claim and the date on which such claim is requested to be paid.
Employee shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which it give such notice to Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If Company notifies Employee in writing
prior to the expiration of such period that it desires to contest such
claim, Employee shall (i) give Company any information reasonably requested
by Company relating to such claim, (ii) take such action in connection with
contesting such claim as Company shall reasonably request in writing,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by Company, (iii)
cooperate with Company in good faith in order to effectively contest such
claim and (iv) permit Company to participate in any proceedings relating to
such claim; provided, however, that Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold Employee
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect hereto) imposed as a result
of such representation and payment of costs and expenses.
(c) Without limitation on the foregoing provisions of this
Section 3, Company shall control all proceedings taken in connection with
contesting a claim by the Internal Revenue Service and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option either direct Employee to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as Company shall determine; provided, however, that
if Company directs Employee to pay such claim and sue for a refund, Company
shall advance the amount of such payment to Employee on an interest-free
basis, and shall indemnify and hold Employee harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and provided, further
that if Employee is required to extend the statute of limitations to enable
Company to contest such claim, Employee may limit this extension solely to
such contested amount. Company's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder and Employee shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by Employee of an amount advanced by
Company pursuant to paragraph 3(c) above, Employee becomes entitled to
receive any refund with respect to such claim, Employee shall (subject to
Company's complying with the requirements of paragraphs 3(b) and (c))
promptly pay to Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).
<PAGE>
(e) If, after the receipt by Employee of any amount advanced by
Company under paragraph 3(c), a determination is made that Employee shall
not be entitled to any refund with respect to such claim and Company does
not notify Employee in writing of its intent to contest such denial of
refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
4. NON-SOLICITATION AND NON-COMPETITION. In consideration for the
severance benefits called for under paragraph 2(c) and Section 3 above,
Employee agrees that during the 24-month period following his Date of
Termination (the "Severance Period"), Employee:
(a) will not, without the prior written consent of Company,
alone or in association with others, solicit on behalf of Employee, or any
other person, firm, corporation or entity, any employee of Company, or any
of its operating divisions, subsidiaries or affiliates, for employment with
a person, firm, corporation or entity which competes with Company, or any
of its divisions, subsidiaries or affiliates.
(b) will not, without the prior written consent of Company,
directly or indirectly, engage or invest in, counsel or advise or be
employed by any other person, firm, corporation or entity engaged in or
conducting business which is the same as, or competing with, the business
being conducted by Company, or any of its operating divisions, subsidiaries
or affiliates, in any area or territory in which Company, or such operating
divisions, subsidiaries or affiliates, shall be conducting business during
the Severance Period. Notwithstanding the foregoing, Employee shall be
entitled to passively own not more than four and nine-tenths percent (4.9%)
of any publicly held entity engaged in any business in which Company, or
any of its operating divisions, subsidiaries or affiliates, shall be
engaged during said period.
Should Employee fail to comply with the non-solicitation and/or non-competition
restrictions contained in this Section 4, this Agreement shall immediately
terminate and Employee shall forfeit any remaining unpaid benefits under this
Agreement.
5. OTHER EMPLOYMENT. Employee shall not be required to mitigate the
amount of any payment or benefit provided for under this Agreement by seeking
other employment or otherwise nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by
Employee as a result of other employment. Payment to Employee pursuant to
this Agreement shall constitute the entire obligation of Company for
severance pay and full settlement of any claim for severance pay under law or
in equity that Employee might otherwise assert against Company or any of its
employees, officers or directors on account of Employee's termination.
6. CHANGE IN CONTROL. For purposes of this Agreement a "Change in
Control" shall have occurred if:
(a) any "Person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"))
other than Company, any corporation owned, directly or indirectly, by the
stockholders of Company in
<PAGE>
substantially the same proportions as their ownership of stock of Company,
and any trustee or other fiduciary holding securities under a Company
employee benefit plan or such proportionately owned corporation, becomes
the "beneficial owner" (as defined in rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of Company representing 20% or
more of the combined voting power of Company's then outstanding securities;
(b) during any period of not more than 24 months, individuals
who at the beginning of such period constitute the Board of Directors of
the Company, and any new director (other than a director designated by a
Person who has entered into an agreement with Company to effect a
transaction described in paragraph (a), (c), or (d) of this Section 6)
whose election by the board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directs
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(c) the stockholders of Company approve a merger or
consolidation of Company with any other corporation, other than (i) a
merger or consolidation which would result in the voting securities of
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 60% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of Company
(or similar transaction) in which no Person acquires more than 20% of the
combined voting power of Company's then outstanding securities; or
(d) the stockholders of Company approve a plan of compete
liquidation of Company or an agreement for sale or disposition by Company
of all or substantially all of its assets (or any transaction having a
similar effect).
Company may also determine, in its discretion, that a sale of a substantial
portion of its assets or one of its businesses constitutes a "Change of Control"
with respect to Employee if Employee is employed in the affected operation.
7. TERMINATIONS FOR CAUSE AND GOOD REASON. Employee will be
considered to have been terminated for "Cause" if the termination is by
reason of Employee willfully engaging in conduct demonstrably and materially
injurious to the Company, Employee being convicted of or pleading guilty or
nolo contendre to a crime involving moral turpitude or Employee's willful and
continued failure for a significant period of time to perform Employee's
duties after a demand for substantial performance has been delivered to
Employee by the Board of Directors of Company which demand specifically
identifies the manner in which the Boar believes that Employee has not
substantially performed his duties. Employee's termination shall be
considered to have been for "Good Reason" if Employee's termination is by
reason of the occurrence of any of the following events within 24 moths
following a Change in Control without Employee's express written consent:
(a) any change in Employee's authorities, duties,
responsibilities (including reporting responsibilities) or performance
criteria or objectives or a change of more than
<PAGE>
20 miles in Employee's place of employment which, in Employee's judgment,
represents an adverse change; the assignment to Employee of any duties
or work responsibilities which, in his reasonable judgment, are
inconsistent with such authorities or responsibilities; or any removal
of Employee from, or failure to reappoint or reelect him to any of
such positions, except if any such changes are because of disability,
retirement or Cause;
(b) a reduction in or failure to pay any portion of Employee's
Annual Base Salary as in effect on the date of the Change in Control or as
the same may be increased from time to time thereafter;
(c) the failure by Company to provide Employee with compensation
and benefits (including, without limitation, incentive, bonus and other
compensation plans and any vacation, medical, hospitalization, life
insurance, dental or disability benefit plan), or cash compensation in lieu
thereof, which are, in the aggregate, no less favorable than those provided
by Company to Employee immediately prior to the occurrence of the Change in
Control;
(d) any breach by Company of any provision of this Agreement;
and
(e) the failure of Company to obtain a satisfactory agreement
from any successor or assign of Company to assume and agree to perform this
Agreement, as required in Section 9 of this Agreement.
Employee's continued employment after the expiration of six months from any
action which would constitute Good Reason under paragraph 7(a) above shall
constitute a waiver of rights with respect to such action constituting Good
Reason under this Agreement.
8. NOTICE OF TERMINATION. Any purported termination of employment
by Company or by Employee shall be communicated by a written Notice of
Termination to the other party which notice is given in accordance with Section
11 of this Agreement. No termination shall be effective without such a Notice
of Termination. The Notice of Termination shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Employee's employment and shall specify the Date of Termination. The "Date of
Termination" shall mean the date specified in the Notice of Termination provided
that in no case shall the date be less than thirty (30) days or more than sixty
(60) days after the date of Notice of Termination is given. If within thirty
(30) days after any Notice of Termination is given the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which the dispute
is finally determined wither by mutual written agreement of the parties, or by
the final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been taken).
9. SUCCESSORS. Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Company to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
Company would be required to perform if no such succession or assignment had
taken place. As used in this Agreement, "Company" shall include
<PAGE>
any successor or assign to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or otherwise. This
Agreement shall inure to the benefit of and be enforceable by Employee's
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Employee should die while any
amounts would still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Employee's named beneficiary
and if there is no such named beneficiary, to Employee's estate in a lump sum.
10. FEES AND EXPENSES. Company shall pay all reasonable legal fees and
related expenses (including the reasonable costs of experts, evidence and
counsel), when and as incurred by Employee, as a result of contesting or
disputing any termination of employment of Employee following a Change in
Control whether or not such contest or dispute is resolved in Employee's
favor but only if Employee was seeking in good faith to obtain or enforce any
right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company under with Employee is or may be
entitled to receive benefits.
11. NOTICE. Any notice or other communication provided for or required
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given
by each party to the other or to such other address as either party may have
furnished to the other in writing.
12. MODIFICATIONS, WAIVERS AND SURVIVAL OF OBLIGATIONS. No provision
of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in writing and signed by
Employee and Company. A waiver of any condition or provision of this
Agreement shall be limited to the terms an conditions of such waiver and
shall not be construed as a waiver of any similar or dissimilar provisions or
conditions at any time. The obligations of Company under Sections 2 and 3
shall survive the expiration of the term of this Agreement.
13. CLAIMS PROCEDURE. Any claim for benefits under this Agreement by
Employee shall be made in writing.
14. GOVERNING LAW. The laws of Illinois shall be controlling in all
matters relating to this Agreement to the extent not preempted by ERISA.
15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. ENTIRE AGREEMENT. The Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreement, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.
17. ACTION BY COMPANY. Any action required of or permitted by Company
under this Agreement shall be by resolution of its Board of Directors, by
resolution of a duly authorized
<PAGE>
committee of its Board of Directors, or by a person or persons authorized by
resolutions of its Board of Directors or such committee.
18. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
19. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit Employee's continuing or future participation in any benefit, bonus,
incentive or other plan or program provide by Company and for which Employee
may qualify, nor shall anything herein limit or reduce such rights as
Employee may have under any other agreements with Company. Amounts which are
vested benefits or which Employee is otherwise entitled to receive under any
plan or program of Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.
McWHORTER TECHNOLOGIES, INC.
By: /s/ Jeffrey M. Nodland
------------------------
Its: President and Chief Executive Officer
/s/ Louise M. Tonozzi-Frederick
-------------------------------
Employee
<PAGE>
Exhibit 10.42
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") is made as of February
17, 1999 by and between McWhorter Technologies, Inc., a Delaware corporation
(the "Company") and Douglas B. Rahrig (the "Employee").
WHEREAS, Company considers the maintenance of a motivated management
group to be essential to protecting and enhancing the best interests of Company
and its stockholders and to that end Company has determined to provide benefits
to certain management employees in the event their employment is terminated
following a Change in Control of Company; and
WHEREAS, Employee is a member of Company's management group and
Company has determined that to reinforce and encourage the continued attention
and dedication of Employee to his duties, free from distractions which could
arise in anticipation of or subsequent to a Change in Control of Company, it
should enter into this Agreement with the Employee;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Company and Employee agree as follows:
1. TERM AND NATURE OF AGREEMENT. This Agreement shall commence as
of the date hereof and shall continue in effect until February 17, 2002. As of
February 17, 2002 and each third February 17th occurring thereafter, this
Agreement shall be automatically renewed for a term of three (3) years unless
Company gives written notice to Employee at least 90 days prior to the renewal
date that this Agreement will not be extended. Notwithstanding the foregoing,
if a Change in Control (as hereinafter defined) occurs during the last two (2)
years of any term of this Agreement, the term of this Agreement shall
automatically be extended for a period of twenty-four (24) months after the end
of the month in which the Change in Control occurs. Furthermore, Employee may
terminate this Agreement at any time by giving Company 30 days' advance written
notice. This Agreement shall be construed and enforced under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") as an unfunded
welfare benefit plan. The Agreement shall be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee").
2. SEVERANCE BENEFITS FOLLOWING A CHANGE IN CONTROL. If
Employee's employment with Company is terminated within twenty-four (24) months
following a Change in Control, Employee shall be entitled to the following
severance benefits (in addition to any non-severance compensation and benefits
provided for under any of Company's employee benefit plans, policies and
practices or under the terms of any other contracts, but in lieu of any
severance pay under any Company employee benefit plan, policy and practice or
under the terms of any other contract including any employment contract):
(a) If Employee's employment is terminated by reason of Employee's
disability, retirement or death of by Employee other than for Good Reason, the
Company shall pay Employee his full base salary through the Date of Termination
at the rate in effect at the time of
<PAGE>
termination (or the date of death in the case of Employee's death), plus any
bonus or incentive compensation award which, pursuant to the terms of any
compensation or incentive plan, Employee is entitled to receive but which has
not yet been paid.
