Exhibit 10.57
CHANGE IN CONTROL
AGREEMENT
THIS AGREEMENT, dated November 19,
2008, between QUAKER CHEMICAL CORPORATION, a Pennsylvania
corporation (the “Company”), and George H. Hill (the
“Manager”),
W I T N E S S E T
H T H A T
WHEREAS, the Board of Directors of
the Company has determined that it is in the best interests of the
Company and its shareholders that the Company and its subsidiaries
be able to attract, retain, and motivate highly qualified
management personnel and, in particular, that they be assured of
continuity of management in the event of any actual or threatened
change in control of the Company; and
WHEREAS, the Board of Directors of
the Company believes that the execution by the Company of change in
control agreements with certain management personnel, including the
Manager, is an important factor in achieving this desired
end;
NOW, THEREFORE, IN CONSIDERATION of
the mutual obligations and agreements contained herein and
intending to be legally bound hereby, the Manager and the Company
agree that the Change in Control Agreement is amended and restated,
as follows:
1. Term of Agreement
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This Agreement shall become
effective on October 1, 2008 (the “Effective
Date”), and shall continue in effect through
December 31, 2009, provided, however, that the term of this
Agreement shall automatically be extended for one additional year
beyond December 31, 2009, and successive one-year periods
thereafter, unless, not later than eighteen (18) months (nine
(9) months with respect to the automatic extension that would
otherwise begin on January 1, 2010) preceding the calendar
year for which the term would otherwise automatically extend, the
Company shall have given written notice to the Manager of intention
not to extend this Agreement for an additional year, in which event
this Agreement shall continue in effect until December 31 of
the calendar year immediately preceding the calendar year for which
the term would have otherwise automatically extended.
Notwithstanding any such notice not to extend, if a Change in
Control (as defined in Section 2) occurs during the original
or extended term of this Agreement, this Agreement shall remain in
effect after a Change in Control until all obligations of the
parties hereto under this Agreement shall have been
satisfied.
As used in this Agreement, a
“Change in Control” of the Company shall be deemed to
have occurred if:
(a) Any person (a
“Person”), as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) (other than (i) the Company and/or
its wholly owned subsidiaries; (ii) any ESOP or other employee
benefit plan of the Company and any trustee or other fiduciary in
such capacity holding securities under such plan; (iii) any
corporation owned, directly or indirectly, by the shareholders of
the Company in substantially the same proportions as their
ownership of stock of the Company; or (iv) any other Person
who, within the one year prior to the event which would otherwise
be a Change in Control, is an executive officer of the Company or
any group of Persons of which he voluntarily is a part), is or
becomes the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined
voting power of the Company’s then outstanding securities or
such lesser percentage of voting power, but not less than 15%, as
determined by the members of the Board of Directors of the Company
who are independent directors (as defined in the New York Stock
Exchange, Inc. Listed Company Manual); provided, however, that a
Change in Control shall not be deemed to have occurred under the
provisions of this subsection (a) by reason of the beneficial
ownership of voting securities by members of the Benoliel family
(as defined below) unless and until the beneficial ownership of all
members of the Benoliel family (including any other individuals or
entities who or which, together with any member or members of the
Benoliel family, are deemed under Sections 13(d) or 14(d) of the
Exchange Act to constitute a single Person) exceeds 50% of the
combined voting power of the Company’s then outstanding
securities;
(b) During any two-year period after
the Effective Date, Directors of the Company in office at the
beginning of such period plus any new Director (other than a
Director designated by a Person who has entered into an agreement
with the Company to effect a transaction within the purview of
subsections (a) or (c)) whose election by the Board of
Directors of the Company or whose nomination for election by the
Company’s shareholders was approved by a vote of at least
two-thirds of the Directors 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 shall cease for
any reason to constitute at least a majority of the
Board;
(c) The consummation of (i) any
consolidation or merger of the Company in which the Company is not
the continuing or surviving corporation or pursuant to which the
Company’s voting common shares (the “Common
Shares”) would be converted into cash, securities, and/or
other property, other than a merger of the Company in which holders
of Common Shares immediately prior to the merger have the same
proportionate ownership of voting shares of the surviving
corporation immediately after the merger as they had in the Common
Shares immediately before; or (ii) any sale, lease, exchange,
or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets or earning
power of the Company; or
(d) The Company’s shareholders
or the Company’s Board of Directors shall approve the
liquidation or dissolution of the Company.