(b) If Employee's employment is terminated for Cause, Company shall
pay Employee his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given plus any bonus or incentive
compensation award which, pursuant to the terms of any compensation or incentive
plan, Employee is entitled to receive but which has not yet been paid.
(c) If Employee's employment is terminated by Company other than
for Cause or by Employee for Good Reason, then:
(i) Within five (5) days after the Date of Termination, Company
shall pay Employee his full base salary through the Date of Termination at
the greater of the rate in effect at the time the Change in Control
occurred or the rate in effect when the Notice of Termination was given
plus an amount equal to 100% of Employee's Target Annual Bonus (as defined
below).
(ii) Company shall pay Employee a gross severance benefit equal
to (i) 1 times Employee's Annual Base Salary at the greater of the rate in
effect at the time the Change in Control occurred or the rate in effect
when Notice of Termination was given plus (ii) 1 times Employee's Target
Annual Bonus. The severance benefit shall be paid in a lump sum within 30
days of Employee's Termination. Employee's "Annual Base Salary" shall mean
the yearly salary rate established from time to time by Company as
Employee's regular salary for the next succeeding twelve (12) month period,
payable pursuant to the Company's payroll on a periodic basis and
Employee's "Target Annual Bonus" shall mean the maximum available normal
bonus Employee could earn under Company's bonus program for the year in
which his Date of Termination occurs.
(iii) Any outstanding options to purchase stock of Company held by
Employee shall immediately vest and become exercisable in full in
accordance with their terms and the provisions of the Company's 1994 Stock
Incentive Plan and 1996 Incentive Stock Plan and any other stock option
plan or arrangement of the Company.
(iv) The restrictions on any shares of restricted stock held by
Employee which have not yet terminated will terminate immediately.
(v) Company shall pay the costs of a reasonable outplacement
service until Employee is employed on a full time basis.
(vi) For all purposes of Employee's participation in the
Company's Deferred Compensation Plan (the "Plan"): (a) the definition of
Change in Control contained in this Agreement shall govern and be deemed to
be the definition of "Change in Control" applicable to the Plan,
notwithstanding any provisions of the Plan, including Section 1.17, to the
contrary, and (b) the provisions of Section 3.9 (d) of the Plan and any
similar successor provisions shall not be applicable.
<PAGE>
(vii) Until the earlier of the second anniversary of the
Termination or the date on which Employee becomes employed by a new
employer, Company shall, at its expense, provide Employee and Employee's
family members with medical, dental, life insurance, disability and
accidental death and dismemberment benefits at the highest level provided
to Employee and Employee's family members during the period beginning
immediately prior to the Change of Control and ending on the Date of
Termination, PROVIDED, HOWEVER, that if Employee become employed by a new
employer which maintains a major medical plan that either (i) does not
cover Employee and Employee's family members with respect to a pre-existing
condition which was covered under the Company's major medical plan, or (ii)
does not cover Employee and Employee's family members for a designated
waiting period, Employee's coverage under the Company's major medical plan
shall continue (but shall be limited in the event of noncoverage due to a
preexisting condition, to the preexisting condition itself) until the
earlier of the end of the applicable period of noncoverage under the new
employer's plan or the second anniversary of the Date of Termination.
3. EXCISE TAX 280G GROSS UP. In the event it shall be determined
that any payment or benefit provided under Paragraph 2(c) above together with
any other payments or benefits Employee is entitled to receive by reason of his
termination (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986 ("Code"), or any interest or penalties
are incurred by Employee with respect to such excise tax (such excise tax,
together with any such interest and penalties, hereinafter collectively referred
to as the "Excise Tax"), Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by Employee
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Employee retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payment. Payment of the Gross-Up Payment shall be subject
to the following:
(a) Subject to paragraph 3(b) below, the determination of
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment shall be made by an accounting firm (the "Accounting
Firm") selected by the Company from among the following: Arthur Andersen &
Co., KPMG Peat Marwick, Price Waterhouse Coopers, and Deloitte & Touche.
The Company will notify Employee of the identity of the Accounting Firm
within fifteen (15) business days of Employee's Termination and the
Accounting Firm shall provide detailed supporting calculations to Company
and Employee within thirty (30) business days of being requested by
Employee to make a Gross-Up Payment determination. If the Accounting Firm
determines that a Gross-Up Payment is required, the Gross-Up Payment so
determined shall be paid within five (5) days after the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by Employee, it shall so advise Employee in writing.
The Accounting Firm's determinations shall be binding upon Company and
Employee. If, following the exhaustion of Company's remedies under
paragraphs (b) and (c) below, Employee is required to pay an Excise Tax,
the Accounting Firm shall make a determination of the amount of any
underpayment in any previous Gross-Up Payment and any underpayment shall be
paid promptly by Company to Employee.
<PAGE>
(b) Employee shall notify Company in writing of any claim by the
Internal Revenue Service that, if successful, would require Company to make
a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after Employee is
informed in writing of such claim and shall apprise Company of the nature
of such claim and the date on which such claim is requested to be paid.
Employee shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which it give such notice to Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If Company notifies Employee in writing
prior to the expiration of such period that it desires to contest such
claim, Employee shall (i) give Company any information reasonably requested
by Company relating to such claim, (ii) take such action in connection with
contesting such claim as Company shall reasonably request in writing,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by Company, (iii)
cooperate with Company in good faith in order to effectively contest such
claim and (iv) permit Company to participate in any proceedings relating to
such claim; provided, however, that Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold Employee
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect hereto) imposed as a result
of such representation and payment of costs and expenses.
(c) Without limitation on the foregoing provisions of this
Section 3, Company shall control all proceedings taken in connection with
contesting a claim by the Internal Revenue Service and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option either direct Employee to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as Company shall determine; provided, however, that
if Company directs Employee to pay such claim and sue for a refund, Company
shall advance the amount of such payment to Employee on an interest-free
basis, and shall indemnify and hold Employee harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and provided, further
that if Employee is required to extend the statute of limitations to enable
Company to contest such claim, Employee may limit this extension solely to
such contested amount. Company's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder and Employee shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by Employee of an amount advanced by
Company pursuant to paragraph 3(c) above, Employee becomes entitled to
receive any refund with respect to such claim, Employee shall (subject to
Company's complying with the requirements of paragraphs 3(b) and (c))
promptly pay to Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).
<PAGE>
(e) If, after the receipt by Employee of any amount advanced by
Company under paragraph 3(c), a determination is made that Employee shall
not be entitled to any refund with respect to such claim and Company does
not notify Employee in writing of its intent to contest such denial of
refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
4. NON-SOLICITATION AND NON-COMPETITION. In consideration for the
severance benefits called for under paragraph 2(c) and Section 3 above,
Employee agrees that during the 12-month period following his Date of
Termination (the "Severance Period"), Employee:
(a) will not, without the prior written consent of Company,
alone or in association with others, solicit on behalf of Employee, or any
other person, firm, corporation or entity, any employee of Company, or any
of its operating divisions, subsidiaries or affiliates, for employment with
a person, firm, corporation or entity which competes with Company, or any
of its divisions, subsidiaries or affiliates.
(b) will not, without the prior written consent of Company,
directly or indirectly, engage or invest in, counsel or advise or be
employed by any other person, firm, corporation or entity engaged in or
conducting business which is the same as, or competing with, the business
being conducted by Company, or any of its operating divisions, subsidiaries
or affiliates, in any area or territory in which Company, or such operating
divisions, subsidiaries or affiliates, shall be conducting business during
the Severance Period. Notwithstanding the foregoing, Employee shall be
entitled to passively own not more than four and nine-tenths percent (4.9%)
of any publicly held entity engaged in any business in which Company, or
any of its operating divisions, subsidiaries or affiliates, shall be
engaged during said period.
Should Employee fail to comply with the non-solicitation and/or non-competition
restrictions contained in this Section 4, this Agreement shall immediately
terminate and Employee shall forfeit any remaining unpaid benefits under this
Agreement.
5. OTHER EMPLOYMENT. Employee shall not be required to mitigate the
amount of any payment or benefit provided for under this Agreement by seeking
other employment or otherwise nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by
Employee as a result of other employment. Payment to Employee pursuant to
this Agreement shall constitute the entire obligation of Company for
severance pay and full settlement of any claim for severance pay under law or
in equity that Employee might otherwise assert against Company or any of its
employees, officers or directors on account of Employee's termination.
6. CHANGE IN CONTROL. For purposes of this Agreement a "Change in
Control" shall have occurred if:
(a) any "Person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"))
other than Company, any corporation owned, directly or indirectly, by the
stockholders of Company in
<PAGE>
substantially the same proportions as their ownership of stock of Company,
and any trustee or other fiduciary holding securities under a Company
employee benefit plan or such proportionately owned corporation, becomes
the "beneficial owner" (as defined in rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of Company representing 20% or more
of the combined voting power of Company's then outstanding securities;
(b) during any period of not more than 24 months, individuals
who at the beginning of such period constitute the Board of Directors of
the Company, and any new director (other than a director designated by a
Person who has entered into an agreement with Company to effect a
transaction described in paragraph (a), (c), or (d) of this Section 6)
whose election by the board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directs
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(c) the stockholders of Company approve a merger or
consolidation of Company with any other corporation, other than (i) a
merger or consolidation which would result in the voting securities of
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 60% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of Company
(or similar transaction) in which no Person acquires more than 20% of the
combined voting power of Company's then outstanding securities; or
(d) the stockholders of Company approve a plan of compete
liquidation of Company or an agreement for sale or disposition by Company
of all or substantially all of its assets (or any transaction having a
similar effect).
Company may also determine, in its discretion, that a sale of a substantial
portion of its assets or one of its businesses constitutes a "Change of Control"
with respect to Employee if Employee is employed in the affected operation.
7. TERMINATIONS FOR CAUSE AND GOOD REASON. Employee will be
considered to have been terminated for "Cause" if the termination is by
reason of Employee willfully engaging in conduct demonstrably and materially
injurious to the Company, Employee being convicted of or pleading guilty or
nolo contendre to a crime involving moral turpitude or Employee's willful and
continued failure for a significant period of time to perform Employee's
duties after a demand for substantial performance has been delivered to
Employee by the Board of Directors of Company which demand specifically
identifies the manner in which the Boar believes that Employee has not
substantially performed his duties. Employee's termination shall be
considered to have been for "Good Reason" if Employee's termination is by
reason of the occurrence of any of the following events within 24 moths
following a Change in Control without Employee's express written consent:
(a) any change in Employee's authorities, duties,
responsibilities (including reporting responsibilities) or performance
criteria or objectives or a change of more than
<PAGE>
20 miles in Employee's place of employment which, in Employee's judgment,
represents an adverse change; the assignment to Employee of any duties
or work responsibilities which, in his reasonable judgment, are
inconsistent with such authorities or responsibilities; or any removal
of Employee from, or failure to reappoint or reelect him to any of such
positions, except if any such changes are because of disability,
retirement or Cause;
(b) a reduction in or failure to pay any portion of Employee's
Annual Base Salary as in effect on the date of the Change in Control or as
the same may be increased from time to time thereafter;
(c) the failure by Company to provide Employee with compensation
and benefits (including, without limitation, incentive, bonus and other
compensation plans and any vacation, medical, hospitalization, life
insurance, dental or disability benefit plan), or cash compensation in lieu
thereof, which are, in the aggregate, no less favorable than those provided
by Company to Employee immediately prior to the occurrence of the Change in
Control;
(d) any breach by Company of any provision of this Agreement;
and
(e) the failure of Company to obtain a satisfactory agreement
from any successor or assign of Company to assume and agree to perform this
Agreement, as required in Section 9 of this Agreement.
Employee's continued employment after the expiration of six months from any
action which would constitute Good Reason under paragraph 7(a) above shall
constitute a waiver of rights with respect to such action constituting Good
Reason under this Agreement.
8. NOTICE OF TERMINATION. Any purported termination of employment by
Company or by Employee shall be communicated by a written Notice of
Termination to the other party which notice is given in accordance with
Section 11 of this Agreement. No termination shall be effective without such
a Notice of Termination. The Notice of Termination shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment and shall specify the Date of
Termination. The "Date of Termination" shall mean the date specified in the
Notice of Termination provided that in no case shall the date be less than
thirty (30) days or more than sixty (60) days after the date of Notice of
Termination is given. If within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined
wither by mutual written agreement of the parties, or by the final judgment,
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been taken).
9. SUCCESSORS. Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Company to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
Company would be required to perform if no such succession or assignment had
taken place. As used in this Agreement, "Company" shall include
<PAGE>
any successor or assign to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or otherwise. This
Agreement shall inure to the benefit of and be enforceable by Employee's
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Employee should die while any
amounts would still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Employee's named beneficiary
and if there is no such named beneficiary, to Employee's estate in a lump sum.
10. FEES AND EXPENSES. Company shall pay all reasonable legal fees and
related expenses (including the reasonable costs of experts, evidence and
counsel), when and as incurred by Employee, as a result of contesting or
disputing any termination of employment of Employee following a Change in
Control whether or not such contest or dispute is resolved in Employee's
favor but only if Employee was seeking in good faith to obtain or enforce any
right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company under with Employee is or may be
entitled to receive benefits.
11. NOTICE. Any notice or other communication provided for or required
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given
by each party to the other or to such other address as either party may have
furnished to the other in writing.
12. MODIFICATIONS, WAIVERS AND SURVIVAL OF OBLIGATIONS. No provision
of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in writing and signed by
Employee and Company. A waiver of any condition or provision of this
Agreement shall be limited to the terms an conditions of such waiver and
shall not be construed as a waiver of any similar or dissimilar provisions or
conditions at any time. The obligations of Company under Sections 2 and 3
shall survive the expiration of the term of this Agreement.
13. CLAIMS PROCEDURE. Any claim for benefits under this Agreement by
Employee shall be made in writing.
14. GOVERNING LAW. The laws of Illinois shall be controlling in all
matters relating to this Agreement to the extent not preempted by ERISA.
15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. ENTIRE AGREEMENT. The Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreement, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.
17. ACTION BY COMPANY. Any action required of or permitted by Company
under this Agreement shall be by resolution of its Board of Directors, by
resolution of a duly authorized
<PAGE>
committee of its Board of Directors, or by a person or persons authorized by
resolutions of its Board of Directors or such committee.
18. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
19. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit Employee's continuing or future participation in any benefit,
bonus, incentive or other plan or program provide by Company and for which
Employee may qualify, nor shall anything herein limit or reduce such rights as
Employee may have under any other agreements with Company. Amounts which are
vested benefits or which Employee is otherwise entitled to receive under any
plan or program of Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.
McWHORTER TECHNOLOGIES, INC.
By: /s/ Jeffrey M. Nodland
----------------------
Its: President and Chief Executive Officer
/s/ Douglas B. Rahrig
---------------------
Employee
<PAGE>
Exhibit 10.43
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") is made as of February
17, 1999 by and between McWhorter Technologies, Inc., a Delaware corporation
(the "Company") and Douglas J. Graff (the "Employee").
WHEREAS, Company considers the maintenance of a motivated management
group to be essential to protecting and enhancing the best interests of Company
and its stockholders and to that end Company has determined to provide benefits
to certain management employees in the event their employment is terminated
following a Change in Control of Company; and
WHEREAS, Employee is a member of Company's management group and
Company has determined that to reinforce and encourage the continued attention
and dedication of Employee to his duties, free from distractions which could
arise in anticipation of or subsequent to a Change in Control of Company, it
should enter into this Agreement with the Employee;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Company and Employee agree as follows:
1. TERM AND NATURE OF AGREEMENT. This Agreement shall commence as of
the date hereof and shall continue in effect until February 17, 2002. As of
February 17, 2002 and each third February 17th occurring thereafter, this
Agreement shall be automatically renewed for a term of three (3) years unless
Company gives written notice to Employee at least 90 days prior to the
renewal date that this Agreement will not be extended. Notwithstanding the
foregoing, if a Change in Control (as hereinafter defined) occurs during the
last two (2) years of any term of this Agreement, the term of this Agreement
shall automatically be extended for a period of twenty-four (24) months after
the end of the month in which the Change in Control occurs. Furthermore,
Employee may terminate this Agreement at any time by giving Company 30 days'
advance written notice. This Agreement shall be construed and enforced under
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") as
an unfunded welfare benefit plan. The Agreement shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
"Committee").
2. SEVERANCE BENEFITS FOLLOWING A CHANGE IN CONTROL. If Employee's
employment with Company is terminated within twenty-four (24) months
following a Change in Control, Employee shall be entitled to the following
severance benefits (in addition to any non-severance compensation and
benefits provided for under any of Company's employee benefit plans, policies
and practices or under the terms of any other contracts, but in lieu of any
severance pay under any Company employee benefit plan, policy and practice or
under the terms of any other contract including any employment contract):
(a) If Employee's employment is terminated by reason of Employee's
disability, retirement or death of by Employee other than for Good Reason,
the Company shall pay Employee his full base salary through the Date of
Termination at the rate in effect at the time of
<PAGE>
termination (or the date of death in the case of Employee's death), plus any
bonus or incentive compensation award which, pursuant to the terms of any
compensation or incentive plan, Employee is entitled to receive but which has
not yet been paid.
(b) If Employee's employment is terminated for Cause, Company shall pay
Employee his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given plus any bonus or incentive
compensation award which, pursuant to the terms of any compensation or
incentive plan, Employee is entitled to receive but which has not yet been
paid.
(c) If Employee's employment is terminated by Company other than
for Cause or by Employee for Good Reason, then:
(i) Within five (5) days after the Date of Termination, Company
shall pay Employee his full base salary through the Date of Termination at
the greater of the rate in effect at the time the Change in Control
occurred or the rate in effect when the Notice of Termination was given
plus an amount equal to 100% of Employee's Target Annual Bonus (as defined
below).
(ii) Company shall pay Employee a gross severance benefit equal
to (i) 1 times Employee's Annual Base Salary at the greater of the rate in
effect at the time the Change in Control occurred or the rate in effect
when Notice of Termination was given plus (ii) 1 times Employee's Target
Annual Bonus. The severance benefit shall be paid in a lump sum within 30
days of Employee's Termination. Employee's "Annual Base Salary" shall mean
the yearly salary rate established from time to time by Company as
Employee's regular salary for the next succeeding twelve (12) month period,
payable pursuant to the Company's payroll on a periodic basis and
Employee's "Target Annual Bonus" shall mean the maximum available normal
bonus Employee could earn under Company's bonus program for the year in
which his Date of Termination occurs.
(iii) Any outstanding options to purchase stock of Company held by
Employee shall immediately vest and become exercisable in full in
accordance with their terms and the provisions of the Company's 1994 Stock
Incentive Plan and 1996 Incentive Stock Plan and any other stock option
plan or arrangement of the Company.
(iv) The restrictions on any shares of restricted stock held by
Employee which have not yet terminated will terminate immediately.
(v) Company shall pay the costs of a reasonable outplacement
service until Employee is employed on a full time basis.
(vi) For all purposes of Employee's participation in the
Company's Deferred Compensation Plan (the "Plan"): (a) the definition of
Change in Control contained in this Agreement shall govern and be deemed to
be the definition of "Change in Control" applicable to the Plan,
notwithstanding any provisions of the Plan, including Section 1.17, to the
contrary, and (b) the provisions of Section 3.9 (d) of the Plan and any
similar successor provisions shall not be applicable.
<PAGE>
(vii) Until the earlier of the second anniversary of the
Termination or the date on which Employee becomes employed by a new
employer, Company shall, at its expense, provide Employee and Employee's
family members with medical, dental, life insurance, disability and
accidental death and dismemberment benefits at the highest level provided
to Employee and Employee's family members during the period beginning
immediately prior to the Change of Control and ending on the Date of
Termination, PROVIDED, HOWEVER, that if Employee become employed by a new
employer which maintains a major medical plan that either (i) does not
cover Employee and Employee's family members with respect to a pre-existing
condition which was covered under the Company's major medical plan, or (ii)
does not cover Employee and Employee's family members for a designated
waiting period, Employee's coverage under the Company's major medical plan
shall continue (but shall be limited in the event of noncoverage due to a
preexisting condition, to the preexisting condition itself) until the
earlier of the end of the applicable period of noncoverage under the new
employer's plan or the second anniversary of the Date of Termination.
3. EXCISE TAX 280G GROSS UP. In the event it shall be determined that
any payment or benefit provided under Paragraph 2(c) above together with any
other payments or benefits Employee is entitled to receive by reason of his
termination (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986 ("Code"), or any interest
or penalties are incurred by Employee with respect to such excise tax (such
excise tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Employee shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, Employee retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment.
Payment of the Gross-Up Payment shall be subject to the following:
(a) Subject to paragraph 3(b) below, the determination of
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment shall be made by an accounting firm (the "Accounting
Firm") selected by the Company from among the following: Arthur Andersen &
Co., KPMG Peat Marwick, Price Waterhouse Coopers, and Deloitte & Touche.
The Company will notify Employee of the identity of the Accounting Firm
within fifteen (15) business days of Employee's Termination and the
Accounting Firm shall provide detailed supporting calculations to Company
and Employee within thirty (30) business days of being requested by
Employee to make a Gross-Up Payment determination. If the Accounting Firm
determines that a Gross-Up Payment is required, the Gross-Up Payment so
determined shall be paid within five (5) days after the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by Employee, it shall so advise Employee in writing.
The Accounting Firm's determinations shall be binding upon Company and
Employee. If, following the exhaustion of Company's remedies under
paragraphs (b) and (c) below, Employee is required to pay an Excise Tax,
the Accounting Firm shall make a determination of the amount of any
underpayment in any previous Gross-Up Payment and any underpayment shall be
paid promptly by Company to Employee.
<PAGE>
(b) Employee shall notify Company in writing of any claim by the
Internal Revenue Service that, if successful, would require Company to make
a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after Employee is
informed in writing of such claim and shall apprise Company of the nature
of such claim and the date on which such claim is requested to be paid.
Employee shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which it give such notice to Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If Company notifies Employee in writing
prior to the expiration of such period that it desires to contest such
claim, Employee shall (i) give Company any information reasonably requested
by Company relating to such claim, (ii) take such action in connection with
contesting such claim as Company shall reasonably request in writing,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by Company, (iii)
cooperate with Company in good faith in order to effectively contest such
claim and (iv) permit Company to participate in any proceedings relating to
such claim; provided, however, that Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold Employee
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect hereto) imposed as a result
of such representation and payment of costs and expenses.
(c) Without limitation on the foregoing provisions of this
Section 3, Company shall control all proceedings taken in connection with
contesting a claim by the Internal Revenue Service and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option either direct Employee to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as Company shall determine; provided, however, that
if Company directs Employee to pay such claim and sue for a refund, Company
shall advance the amount of such payment to Employee on an interest-free
basis, and shall indemnify and hold Employee harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and provided, further
that if Employee is required to extend the statute of limitations to enable
Company to contest such claim, Employee may limit this extension solely to
such contested amount. Company's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder and Employee shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by Employee of an amount advanced by
Company pursuant to paragraph 3(c) above, Employee becomes entitled to
receive any refund with respect to such claim, Employee shall (subject to
Company's complying with the requirements of paragraphs 3(b) and (c))
promptly pay to Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).
<PAGE>
(e) If, after the receipt by Employee of any amount advanced by
Company under paragraph 3(c), a determination is made that Employee shall
not be entitled to any refund with respect to such claim and Company does
not notify Employee in writing of its intent to contest such denial of
refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
4. NON-SOLICITATION AND NON-COMPETITION. In consideration for the
severance benefits called for under paragraph 2(c) and Section 3 above,
Employee agrees that during the 12-month period following his Date of
Termination (the "Severance Period"), Employee:
(a) will not, without the prior written consent of Company,
alone or in association with others, solicit on behalf of Employee, or any
other person, firm, corporation or entity, any employee of Company, or any
of its operating divisions, subsidiaries or affiliates, for employment with
a person, firm, corporation or entity which competes with Company, or any
of its divisions, subsidiaries or affiliates.