As used in this Agreement,
“members of the Benoliel family” shall mean Peter A.
Benoliel, his wife and children and their respective spouses and
children, and all trusts created by or for the benefit of any of
them.
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3.
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Entitlement to Change in Control Benefits;
Certain Definitions .
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The Manager shall be entitled to the
benefits provided in this Agreement in the event the Manager has a
Separation from Service under the circumstances described in
(a) below (a “Covered Termination”), provided the
Manager executes and does not revoke a Release (as defined below),
if any, provided by the Company.
(a) A Covered Termination shall have
occurred in the event the Manager’s employment with the
Company or its affiliates is terminated within two (2) years
following a Change in Control by:
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(i)
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The Company or
its affiliates without Cause (as defined below); or
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(ii)
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Resignation of
the Manager for Good Reason (as defined below).
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The Manager shall have no rights to
any payments or benefits under this Agreement in the event the
Manager’s employment with the Company and its affiliates is
terminated (i) as a result of death or Disability (as defined
below), or (ii) by the Company or its affiliates for Cause. In
the event the Manager’s employment is terminated for any
reason prior to a Change in Control, the Manager shall have no
rights to any payments or benefits under this Agreement and, after
any such termination, this Agreement shall be of no further force
or effect.
“ Cause ” shall
mean (i) the Manager’s willful and material breach of
the employment agreement, if any, between the Manager and the
Company (after having received notice thereof and a reasonable
opportunity to cure or correct), (ii) dishonesty, fraud,
willful malfeasance, gross negligence, or other gross misconduct,
in each case relating to the performance of the Manager’s
employment with the Company or its affiliates which is materially
injurious to the Company, or (iii) conviction of or plea of
guilty to a felony, such Cause to be determined, in each case, by a
resolution approved by at least two-thirds of the Directors of the
Company after having afforded the Manager a reasonable opportunity
to appear before the Board of Directors of the Company and present
his position.
“ Code ” shall
mean the Internal Revenue Code of 1986, as amended, together with
any applicable regulations thereunder.
“ Disability ”
shall mean covered total and permanent disability as defined in the
long-term disability plan maintained by the Company for employees
generally or, if the Company does not maintain such a plan, the
long-term disability plan most recently maintained by the Company
for employees generally.
“ Good Reason ”
shall mean any of the following actions without the Manager’s
consent, other than due to the Manager’s death or Disability:
(i) any reduction in the Manager’s base salary from that
provided immediately before the Covered Termination or, if higher,
immediately before the Change in Control; (ii) any reduction
in the Manager’s bonus opportunity (including cash and
noncash incentives) or increase in the goals or standards required
to accrue that opportunity, as compared to the opportunity and
goals or standards in effect immediately before
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the Change in Control; (iii) a material
adverse change in the nature or scope of the Manager’s
authorities, powers, functions, or duties from those in effect
immediately before the Change in Control; (iv) a reduction in
the Manager’s benefits from those provided immediately before
the Change in Control, disregarding any reduction under a plan or
program covering employees generally that applies to all employees
covered by the plan or program; or (v) the Manager being
required to accept a primary employment location which is more than
twenty-five (25) miles from the location at which he primarily
was employed during the ninety (90) day period prior to a
Change in Control.
“ Payment Date ”
shall mean the 60th day after the Manager’s Separation from
Service, subject to Section 9.
“ Release ” shall
mean a release (in a form satisfactory to the Company) of any and
all claims against the Company and all related parties with respect
to all matters arising out of the Manager’s employment by the
Company and its affiliates, or the termination thereof (other than
claims for any entitlements under the terms of this Agreement,
under any employment agreement between the Manager and the Company,
or under any plans or programs of the Company under which the
Manager has accrued a benefit) that the Company provides to the
Manager no later than three days after the date of the
Manager’s Covered Termination. Notwithstanding any provision
of this Agreement to the contrary, if the Company provides a
Release to the Manager, the Manager shall not be entitled to any
payments or benefits under this Agreement unless the Manager
executes the Release within 45 days of the later of the date he
receives the Release or the date of his Covered Termination, and
the Manager does not revoke the Release.