(b) will not, without the prior written consent of Company,
directly or indirectly, engage or invest in, counsel or advise or be
employed by any other person, firm, corporation or entity engaged in or
conducting business which is the same as, or competing with, the business
being conducted by Company, or any of its operating divisions, subsidiaries
or affiliates, in any area or territory in which Company, or such operating
divisions, subsidiaries or affiliates, shall be conducting business during
the Severance Period. Notwithstanding the foregoing, Employee shall be
entitled to passively own not more than four and nine-tenths percent (4.9%)
of any publicly held entity engaged in any business in which Company, or
any of its operating divisions, subsidiaries or affiliates, shall be
engaged during said period.
Should Employee fail to comply with the non-solicitation and/or non-competition
restrictions contained in this Section 4, this Agreement shall immediately
terminate and Employee shall forfeit any remaining unpaid benefits under this
Agreement.
5. OTHER EMPLOYMENT. Employee shall not be required to mitigate the
amount of any payment or benefit provided for under this Agreement by seeking
other employment or otherwise nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by
Employee as a result of other employment. Payment to Employee pursuant to
this Agreement shall constitute the entire obligation of Company for
severance pay and full settlement of any claim for severance pay under law or
in equity that Employee might otherwise assert against Company or any of its
employees, officers or directors on account of Employee's termination.
6. CHANGE IN CONTROL. For purposes of this Agreement a "Change in
Control" shall have occurred if:
(a) any "Person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"))
other than Company, any corporation owned, directly or indirectly, by the
stockholders of Company in
<PAGE>
substantially the same proportions as their ownership of stock of Company,
and any trustee or other fiduciary holding securities under a Company
employee benefit plan or such proportionately owned corporation, becomes
the "beneficial owner" (as defined in rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of Company representing 20% or more
of the combined voting power of Company's then outstanding securities;
(b) during any period of not more than 24 months, individuals
who at the beginning of such period constitute the Board of Directors of
the Company, and any new director (other than a director designated by a
Person who has entered into an agreement with Company to effect a
transaction described in paragraph (a), (c), or (d) of this Section 6)
whose election by the board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directs
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(c) the stockholders of Company approve a merger or
consolidation of Company with any other corporation, other than (i) a
merger or consolidation which would result in the voting securities of
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 60% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of Company
(or similar transaction) in which no Person acquires more than 20% of the
combined voting power of Company's then outstanding securities; or
(d) the stockholders of Company approve a plan of compete
liquidation of Company or an agreement for sale or disposition by Company
of all or substantially all of its assets (or any transaction having a
similar effect).
Company may also determine, in its discretion, that a sale of a substantial
portion of its assets or one of its businesses constitutes a "Change of Control"
with respect to Employee if Employee is employed in the affected operation.
7. TERMINATIONS FOR CAUSE AND GOOD REASON. Employee will be
considered to have been terminated for "Cause" if the termination is by
reason of Employee willfully engaging in conduct demonstrably and materially
injurious to the Company, Employee being convicted of or pleading guilty or
nolo contendre to a crime involving moral turpitude or Employee's willful and
continued failure for a significant period of time to perform Employee's
duties after a demand for substantial performance has been delivered to
Employee by the Board of Directors of Company which demand specifically
identifies the manner in which the Boar believes that Employee has not
substantially performed his duties. Employee's termination shall be
considered to have been for "Good Reason" if Employee's termination is by
reason of the occurrence of any of the following events within 24 moths
following a Change in Control without Employee's express written consent:
(a) any change in Employee's authorities, duties,
responsibilities (including reporting responsibilities) or performance
criteria or objectives or a change of more than
<PAGE>
20 miles in Employee's place of employment which, in Employee's judgment,
represents an adverse change; the assignment to Employee of any duties
or work responsibilities which, in his reasonable judgment, are
inconsistent with such authorities or responsibilities; or any removal
of Employee from, or failure to reappoint or reelect him to any of such
positions, except if any such changes are because of disability,
retirement or Cause;
(b) a reduction in or failure to pay any portion of Employee's
Annual Base Salary as in effect on the date of the Change in Control or as
the same may be increased from time to time thereafter;
(c) the failure by Company to provide Employee with compensation
and benefits (including, without limitation, incentive, bonus and other
compensation plans and any vacation, medical, hospitalization, life
insurance, dental or disability benefit plan), or cash compensation in lieu
thereof, which are, in the aggregate, no less favorable than those provided
by Company to Employee immediately prior to the occurrence of the Change in
Control;
(d) any breach by Company of any provision of this Agreement;
and
(e) the failure of Company to obtain a satisfactory agreement
from any successor or assign of Company to assume and agree to perform this
Agreement, as required in Section 9 of this Agreement.
Employee's continued employment after the expiration of six months from any
action which would constitute Good Reason under paragraph 7(a) above shall
constitute a waiver of rights with respect to such action constituting Good
Reason under this Agreement.
8. NOTICE OF TERMINATION. Any purported termination of employment by
Company or by Employee shall be communicated by a written Notice of
Termination to the other party which notice is given in accordance with
Section 11 of this Agreement. No termination shall be effective without such
a Notice of Termination. The Notice of Termination shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment and shall specify the Date of
Termination. The "Date of Termination" shall mean the date specified in the
Notice of Termination provided that in no case shall the date be less than
thirty (30) days or more than sixty (60) days after the date of Notice of
Termination is given. If within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined
wither by mutual written agreement of the parties, or by the final judgment,
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been taken).
9. SUCCESSORS. Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Company to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
Company would be required to perform if no such succession or assignment had
taken place. As used in this Agreement, "Company" shall include
<PAGE>
any successor or assign to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or otherwise. This
Agreement shall inure to the benefit of and be enforceable by Employee's
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Employee should die while any
amounts would still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Employee's named beneficiary
and if there is no such named beneficiary, to Employee's estate in a lump sum.
10. FEES AND EXPENSES. Company shall pay all reasonable legal fees and
related expenses (including the reasonable costs of experts, evidence and
counsel), when and as incurred by Employee, as a result of contesting or
disputing any termination of employment of Employee following a Change in
Control whether or not such contest or dispute is resolved in Employee's
favor but only if Employee was seeking in good faith to obtain or enforce any
right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company under with Employee is or may be
entitled to receive benefits.
11. NOTICE. Any notice or other communication provided for or required
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given
by each party to the other or to such other address as either party may have
furnished to the other in writing.
12. MODIFICATIONS, WAIVERS AND SURVIVAL OF OBLIGATIONS. No provision
of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in writing and signed by
Employee and Company. A waiver of any condition or provision of this
Agreement shall be limited to the terms an conditions of such waiver and
shall not be construed as a waiver of any similar or dissimilar provisions or
conditions at any time. The obligations of Company under Sections 2 and 3
shall survive the expiration of the term of this Agreement.
13. CLAIMS PROCEDURE. Any claim for benefits under this Agreement
by Employee shall be made in writing.
14. GOVERNING LAW. The laws of Illinois shall be controlling in
all matters relating to this Agreement to the extent not preempted by ERISA.
15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. ENTIRE AGREEMENT. The Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreement,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
17. ACTION BY COMPANY. Any action required of or permitted by
Company under this Agreement shall be by resolution of its Board of Directors,
by resolution of a duly authorized
<PAGE>
committee of its Board of Directors, or by a person or persons authorized by
resolutions of its Board of Directors or such committee.
18. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
19. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit Employee's continuing or future participation in any benefit, bonus,
incentive or other plan or program provide by Company and for which Employee
may qualify, nor shall anything herein limit or reduce such rights as
Employee may have under any other agreements with Company. Amounts which are
vested benefits or which Employee is otherwise entitled to receive under any
plan or program of Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.
McWHORTER TECHNOLOGIES, INC.
By: /s/ Jeffrey M. Nodland
----------------------
Its: President and Chief Executive Officer
/s/ Douglas J. Graff
----------------------
Employee
<PAGE>
Exhibit 10.44
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") is made as of February
17, 1999 by and between McWhorter Technologies, Inc., a Delaware corporation
(the "Company") and Patrick T. Heffernan (the "Employee").
WHEREAS, Company considers the maintenance of a motivated management
group to be essential to protecting and enhancing the best interests of Company
and its stockholders and to that end Company has determined to provide benefits
to certain management employees in the event their employment is terminated
following a Change in Control of Company; and
WHEREAS, Employee is a member of Company's management group and
Company has determined that to reinforce and encourage the continued attention
and dedication of Employee to his duties, free from distractions which could
arise in anticipation of or subsequent to a Change in Control of Company, it
should enter into this Agreement with the Employee;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Company and Employee agree as follows:
1. TERM AND NATURE OF AGREEMENT. This Agreement shall commence as of
the date hereof and shall continue in effect until February 17, 2002. As of
February 17, 2002 and each third February 17th occurring thereafter, this
Agreement shall be automatically renewed for a term of three (3) years unless
Company gives written notice to Employee at least 90 days prior to the
renewal date that this Agreement will not be extended. Notwithstanding the
foregoing, if a Change in Control (as hereinafter defined) occurs during the
last two (2) years of any term of this Agreement, the term of this Agreement
shall automatically be extended for a period of twenty-four (24) months after
the end of the month in which the Change in Control occurs. Furthermore,
Employee may terminate this Agreement at any time by giving Company 30 days'
advance written notice. This Agreement shall be construed and enforced under
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") as
an unfunded welfare benefit plan. The Agreement shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
"Committee").
2. SEVERANCE BENEFITS FOLLOWING A CHANGE IN CONTROL. If Employee's
employment with Company is terminated within twenty-four (24) months
following a Change in Control, Employee shall be entitled to the following
severance benefits (in addition to any non-severance compensation and
benefits provided for under any of Company's employee benefit plans, policies
and practices or under the terms of any other contracts, but in lieu of any
severance pay under any Company employee benefit plan, policy and practice or
under the terms of any other contract including any employment contract):
(a) If Employee's employment is terminated by reason of Employee's
disability, retirement or death of by Employee other than for Good Reason, the
Company shall pay Employee his full base salary through the Date of Termination
at the rate in effect at the time of
<PAGE>
termination (or the date of death in the case of Employee's death), plus any
bonus or incentive compensation award which, pursuant to the terms of any
compensation or incentive plan, Employee is entitled to receive but which has
not yet been paid.
(b) If Employee's employment is terminated for Cause, Company shall
pay Employee his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given plus any bonus or incentive
compensation award which, pursuant to the terms of any compensation or incentive
plan, Employee is entitled to receive but which has not yet been paid.
(c) If Employee's employment is terminated by Company other than
for Cause or by Employee for Good Reason, then:
(i) Within five (5) days after the Date of Termination, Company
shall pay Employee his full base salary through the Date of Termination at
the greater of the rate in effect at the time the Change in Control
occurred or the rate in effect when the Notice of Termination was given
plus an amount equal to 100% of Employee's Target Annual Bonus (as defined
below).
(ii) Company shall pay Employee a gross severance benefit equal
to (i) 1 times Employee's Annual Base Salary at the greater of the rate in
effect at the time the Change in Control occurred or the rate in effect
when Notice of Termination was given plus (ii) 1 times Employee's Target
Annual Bonus. The severance benefit shall be paid in a lump sum within 30
days of Employee's Termination. Employee's "Annual Base Salary" shall mean
the yearly salary rate established from time to time by Company as
Employee's regular salary for the next succeeding twelve (12) month period,
payable pursuant to the Company's payroll on a periodic basis and
Employee's "Target Annual Bonus" shall mean the maximum available normal
bonus Employee could earn under Company's bonus program for the year in
which his Date of Termination occurs.
(iii) Any outstanding options to purchase stock of Company held by
Employee shall immediately vest and become exercisable in full in
accordance with their terms and the provisions of the Company's 1994 Stock
Incentive Plan and 1996 Incentive Stock Plan and any other stock option
plan or arrangement of the Company.
(iv) The restrictions on any shares of restricted stock held by
Employee which have not yet terminated will terminate immediately.
(v) Company shall pay the costs of a reasonable outplacement
service until Employee is employed on a full time basis.
(vi) For all purposes of Employee's participation in the
Company's Deferred Compensation Plan (the "Plan"): (a) the definition of
Change in Control contained in this Agreement shall govern and be deemed to
be the definition of "Change in Control" applicable to the Plan,
notwithstanding any provisions of the Plan, including Section 1.17, to the
contrary, and (b) the provisions of Section 3.9 (d) of the Plan and any
similar successor provisions shall not be applicable.
<PAGE>
(vii) Until the earlier of the second anniversary of the
Termination or the date on which Employee becomes employed by a new
employer, Company shall, at its expense, provide Employee and Employee's
family members with medical, dental, life insurance, disability and
accidental death and dismemberment benefits at the highest level provided
to Employee and Employee's family members during the period beginning
immediately prior to the Change of Control and ending on the Date of
Termination, PROVIDED, HOWEVER, that if Employee become employed by a new
employer which maintains a major medical plan that either (i) does not
cover Employee and Employee's family members with respect to a pre-existing
condition which was covered under the Company's major medical plan, or (ii)
does not cover Employee and Employee's family members for a designated
waiting period, Employee's coverage under the Company's major medical plan
shall continue (but shall be limited in the event of noncoverage due to a
preexisting condition, to the preexisting condition itself) until the
earlier of the end of the applicable period of noncoverage under the new
employer's plan or the second anniversary of the Date of Termination.
3. EXCISE TAX 280G GROSS UP. In the event it shall be determined
that any payment or benefit provided under Paragraph 2(c) above together with
any other payments or benefits Employee is entitled to receive by reason of his
termination (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986 ("Code"), or any interest or penalties
are incurred by Employee with respect to such excise tax (such excise tax,
together with any such interest and penalties, hereinafter collectively referred
to as the "Excise Tax"), Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by Employee
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Employee retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payment. Payment of the Gross-Up Payment shall be subject
to the following:
(a) Subject to paragraph 3(b) below, the determination of
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment shall be made by an accounting firm (the "Accounting
Firm") selected by the Company from among the following: Arthur Andersen &
Co., KPMG Peat Marwick, Price Waterhouse Coopers, and Deloitte & Touche.
The Company will notify Employee of the identity of the Accounting Firm
within fifteen (15) business days of Employee's Termination and the
Accounting Firm shall provide detailed supporting calculations to Company
and Employee within thirty (30) business days of being requested by
Employee to make a Gross-Up Payment determination. If the Accounting Firm
determines that a Gross-Up Payment is required, the Gross-Up Payment so
determined shall be paid within five (5) days after the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by Employee, it shall so advise Employee in writing.
The Accounting Firm's determinations shall be binding upon Company and
Employee. If, following the exhaustion of Company's remedies under
paragraphs (b) and (c) below, Employee is required to pay an Excise Tax,
the Accounting Firm shall make a determination of the amount of any
underpayment in any previous Gross-Up Payment and any underpayment shall be
paid promptly by Company to Employee.
<PAGE>
(b) Employee shall notify Company in writing of any claim by the
Internal Revenue Service that, if successful, would require Company to make
a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after Employee is
informed in writing of such claim and shall apprise Company of the nature
of such claim and the date on which such claim is requested to be paid.
Employee shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which it give such notice to Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If Company notifies Employee in writing
prior to the expiration of such period that it desires to contest such
claim, Employee shall (i) give Company any information reasonably requested
by Company relating to such claim, (ii) take such action in connection with
contesting such claim as Company shall reasonably request in writing,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by Company, (iii)
cooperate with Company in good faith in order to effectively contest such
claim and (iv) permit Company to participate in any proceedings relating to
such claim; provided, however, that Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold Employee
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect hereto) imposed as a result
of such representation and payment of costs and expenses.
(c) Without limitation on the foregoing provisions of this
Section 3, Company shall control all proceedings taken in connection with
contesting a claim by the Internal Revenue Service and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option either direct Employee to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as Company shall determine; provided, however, that
if Company directs Employee to pay such claim and sue for a refund, Company
shall advance the amount of such payment to Employee on an interest-free
basis, and shall indemnify and hold Employee harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and provided, further
that if Employee is required to extend the statute of limitations to enable
Company to contest such claim, Employee may limit this extension solely to
such contested amount. Company's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder and Employee shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by Employee of an amount advanced by
Company pursuant to paragraph 3(c) above, Employee becomes entitled to
receive any refund with respect to such claim, Employee shall (subject to
Company's complying with the requirements of paragraphs 3(b) and (c))
promptly pay to Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).
<PAGE>
(e) If, after the receipt by Employee of any amount advanced by
Company under paragraph 3(c), a determination is made that Employee shall
not be entitled to any refund with respect to such claim and Company does
not notify Employee in writing of its intent to contest such denial of
refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
4. NON-SOLICITATION AND NON-COMPETITION. In consideration for the
severance benefits called for under paragraph 2(c) and Section 3 above, Employee
agrees that during the 12-month period following his Date of Termination (the
"Severance Period"), Employee:
(a) will not, without the prior written consent of Company,
alone or in association with others, solicit on behalf of Employee, or any
other person, firm, corporation or entity, any employee of Company, or any
of its operating divisions, subsidiaries or affiliates, for employment with
a person, firm, corporation or entity which competes with Company, or any
of its divisions, subsidiaries or affiliates.
(b) will not, without the prior written consent of Company,
directly or indirectly, engage or invest in, counsel or advise or be
employed by any other person, firm, corporation or entity engaged in or
conducting business which is the same as, or competing with, the business
being conducted by Company, or any of its operating divisions, subsidiaries
or affiliates, in any area or territory in which Company, or such operating
divisions, subsidiaries or affiliates, shall be conducting business during
the Severance Period. Notwithstanding the foregoing, Employee shall be
entitled to passively own not more than four and nine-tenths percent (4.9%)
of any publicly held entity engaged in any business in which Company, or
any of its operating divisions, subsidiaries or affiliates, shall be
engaged during said period.
Should Employee fail to comply with the non-solicitation and/or non-competition
restrictions contained in this Section 4, this Agreement shall immediately
terminate and Employee shall forfeit any remaining unpaid benefits under this
Agreement.
5. OTHER EMPLOYMENT. Employee shall not be required to mitigate
the amount of any payment or benefit provided for under this Agreement by
seeking other employment or otherwise nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation earned by
Employee as a result of other employment. Payment to Employee pursuant to this
Agreement shall constitute the entire obligation of Company for severance pay
and full settlement of any claim for severance pay under law or in equity that
Employee might otherwise assert against Company or any of its employees,
officers or directors on account of Employee's termination.
6. CHANGE IN CONTROL. For purposes of this Agreement a "Change in
Control" shall have occurred if:
(a) any "Person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"))
other than Company, any corporation owned, directly or indirectly, by the
stockholders of Company in
<PAGE>
substantially the same proportions as their ownership of stock of Company,
and any trustee or other fiduciary holding securities under a Company
employee benefit plan or such proportionately owned corporation, becomes
the "beneficial owner" (as defined in rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of Company representing 20% or more
of the combined voting power of Company's then outstanding securities;
(b) during any period of not more than 24 months, individuals
who at the beginning of such period constitute the Board of Directors of
the Company, and any new director (other than a director designated by a
Person who has entered into an agreement with Company to effect a
transaction described in paragraph (a), (c), or (d) of this Section 6)
whose election by the board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directs
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(c) the stockholders of Company approve a merger or
consolidation of Company with any other corporation, other than (i) a
merger or consolidation which would result in the voting securities of
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 60% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of Company
(or similar transaction) in which no Person acquires more than 20% of the
combined voting power of Company's then outstanding securities; or
(d) the stockholders of Company approve a plan of compete
liquidation of Company or an agreement for sale or disposition by Company
of all or substantially all of its assets (or any transaction having a
similar effect).
Company may also determine, in its discretion, that a sale of a substantial
portion of its assets or one of its businesses constitutes a "Change of Control"
with respect to Employee if Employee is employed in the affected operation.
7. TERMINATIONS FOR CAUSE AND GOOD REASON. Employee will be
considered to have been terminated for "Cause" if the termination is by
reason of Employee willfully engaging in conduct demonstrably and materially
injurious to the Company, Employee being convicted of or pleading guilty or
nolo contendre to a crime involving moral turpitude or Employee's willful and
continued failure for a significant period of time to perform Employee's
duties after a demand for substantial performance has been delivered to
Employee by the Board of Directors of Company which demand specifically
identifies the manner in which the Boar believes that Employee has not
substantially performed his duties. Employee's termination shall be
considered to have been for "Good Reason" if Employee's termination is by
reason of the occurrence of any of the following events within 24 moths
following a Change in Control without Employee's express written consent:
(a) any change in Employee's authorities, duties,
responsibilities (including reporting responsibilities) or performance
criteria or objectives or a change of more than
<PAGE>
20 miles in Employee's place of employment which, in Employee's judgment,
represents an adverse change; the assignment to Employee of any duties
or work responsibilities which, in his reasonable judgment, are
inconsistent with such authorities or responsibilities; or any removal
of Employee from, or failure to reappoint or reelect him to any of such
positions, except if any such changes are because of disability,
retirement or Cause;
(b) a reduction in or failure to pay any portion of Employee's
Annual Base Salary as in effect on the date of the Change in Control or as
the same may be increased from time to time thereafter;
(c) the failure by Company to provide Employee with compensation
and benefits (including, without limitation, incentive, bonus and other
compensation plans and any vacation, medical, hospitalization, life
insurance, dental or disability benefit plan), or cash compensation in lieu
thereof, which are, in the aggregate, no less favorable than those provided
by Company to Employee immediately prior to the occurrence of the Change in
Control;
(d) any breach by Company of any provision of this Agreement;
and
(e) the failure of Company to obtain a satisfactory agreement
from any successor or assign of Company to assume and agree to perform this
Agreement, as required in Section 9 of this Agreement.
Employee's continued employment after the expiration of six months from any
action which would constitute Good Reason under paragraph 7(a) above shall
constitute a waiver of rights with respect to such action constituting Good
Reason under this Agreement.
8. NOTICE OF TERMINATION. Any purported termination of employment by
Company or by Employee shall be communicated by a written Notice of
Termination to the other party which notice is given in accordance with
Section 11 of this Agreement. No termination shall be effective without such
a Notice of Termination. The Notice of Termination shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment and shall specify the Date of
Termination. The "Date of Termination" shall mean the date specified in the
Notice of Termination provided that in no case shall the date be less than
thirty (30) days or more than sixty (60) days after the date of Notice of
Termination is given. If within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined
wither by mutual written agreement of the parties, or by the final judgment,
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been taken).
9. SUCCESSORS. Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Company to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
Company would be required to perform if no such succession or assignment had
taken place. As used in this Agreement, "Company" shall include
<PAGE>
any successor or assign to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or otherwise. This
Agreement shall inure to the benefit of and be enforceable by Employee's
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Employee should die while any
amounts would still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Employee's named beneficiary
and if there is no such named beneficiary, to Employee's estate in a lump sum.
10. FEES AND EXPENSES. Company shall pay all reasonable legal fees
and related expenses (including the reasonable costs of experts, evidence and
counsel), when and as incurred by Employee, as a result of contesting or
disputing any termination of employment of Employee following a Change in
Control whether or not such contest or dispute is resolved in Employee's favor
but only if Employee was seeking in good faith to obtain or enforce any right or
benefit provided by this Agreement or by any other plan or arrangement
maintained by the Company under with Employee is or may be entitled to receive
benefits.
11. NOTICE. Any notice or other communication provided for or required
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given
by each party to the other or to such other address as either party may have
furnished to the other in writing.
12. MODIFICATIONS, WAIVERS AND SURVIVAL OF OBLIGATIONS. No provision
of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in writing and signed by
Employee and Company. A waiver of any condition or provision of this
Agreement shall be limited to the terms an conditions of such waiver and
shall not be construed as a waiver of any similar or dissimilar provisions or
conditions at any time. The obligations of Company under Sections 2 and 3
shall survive the expiration of the term of this Agreement.
13. CLAIMS PROCEDURE. Any claim for benefits under this Agreement by
Employee shall be made in writing.
14. GOVERNING LAW. The laws of Illinois shall be controlling in all
matters relating to this Agreement to the extent not preempted by ERISA.
15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. ENTIRE AGREEMENT. The Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreement, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.