“ Separation from
Service ” shall mean the Manager’s separation from
service with the Company and its affiliates within the meaning of
Treas. Reg. §1.409A-1(h) or any successor thereto.
“ Specified Employee
” shall mean the Manager if he is a specified employee as
defined in Section 409A of the Code as of the date of his
Separation from Service.
(a) Amount of Severance
Allowance . In the event of a Covered Termination, the Company
shall pay or cause to be paid to the Manager in cash a severance
allowance (the “Severance Allowance”) equal to 1 times
the sum of the amounts determined in accordance with the following
paragraphs (i) and (ii):
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(i)
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An amount
equivalent to the highest annualized base salary which the Manager
was entitled to receive from the Company and its subsidiaries at
any time during his employment prior to the Covered Termination;
and
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(ii)
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An amount equal to the average of
the aggregate annual amounts paid to the Manager in the Applicable
Three-Year Period under all applicable annual incentive
compensation plans maintained by the Company and its affiliates
(other than compensation relating to relocation expense; the grant,
exercise, or settlement of stock options, restricted stock
or
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performance incentive units or
the sale or other disposition of shares received upon exercise or
settlement of such awards); provided, however, that (x) in
determining the average amount paid under the annual incentive plan
during the Applicable Three-Year Period there shall be excluded any
year in which no amounts were paid to the Manager under that plan;
and (y) there shall be excluded from such calculation any
amounts paid to the Manager under any such incentive compensation
plan as a result of the acceleration of such payments under such
plan due to termination of the plan, a Change in Control, or a
similar occurrence. The Applicable Three-Year Period shall be
(A) if the Manager has received an annual incentive
compensation plan payment in the calendar year of his Covered
Termination, the calendar year in which such Covered Termination
occurs and the two preceding calendar years, or (B) in any
other case, the three calendar years preceding the calendar year in
which the Manager’s Covered Termination occurs; provided,
however, that the Applicable Three-Year Period shall be determined
by substituting “ Change In Control” for “Covered
Termination” if such substitution results in a higher amount
under this subsection (ii).
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In no event shall any retention
bonus or change in control or success fee be taken into account
when determining the amount of the Severance Allowance
hereunder.
(b) Payment of Severance
Allowance . The Severance Allowance shall be paid to the
Manager in a lump sum on the Payment Date if the applicable Change
in Control is also a change in control event as defined in Treas.
Reg. §1.409A-3(i)(5) (or any successor thereto). In any other
case, the Severance Allowance shall be paid in eighteen monthly
installments commencing on the Payment Date, each of which is equal
to one-eighteenth (1/18th) of the amount of the Severance
Allowance determined under Section 4(a), which are treated as
a right to a series of separate payments for purposes of
Section 409A of the Code.
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5.
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Outplacement and Welfare Benefits
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(a) Outplacement . Subject to
Section 6, for a period of one year following a Covered
Termination of the Manager, the Company shall make or cause to be
made available to the Manager, at its expense, outplacement
counseling and other outplacement services comparable to those
available for the Company’s senior managers prior to the
Change in Control.
(b) Welfare Benefits .
Subject to Section 6, for a period of 18 months following a
Covered Termination of the Manager, the Manager and the
Manager’s dependents shall be entitled to participate in the
Company’s life, medical, and dental insurance plans at the
Company’s expense, in accordance with the terms of such plans
at the time of such Covered Termination as if the Manager were
still employed by the Company or its affiliates under this
Agreement. If, however, life, medical, or dental insurance benefits
are not paid or provided under any such plan to the Manager or his
dependents because the Manager is no longer an employee of the
Company or its subsidiaries, the Company itself shall, to the
extent necessary, pay or otherwise provide for such benefits to the
Manager and his dependents.
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