17. ACTION BY COMPANY. Any action required of or permitted by Company
under this Agreement shall be by resolution of its Board of Directors, by
resolution of a duly authorized
<PAGE>
committee of its Board of Directors, or by a person or persons authorized by
resolutions of its Board of Directors or such committee.
18. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
19. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit Employee's continuing or future participation in any benefit, bonus,
incentive or other plan or program provide by Company and for which Employee
may qualify, nor shall anything herein limit or reduce such rights as
Employee may have under any other agreements with Company. Amounts which are
vested benefits or which Employee is otherwise entitled to receive under any
plan or program of Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.
McWHORTER TECHNOLOGIES, INC.
By: /s/ Jeffrey M. Nodland
----------------------
Its: President and Chief Executive Officer
/s/ Patrick T. Heffernan
----------------------
Employee
<PAGE>
Exhibit 10.45
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") is made as of February
17, 1999 by and between McWhorter Technologies, Inc., a Delaware corporation
(the "Company") and Donald J. Crawford (the "Employee").
WHEREAS, Company considers the maintenance of a motivated management
group to be essential to protecting and enhancing the best interests of Company
and its stockholders and to that end Company has determined to provide benefits
to certain management employees in the event their employment is terminated
following a Change in Control of Company; and
WHEREAS, Employee is a member of Company's management group and
Company has determined that to reinforce and encourage the continued attention
and dedication of Employee to his duties, free from distractions which could
arise in anticipation of or subsequent to a Change in Control of Company, it
should enter into this Agreement with the Employee;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Company and Employee agree as follows:
1. TERM AND NATURE OF AGREEMENT. This Agreement shall commence as of
the date hereof and shall continue in effect until February 17, 2002. As of
February 17, 2002 and each third February 17th occurring thereafter, this
Agreement shall be automatically renewed for a term of three (3) years unless
Company gives written notice to Employee at least 90 days prior to the
renewal date that this Agreement will not be extended. Notwithstanding the
foregoing, if a Change in Control (as hereinafter defined) occurs during the
last two (2) years of any term of this Agreement, the term of this Agreement
shall automatically be extended for a period of twenty-four (24) months after
the end of the month in which the Change in Control occurs. Furthermore,
Employee may terminate this Agreement at any time by giving Company 30 days'
advance written notice. This Agreement shall be construed and enforced under
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") as
an unfunded welfare benefit plan. The Agreement shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
"Committee").
2. SEVERANCE BENEFITS FOLLOWING A CHANGE IN CONTROL. If Employee's
employment with Company is terminated within twenty-four (24) months
following a Change in Control, Employee shall be entitled to the following
severance benefits (in addition to any non-severance compensation and
benefits provided for under any of Company's employee benefit plans, policies
and practices or under the terms of any other contracts, but in lieu of any
severance pay under any Company employee benefit plan, policy and practice or
under the terms of any other contract including any employment contract):
<PAGE>
(a) If Employee's employment is terminated by reason of Employee's
disability, retirement or death of by Employee other than for Good Reason,
the Company shall pay Employee his full base salary through the Date of
Termination at the rate in effect at the time of termination (or the date of
death in the case of Employee's death), plus any bonus or incentive
compensation award which, pursuant to the terms of any compensation or
incentive plan, Employee is entitled to receive but which has not yet been
paid.
(b) If Employee's employment is terminated for Cause, Company shall pay
Employee his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given plus any bonus or incentive
compensation award which, pursuant to the terms of any compensation or
incentive plan, Employee is entitled to receive but which has not yet been
paid.
(c) If Employee's employment is terminated by Company other than for
Cause or by Employee for Good Reason, then:
(i) Within five (5) days after the Date of Termination, Company
shall pay Employee his full base salary through the Date of Termination at
the greater of the rate in effect at the time the Change in Control
occurred or the rate in effect when the Notice of Termination was given
plus an amount equal to 100% of Employee's Target Annual Bonus (as defined
below).
(ii) Company shall pay Employee a gross severance benefit equal
to (i) 1 times Employee's Annual Base Salary at the greater of the rate in
effect at the time the Change in Control occurred or the rate in effect
when Notice of Termination was given plus (ii) 1 times Employee's Target
Annual Bonus. The severance benefit shall be paid in a lump sum within 30
days of Employee's Termination. Employee's "Annual Base Salary" shall mean
the yearly salary rate established from time to time by Company as
Employee's regular salary for the next succeeding twelve (12) month period,
payable pursuant to the Company's payroll on a periodic basis and
Employee's "Target Annual Bonus" shall mean the maximum available normal
bonus Employee could earn under Company's bonus program for the year in
which his Date of Termination occurs.
(iii) Any outstanding options to purchase stock of Company held by
Employee shall immediately vest and become exercisable in full in
accordance with their terms and the provisions of the Company's 1994 Stock
Incentive Plan and 1996 Incentive Stock Plan and any other stock option
plan or arrangement of the Company.
(iv) The restrictions on any shares of restricted stock held by
Employee which have not yet terminated will terminate immediately.
(v) Company shall pay the costs of a reasonable outplacement
service until Employee is employed on a full time basis.
<PAGE>
(vi) For all purposes of Employee's participation in the
Company's Deferred Compensation Plan (the "Plan"): (a) the definition of
Change in Control contained in this Agreement shall govern and be deemed to
be the definition of "Change in Control" applicable to the Plan,
notwithstanding any provisions of the Plan, including Section 1.17, to the
contrary, and (b) the provisions of Section 3.9 (d) of the Plan and any
similar successor provisions shall not be applicable.
(vii) Until the earlier of the second anniversary of the
Termination or the date on which Employee becomes employed by a new
employer, Company shall, at its expense, provide Employee and Employee's
family members with medical, dental, life insurance, disability and
accidental death and dismemberment benefits at the highest level provided
to Employee and Employee's family members during the period beginning
immediately prior to the Change of Control and ending on the Date of
Termination, PROVIDED, HOWEVER, that if Employee become employed by a new
employer which maintains a major medical plan that either (i) does not
cover Employee and Employee's family members with respect to a pre-existing
condition which was covered under the Company's major medical plan, or (ii)
does not cover Employee and Employee's family members for a designated
waiting period, Employee's coverage under the Company's major medical plan
shall continue (but shall be limited in the event of noncoverage due to a
preexisting condition, to the preexisting condition itself) until the
earlier of the end of the applicable period of noncoverage under the new
employer's plan or the second anniversary of the Date of Termination.
3. EXCISE TAX 280G GROSS UP. In the event it shall be determined that
any payment or benefit provided under Paragraph 2(c) above together with any
other payments or benefits Employee is entitled to receive by reason of his
termination (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986 ("Code"), or any interest
or penalties are incurred by Employee with respect to such excise tax (such
excise tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Employee shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, Employee retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment.
Payment of the Gross-Up Payment shall be subject to the following:
(a) Subject to paragraph 3(b) below, the determination of
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment shall be made by an accounting firm (the "Accounting
Firm") selected by the Company from among the following: Arthur Andersen &
Co., KPMG Peat Marwick, Price Waterhouse Coopers, and Deloitte & Touche.
The Company will notify Employee of the identity of the Accounting Firm
within fifteen (15) business days of Employee's Termination and the
Accounting Firm shall provide detailed supporting calculations to Company
and Employee within thirty (30) business days of being requested by
Employee to make a Gross-Up Payment determination. If the Accounting Firm
determines that a Gross-Up
<PAGE>
Payment is required, the Gross-Up Payment so determined shall be paid
within five (5) days after the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is
payable by Employee, it shall so advise Employee in writing. The
Accounting Firm's determinations shall be binding upon Company and
Employee. If, following the exhaustion of Company's remedies under
paragraphs (b) and (c) below, Employee is required to pay an Excise Tax,
the Accounting Firm shall make a determination of the amount of any
underpayment in any previous Gross-Up Payment and any underpayment shall be
paid promptly by Company to Employee.
(b) Employee shall notify Company in writing of any claim by the
Internal Revenue Service that, if successful, would require Company to make
a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after Employee is
informed in writing of such claim and shall apprise Company of the nature
of such claim and the date on which such claim is requested to be paid.
Employee shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which it give such notice to Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If Company notifies Employee in writing
prior to the expiration of such period that it desires to contest such
claim, Employee shall (i) give Company any information reasonably requested
by Company relating to such claim, (ii) take such action in connection with
contesting such claim as Company shall reasonably request in writing,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by Company, (iii)
cooperate with Company in good faith in order to effectively contest such
claim and (iv) permit Company to participate in any proceedings relating to
such claim; provided, however, that Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold Employee
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect hereto) imposed as a result
of such representation and payment of costs and expenses.
(c) Without limitation on the foregoing provisions of this
Section 3, Company shall control all proceedings taken in connection with
contesting a claim by the Internal Revenue Service and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option either direct Employee to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as Company shall determine; provided, however, that
if Company directs Employee to pay such claim and sue for a refund, Company
shall advance the amount of such payment to Employee on an interest-free
basis, and shall indemnify and hold Employee harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and provided, further
that if Employee is required to extend the statute
<PAGE>
of limitations to enable Company to contest such claim, Employee may
limit this extension solely to such contested amount. Company's control
of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Employee shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Employee of an amount advanced by
Company pursuant to paragraph 3(c) above, Employee becomes entitled to
receive any refund with respect to such claim, Employee shall (subject to
Company's complying with the requirements of paragraphs 3(b) and (c))
promptly pay to Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).
(e) If, after the receipt by Employee of any amount advanced by
Company under paragraph 3(c), a determination is made that Employee shall
not be entitled to any refund with respect to such claim and Company does
not notify Employee in writing of its intent to contest such denial of
refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
4. NON-SOLICITATION AND NON-COMPETITION. In consideration for the
severance benefits called for under paragraph 2(c) and Section 3 above,
Employee agrees that during the 12-month period following his Date of
Termination (the "Severance Period"), Employee:
(a) will not, without the prior written consent of Company,
alone or in association with others, solicit on behalf of Employee, or any
other person, firm, corporation or entity, any employee of Company, or any
of its operating divisions, subsidiaries or affiliates, for employment with
a person, firm, corporation or entity which competes with Company, or any
of its divisions, subsidiaries or affiliates.
(b) will not, without the prior written consent of Company,
directly or indirectly, engage or invest in, counsel or advise or be
employed by any other person, firm, corporation or entity engaged in or
conducting business which is the same as, or competing with, the business
being conducted by Company, or any of its operating divisions, subsidiaries
or affiliates, in any area or territory in which Company, or such operating
divisions, subsidiaries or affiliates, shall be conducting business during
the Severance Period. Notwithstanding the foregoing, Employee shall be
entitled to passively own not more than four and nine-tenths percent (4.9%)
of any publicly held entity engaged in any business in which Company, or
any of its operating divisions, subsidiaries or affiliates, shall be
engaged during said period.
Should Employee fail to comply with the non-solicitation and/or non-competition
restrictions contained in this Section 4, this Agreement shall immediately
terminate and Employee shall forfeit any remaining unpaid benefits under this
Agreement.
<PAGE>
5. OTHER EMPLOYMENT. Employee shall not be required to mitigate the
amount of any payment or benefit provided for under this Agreement by seeking
other employment or otherwise nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by
Employee as a result of other employment. Payment to Employee pursuant to
this Agreement shall constitute the entire obligation of Company for
severance pay and full settlement of any claim for severance pay under law or
in equity that Employee might otherwise assert against Company or any of its
employees, officers or directors on account of Employee's termination.
6. CHANGE IN CONTROL. For purposes of this Agreement a "Change in
Control" shall have occurred if:
(a) any "Person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"))
other than Company, any corporation owned, directly or indirectly, by the
stockholders of Company in substantially the same proportions as their
ownership of stock of Company, and any trustee or other fiduciary holding
securities under a Company employee benefit plan or such proportionately
owned corporation, becomes the "beneficial owner" (as defined in rule 13d-3
under the Exchange Act), directly or indirectly, of securities of Company
representing 20% or more of the combined voting power of Company's then
outstanding securities;
(b) during any period of not more than 24 months, individuals
who at the beginning of such period constitute the Board of Directors of
the Company, and any new director (other than a director designated by a
Person who has entered into an agreement with Company to effect a
transaction described in paragraph (a), (c), or (d) of this Section 6)
whose election by the board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directs
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(c) the stockholders of Company approve a merger or
consolidation of Company with any other corporation, other than (i) a
merger or consolidation which would result in the voting securities of
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 60% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of Company
(or similar transaction) in which no Person acquires more than 20% of the
combined voting power of Company's then outstanding securities; or
(d) the stockholders of Company approve a plan of compete
liquidation of Company or an agreement for sale or disposition by Company
of all or substantially all of its assets (or any transaction having a
similar effect).
<PAGE>
Company may also determine, in its discretion, that a sale of a substantial
portion of its assets or one of its businesses constitutes a "Change of Control"
with respect to Employee if Employee is employed in the affected operation.
7. TERMINATIONS FOR CAUSE AND GOOD REASON. Employee will be
considered to have been terminated for "Cause" if the termination is by
reason of Employee willfully engaging in conduct demonstrably and materially
injurious to the Company, Employee being convicted of or pleading guilty or
nolo contendre to a crime involving moral turpitude or Employee's willful and
continued failure for a significant period of time to perform Employee's
duties after a demand for substantial performance has been delivered to
Employee by the Board of Directors of Company which demand specifically
identifies the manner in which the Boar believes that Employee has not
substantially performed his duties. Employee's termination shall be
considered to have been for "Good Reason" if Employee's termination is by
reason of the occurrence of any of the following events within 24 moths
following a Change in Control without Employee's express written consent:
(a) any change in Employee's authorities, duties,
responsibilities (including reporting responsibilities) or performance
criteria or objectives or a change of more than 20 miles in Employee's
place of employment which, in Employee's judgment, represents an adverse
change; the assignment to Employee of any duties or work responsibilities
which, in his reasonable judgment, are inconsistent with such authorities
or responsibilities; or any removal of Employee from, or failure to
reappoint or reelect him to any of such positions, except if any such
changes are because of disability, retirement or Cause;
(b) a reduction in or failure to pay any portion of Employee's
Annual Base Salary as in effect on the date of the Change in Control or as
the same may be increased from time to time thereafter;
(c) the failure by Company to provide Employee with compensation
and benefits (including, without limitation, incentive, bonus and other
compensation plans and any vacation, medical, hospitalization, life
insurance, dental or disability benefit plan), or cash compensation in lieu
thereof, which are, in the aggregate, no less favorable than those provided
by Company to Employee immediately prior to the occurrence of the Change in
Control;
(d) any breach by Company of any provision of this Agreement;
and
(e) the failure of Company to obtain a satisfactory agreement
from any successor or assign of Company to assume and agree to perform this
Agreement, as required in Section 9 of this Agreement.
Employee's continued employment after the expiration of six months from any
action which would constitute Good Reason under paragraph 7(a) above shall
constitute a waiver of rights with respect to such action constituting Good
Reason under this Agreement.
<PAGE>
8. NOTICE OF TERMINATION. Any purported termination of employment by
Company or by Employee shall be communicated by a written Notice of
Termination to the other party which notice is given in accordance with
Section 11 of this Agreement. No termination shall be effective without such
a Notice of Termination. The Notice of Termination shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment and shall specify the Date of
Termination. The "Date of Termination" shall mean the date specified in the
Notice of Termination provided that in no case shall the date be less than
thirty (30) days or more than sixty (60) days after the date of Notice of
Termination is given. If within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined
wither by mutual written agreement of the parties, or by the final judgment,
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been taken).
9. SUCCESSORS. Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent Company would be required to perform if no such succession or
assignment had taken place. As used in this Agreement, "Company" shall
include any successor or assign to its business and/or assets which assumes
and agrees to perform this Agreement by operation of law, or otherwise. This
Agreement shall inure to the benefit of and be enforceable by Employee's
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Employee should die while any
amounts would still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Employee's named beneficiary
and if there is no such named beneficiary, to Employee's estate in a lump sum.
10. FEES AND EXPENSES. Company shall pay all reasonable legal fees and
related expenses (including the reasonable costs of experts, evidence and
counsel), when and as incurred by Employee, as a result of contesting or
disputing any termination of employment of Employee following a Change in
Control whether or not such contest or dispute is resolved in Employee's
favor but only if Employee was seeking in good faith to obtain or enforce any
right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company under with Employee is or may be
entitled to receive benefits.
11. NOTICE. Any notice or other communication provided for or required
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given
by each party to the other or to such other address as either party may have
furnished to the other in writing.
<PAGE>
12. MODIFICATIONS, WAIVERS AND SURVIVAL OF OBLIGATIONS. No provision
of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in writing and signed by
Employee and Company. A waiver of any condition or provision of this
Agreement shall be limited to the terms an conditions of such waiver and
shall not be construed as a waiver of any similar or dissimilar provisions or
conditions at any time. The obligations of Company under Sections 2 and 3
shall survive the expiration of the term of this Agreement.
13. CLAIMS PROCEDURE. Any claim for benefits under this Agreement by
Employee shall be made in writing.
14. GOVERNING LAW. The laws of Illinois shall be controlling in all
matters relating to this Agreement to the extent not preempted by ERISA.
15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. ENTIRE AGREEMENT. The Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreement, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.
17. ACTION BY COMPANY. Any action required of or permitted by Company
under this Agreement shall be by resolution of its Board of Directors, by
resolution of a duly authorized committee of its Board of Directors, or by a
person or persons authorized by resolutions of its Board of Directors or such
committee.
18. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
19. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit Employee's continuing or future participation in any benefit,
bonus, incentive or other plan or program provide by Company and for which
Employee may qualify, nor shall anything herein limit or reduce such rights as
Employee may have under any other agreements with Company. Amounts which are
vested benefits or which Employee is otherwise entitled to receive under any
plan or program of Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.
McWHORTER TECHNOLOGIES, INC.
By: /s/ Jeffrey M. Nodland
----------------------
Its: President and Chief Executive Officer
/s/ Donald J. Crawford
----------------------
Employee
<PAGE>
Exhibit 10.46
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") is made as of May 1,
1999 by and between McWhorter Technologies, Inc., a Delaware corporation (the
"Company") and Warren Grayson (the "Employee").
WHEREAS, Company considers the maintenance of a motivated management
group to be essential to protecting and enhancing the best interests of Company
and its stockholders and to that end Company has determined to provide benefits
to certain management employees in the event their employment is terminated
following a Change in Control of Company; and
WHEREAS, Employee is a member of Company's management group and
Company has determined that to reinforce and encourage the continued attention
and dedication of Employee to his duties, free from distractions which could
arise in anticipation of or subsequent to a Change in Control of Company, it
should enter into this Agreement with the Employee;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Company and Employee agree as follows:
1. TERM AND NATURE OF AGREEMENT. This Agreement shall commence as
of the date hereof and shall continue in effect until May 1, 2002. As of May 1,
2002 and each third May 1st occurring thereafter, this Agreement shall be
automatically renewed for a term of three (3) years unless Company gives written
notice to Employee at least 90 days prior to the renewal date that this
Agreement will not be extended. Notwithstanding the foregoing, if a Change in
Control (as hereinafter defined) occurs during the last two (2) years of any
term of this Agreement, the term of this Agreement shall automatically be
extended for a period of twenty-four (24) months after the end of the month in
which the Change in Control occurs. Furthermore, Employee may terminate this
Agreement at any time by giving Company 30 days' advance written notice. This
Agreement shall be construed and enforced under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") as an unfunded welfare benefit plan.
The Agreement shall be administered by the Compensation Committee of the Board
of Directors of the Company (the "Committee").
2. SEVERANCE BENEFITS FOLLOWING A CHANGE IN CONTROL. If Employee's
employment with Company is terminated within twenty-four (24) months following a
Change in Control, Employee shall be entitled to the following severance
benefits (in addition to any non-severance compensation and benefits provided
for under any of Company's employee benefit plans, policies and practices or
under the terms of any other contracts, but in lieu of any severance pay under
any Company employee benefit plan, policy and practice or under the terms of any
other contract including any employment contract):
<PAGE>
(a) If Employee's employment is terminated by reason of Employee's
disability, retirement or death of by Employee other than for Good Reason, the
Company shall pay Employee his full base salary through the Date of Termination
at the rate in effect at the time of termination (or the date of death in the
case of Employee's death), plus any bonus or incentive compensation award which,
pursuant to the terms of any compensation or incentive plan, Employee is
entitled to receive but which has not yet been paid.
(b) If Employee's employment is terminated for Cause, Company shall
pay Employee his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given plus any bonus or incentive
compensation award which, pursuant to the terms of any compensation or incentive
plan, Employee is entitled to receive but which has not yet been paid.
(c) If Employee's employment is terminated by Company other than for
Cause or by Employee for Good Reason, then:
(i) Within five (5) days after the Date of Termination, Company
shall pay Employee his full base salary through the Date of Termination at
the greater of the rate in effect at the time the Change in Control
occurred or the rate in effect when the Notice of Termination was given
plus an amount equal to 100% of Employee's Target Annual Bonus (as defined
below).
(ii) Company shall pay Employee a gross severance benefit equal
to (i) 2 times Employee's Annual Base Salary at the greater of the rate in
effect at the time the Change in Control occurred or the rate in effect
when Notice of Termination was given plus (ii) 2 times Employee's Target
Annual Bonus. The severance benefit shall be paid in a lump sum within 30
days of Employee's Termination. Employee's "Annual Base Salary" shall mean
the yearly salary rate established from time to time by Company as
Employee's regular salary for the next succeeding twelve (12) month period,
payable pursuant to the Company's payroll on a periodic basis and
Employee's "Target Annual Bonus" shall mean the maximum available normal
bonus Employee could earn under Company's bonus program for the year in
which his Date of Termination occurs.
(iii) Any outstanding options to purchase stock of Company held by
Employee shall immediately vest and become exercisable in full in
accordance with their terms and the provisions of the Company's 1994 Stock
Incentive Plan and 1996 Incentive Stock Plan and any other stock option
plan or arrangement of the Company.
(iv) The restrictions on any shares of restricted stock held by
Employee which have not yet terminated will terminate immediately.
(v) Company shall pay the costs of a reasonable outplacement
service until Employee is employed on a full time basis.
<PAGE>
(vi) For all purposes of Employee's participation in the
Company's Deferred Compensation Plan (the "Plan"): (a) the definition of
Change in Control contained in this Agreement shall govern and be deemed to
be the definition of "Change in Control" applicable to the Plan,
notwithstanding any provisions of the Plan, including Section 1.17, to the
contrary, and (b) the provisions of Section 3.9 (d) of the Plan and any
similar successor provisions shall not be applicable.
(vii) Until the earlier of the second anniversary of the
Termination or the date on which Employee becomes employed by a new
employer, Company shall, at its expense, provide Employee and Employee's
family members with medical, dental, life insurance, disability and
accidental death and dismemberment benefits at the highest level provided
to Employee and Employee's family members during the period beginning
immediately prior to the Change of Control and ending on the Date of
Termination, PROVIDED, HOWEVER, that if Employee become employed by a new
employer which maintains a major medical plan that either (i) does not
cover Employee and Employee's family members with respect to a pre-existing
condition which was covered under the Company's major medical plan, or (ii)
does not cover Employee and Employee's family members for a designated
waiting period, Employee's coverage under the Company's major medical plan
shall continue (but shall be limited in the event of noncoverage due to a
preexisting condition, to the preexisting condition itself) until the
earlier of the end of the applicable period of noncoverage under the new
employer's plan or the second anniversary of the Date of Termination.
3. EXCISE TAX 280G GROSS UP. In the event it shall be determined
that any payment or benefit provided under Paragraph 2(c) above together with
any other payments or benefits Employee is entitled to receive by reason of his
termination (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986 ("Code"), or any interest or penalties
are incurred by Employee with respect to such excise tax (such excise tax,
together with any such interest and penalties, hereinafter collectively referred
to as the "Excise Tax"), Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by Employee
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Employee retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payment. Payment of the Gross-Up Payment shall be subject
to the following:
(a) Subject to paragraph 3(b) below, the determination of
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment shall be made by an accounting firm (the "Accounting
Firm") selected by the Company from among the following: Arthur Andersen &
Co., KPMG Peat Marwick, Price Waterhouse Coopers, and Deloitte & Touche.
The Company will notify Employee of the identity of the Accounting Firm
within fifteen (15) business days of Employee's Termination and the
Accounting Firm shall provide detailed supporting calculations to Company
and Employee within thirty (30) business days of being requested by
Employee to make a Gross-Up Payment determination. If the Accounting Firm
determines that a Gross-Up
<PAGE>
Payment is required, the Gross-Up Payment so determined shall be paid
within five (5) days after the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is
payable by Employee, it shall so advise Employee in writing. The
Accounting Firm's determinations shall be binding upon Company and
Employee. If, following the exhaustion of Company's remedies under
paragraphs (b) and (c) below, Employee is required to pay an Excise Tax,
the Accounting Firm shall make a determination of the amount of any
underpayment in any previous Gross-Up Payment and any underpayment shall
be paid promptly by Company to Employee.
(b) Employee shall notify Company in writing of any claim by the
Internal Revenue Service that, if successful, would require Company to make
a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after Employee is
informed in writing of such claim and shall apprise Company of the nature
of such claim and the date on which such claim is requested to be paid.
Employee shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which it give such notice to Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If Company notifies Employee in writing
prior to the expiration of such period that it desires to contest such
claim, Employee shall (i) give Company any information reasonably requested
by Company relating to such claim, (ii) take such action in connection with
contesting such claim as Company shall reasonably request in writing,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by Company, (iii)
cooperate with Company in good faith in order to effectively contest such
claim and (iv) permit Company to participate in any proceedings relating to
such claim; provided, however, that Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold Employee
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect hereto) imposed as a result
of such representation and payment of costs and expenses.
(c) Without limitation on the foregoing provisions of this
Section 3, Company shall control all proceedings taken in connection with
contesting a claim by the Internal Revenue Service and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option either direct Employee to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as Company shall determine; provided, however, that
if Company directs Employee to pay such claim and sue for a refund, Company
shall advance the amount of such payment to Employee on an interest-free
basis, and shall indemnify and hold Employee harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and provided, further
that if Employee is required to extend the statute
<PAGE>
of limitations to enable Company to contest such claim, Employee may
limit this extension solely to such contested amount. Company's control
of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Employee shall be
entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Employee of an amount advanced by
Company pursuant to paragraph 3(c) above, Employee becomes entitled to
receive any refund with respect to such claim, Employee shall (subject to
Company's complying with the requirements of paragraphs 3(b) and (c))
promptly pay to Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).
(e) If, after the receipt by Employee of any amount advanced by
Company under paragraph 3(c), a determination is made that Employee shall
not be entitled to any refund with respect to such claim and Company does
not notify Employee in writing of its intent to contest such denial of
refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
4. NON-SOLICITATION AND NON-COMPETITION. In consideration for the
severance benefits called for under paragraph 2(c) and Section 3 above, Employee
agrees that during the 24-month period following his Date of Termination (the
"Severance Period"), Employee:
(a) will not, without the prior written consent of Company,
alone or in association with others, solicit on behalf of Employee, or any
other person, firm, corporation or entity, any employee of Company, or any
of its operating divisions, subsidiaries or affiliates, for employment with
a person, firm, corporation or entity which competes with Company, or any
of its divisions, subsidiaries or affiliates.
(b) will not, without the prior written consent of Company,
directly or indirectly, engage or invest in, counsel or advise or be
employed by any other person, firm, corporation or entity engaged in or
conducting business which is the same as, or competing with, the business
being conducted by Company, or any of its operating divisions, subsidiaries
or affiliates, in any area or territory in which Company, or such operating
divisions, subsidiaries or affiliates, shall be conducting business during
the Severance Period. Notwithstanding the foregoing, Employee shall be
entitled to passively own not more than four and nine-tenths percent (4.9%)
of any publicly held entity engaged in any business in which Company, or
any of its operating divisions, subsidiaries or affiliates, shall be
engaged during said period.
Should Employee fail to comply with the non-solicitation and/or non-competition
restrictions contained in this Section 4, this Agreement shall immediately
terminate and Employee shall forfeit any remaining unpaid benefits under this
Agreement.
<PAGE>
5. OTHER EMPLOYMENT. Employee shall not be required to mitigate the
amount of any payment or benefit provided for under this Agreement by seeking
other employment or otherwise nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by Employee
as a result of other employment. Payment to Employee pursuant to this Agreement
shall constitute the entire obligation of Company for severance pay and full
settlement of any claim for severance pay under law or in equity that Employee
might otherwise assert against Company or any of its employees, officers or
directors on account of Employee's termination.
6. CHANGE IN CONTROL. For purposes of this Agreement a "Change in
Control" shall have occurred if:
(a) any "Person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"))
other than Company, any corporation owned, directly or indirectly, by the
stockholders of Company in substantially the same proportions as their
ownership of stock of Company, and any trustee or other fiduciary holding
securities under a Company employee benefit plan or such proportionately
owned corporation, becomes the "beneficial owner" (as defined in rule 13d-3
under the Exchange Act), directly or indirectly, of securities of Company
representing 20% or more of the combined voting power of Company's then
outstanding securities;
(b) during any period of not more than 24 months, individuals
who at the beginning of such period constitute the Board of Directors of
the Company, and any new director (other than a director designated by a
Person who has entered into an agreement with Company to effect a
transaction described in paragraph (a), (c), or (d) of this Section 6)
whose election by the board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directs
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(c) the stockholders of Company approve a merger or
consolidation of Company with any other corporation, other than (i) a
merger or consolidation which would result in the voting securities of
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 60% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of Company
(or similar transaction) in which no Person acquires more than 20% of the
combined voting power of Company's then outstanding securities; or
(d) the stockholders of Company approve a plan of compete
liquidation of Company or an agreement for sale or disposition by Company
of all or substantially all of its assets (or any transaction having a
similar effect).
<PAGE>
Company may also determine, in its discretion, that a sale of a substantial
portion of its assets or one of its businesses constitutes a "Change of Control"
with respect to Employee if Employee is employed in the affected operation.
7. TERMINATIONS FOR CAUSE AND GOOD REASON. Employee will be
considered to have been terminated for "Cause" if the termination is by reason
of Employee willfully engaging in conduct demonstrably and materially injurious
to the Company, Employee being convicted of or pleading guilty or nolo contendre
to a crime involving moral turpitude or Employee's willful and continued failure
for a significant period of time to perform Employee's duties after a demand for
substantial performance has been delivered to Employee by the Board of Directors
of Company which demand specifically identifies the manner in which the Boar
believes that Employee has not substantially performed his duties. Employee's
termination shall be considered to have been for "Good Reason" if Employee's
termination is by reason of the occurrence of any of the following events within
24 moths following a Change in Control without Employee's express written
consent:
(a) any change in Employee's authorities, duties,
responsibilities (including reporting responsibilities) or performance
criteria or objectives or a change of more than 20 miles in Employee's
place of employment which, in Employee's judgment, represents an adverse
change; the assignment to Employee of any duties or work responsibilities
which, in his reasonable judgment, are inconsistent with such authorities
or responsibilities; or any removal of Employee from, or failure to
reappoint or reelect him to any of such positions, except if any such
changes are because of disability, retirement or Cause;
(b) a reduction in or failure to pay any portion of Employee's
Annual Base Salary as in effect on the date of the Change in Control or as
the same may be increased from time to time thereafter;
(c) the failure by Company to provide Employee with compensation
and benefits (including, without limitation, incentive, bonus and other
compensation plans and any vacation, medical, hospitalization, life
insurance, dental or disability benefit plan), or cash compensation in lieu
thereof, which are, in the aggregate, no less favorable than those provided
by Company to Employee immediately prior to the occurrence of the Change in
Control;
(d) any breach by Company of any provision of this Agreement;
and
(e) the failure of Company to obtain a satisfactory agreement
from any successor or assign of Company to assume and agree to perform this
Agreement, as required in Section 9 of this Agreement.
Employee's continued employment after the expiration of six months from any
action which would constitute Good Reason under paragraph 7(a) above shall
constitute a waiver of rights with respect to such action constituting Good
Reason under this Agreement.
<PAGE>
8. NOTICE OF TERMINATION. Any purported termination of employment
by Company or by Employee shall be communicated by a written Notice of
Termination to the other party which notice is given in accordance with Section
11 of this Agreement. No termination shall be effective without such a Notice
of Termination. The Notice of Termination shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Employee's employment and shall specify the Date of Termination. The "Date of
Termination" shall mean the date specified in the Notice of Termination provided
that in no case shall the date be less than thirty (30) days or more than sixty
(60) days after the date of Notice of Termination is given. If within thirty
(30) days after any Notice of Termination is given the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which the dispute
is finally determined wither by mutual written agreement of the parties, or by
the final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been taken).
9. SUCCESSORS. Company will require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of Company to
expressly assume and agree to perform this Agreement in the same manner and
to the same extent Company would be required to perform if no such succession
or assignment had taken place. As used in this Agreement, "Company" shall
include any successor or assign to its business and/or assets which assumes
and agrees to perform this Agreement by operation of law, or otherwise. This
Agreement shall inure to the benefit of and be enforceable by Employee's
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Employee should die while any
amounts would still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Employee's named beneficiary
and if there is no such named beneficiary, to Employee's estate in a lump sum.
10. FEES AND EXPENSES. Company shall pay all reasonable legal fees
and related expenses (including the reasonable costs of experts, evidence and
counsel), when and as incurred by Employee, as a result of contesting or
disputing any termination of employment of Employee following a Change in
Control whether or not such contest or dispute is resolved in Employee's favor
but only if Employee was seeking in good faith to obtain or enforce any right or
benefit provided by this Agreement or by any other plan or arrangement
maintained by the Company under with Employee is or may be entitled to receive
benefits.
11. NOTICE. Any notice or other communication provided for or
required by this Agreement shall be in writing and shall be deemed to have been
duly given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by
each party to the other or to such other address as either party may have
furnished to the other in writing.
<PAGE>
12. MODIFICATIONS, WAIVERS AND SURVIVAL OF OBLIGATIONS. No provision
of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in writing and signed by Employee
and Company. A waiver of any condition or provision of this Agreement shall be
limited to the terms an conditions of such waiver and shall not be construed as
a waiver of any similar or dissimilar provisions or conditions at any time. The
obligations of Company under Sections 2 and 3 shall survive the expiration of
the term of this Agreement.
13. CLAIMS PROCEDURE. Any claim for benefits under this Agreement by
Employee shall be made in writing.
14. GOVERNING LAW. The laws of Illinois shall be controlling in all
matters relating to this Agreement to the extent not preempted by ERISA.
15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. ENTIRE AGREEMENT. The Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreement, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.
17. ACTION BY COMPANY. Any action required of or permitted by
Company under this Agreement shall be by resolution of its Board of Directors,
by resolution of a duly authorized committee of its Board of Directors, or by a
person or persons authorized by resolutions of its Board of Directors or such
committee.
18. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
19. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit Employee's continuing or future participation in any benefit,
bonus, incentive or other plan or program provide by Company and for which
Employee may qualify, nor shall anything herein limit or reduce such rights as
Employee may have under any other agreements with Company. Amounts which are
vested benefits or which Employee is otherwise entitled to receive under any
plan or program of Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.
McWHORTER TECHNOLOGIES, INC.
By: /s/ Jeffrey M. Nodland
------------------------
Its: President and Chief Executive Officer
/s/ Warren Grayson
------------------
Employee
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<CASH> 3,961
<SECURITIES> 0
<RECEIVABLES> 79,214
<ALLOWANCES> 0
<INVENTORY> 41,666
<CURRENT-ASSETS> 136,952
<PP&E> 202,340
<DEPRECIATION> 65,246
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<CURRENT-LIABILITIES> 81,791
<BONDS> 136,487
0
0
<COMMON> 110
<OTHER-SE> 104,844
<TOTAL-LIABILITY-AND-EQUITY> 354,189
<SALES> 209,729
<TOTAL-REVENUES> 209,729
<CGS> 176,000
<TOTAL-COSTS> 176,000
<OTHER-EXPENSES> 21,484
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<INTEREST-EXPENSE> 4,006
<INCOME-PRETAX> 8,239
<INCOME-TAX> 3,378
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