Exhibit 10.7
AMENDED AND
RESTATED
EXECUTIVE EMPLOYMENT
AGREEMENT
This Amended and Restated Executive
Employment Agreement (this “Agreement”), dated as of
November 17, 2008 (the “Effective Date”), is made
by and between Constar International Inc., a Delaware corporation,
having its principal offices at One Crown Way, Philadelphia,
Pennsylvania 19154 (the “Company”), and
Mr. Michael Hoffman (the “Executive”).
RECITALS
WHEREAS, the Executive is currently
employed by the Company as its Chief Executive Officer, pursuant to
the terms of an Employment Agreement dated November 20, 2002
as amended and restated on May 23, 2003 (the “Original
Agreement”);
WHEREAS, the Company desires to
assure itself of the continued employment of the Executive and to
encourage his continued attention and dedication to the best
interests of the Company, by replacing the Original Agreement with
this amended and restated Agreement; and
WHEREAS, the Executive desires to
remain and continue in the employment of the Company in accordance
with the terms of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of
the premises and mutual covenants herein contained, and intending
to be legally bound hereby, the Company and the Executive hereby
agree as follows:
1. Definitions
.
1.1. “Affiliate” means
any person or entity controlling, controlled by or under common
control with the Company.
1.2. “Board” means the
Board of Directors of the Company.
1.3. “Cause” means
(a) the Executive, in carrying out his duties under this
Agreement, engages in gross misconduct or gross negligence
resulting in a material adverse effect on the Company, (b) the
Executive embezzles any amount of the Company’s assets,
(c) the Executive is convicted (including a plea of guilty or
nolo contendere) of a felony involving moral turpitude,
(d) the Executive’s breach of any covenant contained in
Section 9 below, or (e) the Executive’s willful and
material failure to follow the lawful instructions of the
Company’s Board (consistent with Section 4 below). For
purposes of this Section 1.3, no act, or failure to act, on
the Executive’s part shall be considered
“willful” unless done, or omitted to be done, by him in
bad faith and without reasonable belief that his action or omission
was in the best interest of the Company. Any act or omission to act
by the Executive in reliance upon an opinion of counsel to the
Company shall not be deemed to be willful.
1.4. “Change in Control”
shall mean:
1.4.1. the acquisition after the
Effective Date by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the “Exchange Act”)) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of more than 30% of the combined voting
power of the voting securities of the Company entitled to vote
generally in the election of directors (the “Voting
Securities”); provided, however, that the following
acquisitions shall not constitute a Change in Control: (a) any
acquisition, directly or indirectly by or from the Company or any
subsidiary of the Company, or by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
subsidiary of the Company, (b) any acquisition by any
underwriter in connection with any firm commitment underwriting of
securities to be issued by the Company, or (c) any acquisition
by any corporation if, immediately following such acquisition, 70%
or more of the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation (entitled to vote generally
in the election of directors), are beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who, immediately prior to such acquisition, were the
beneficial owners of the then outstanding common stock of the
Company (“Common Stock”) and the Voting Securities in
substantially the same proportions, respectively, as their
ownership, immediately prior to such acquisition, of the Common
Stock and Voting Securities; or
1.4.2. The occurrence after the
Effective Date of a reorganization, merger or consolidation, other
than a reorganization, merger or consolidation with respect to
which all or substantially all of the individuals and entities who
were the beneficial owners, immediately prior to such
reorganization, merger or consolidation, of the Common Stock and
Voting Securities beneficially own, directly or indirectly,
immediately after such reorganization, merger or consolidation 70%
or more of the then outstanding common stock and voting securities
(entitled to vote generally in the election of directors) of the
corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization,
merger or consolidation, of the Common Stock and Voting Securities;
or
1.4.3. The occurrence after the
Effective Date of (a) a complete liquidation or substantial
dissolution of the Company, or (b) the sale or other
disposition of all or substantially all of the assets of the
Company, in each case other than to a subsidiary, wholly-owned,
directly or indirectly, by the Company or to a holding company of
which the Company is a direct or indirect wholly owned subsidiary
prior to such transaction; or
1.4.4. During any
period of twenty-four (24) consecutive months commencing upon
the Effective Date, the individuals at the beginning of any such
period who constitute the Board and any new director (other than a
director designated by a person or entity who has entered into an
agreement with the Company or other person or entity to effect a
transaction described in Sections 1.4.1, 1.4.2 or 1.4.3 above)
whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least
two-thirds ( 2 / 3 ) of the directors then
still in office who either were directors at the beginning of any
such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority of the Board.
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Notwithstanding the above, a “Change in
Control” shall not include any event, circumstance or
transaction which results from the action of any entity or group
which includes, is affiliated with or is wholly or partially
controlled by one or more executive officers of the Company and in
which the Executive participates.
1.5. “Disability” means
the Executive’s inability to render, for a period of six
consecutive months, services hereunder by reason of physical or
mental disability, as determined by the written medical opinion of
an independent medical physician mutually acceptable to the
Executive and the Company. If the Executive and the Company cannot
agree as to such an independent medical physician, each shall
appoint one medical physician and those two physicians shall
appoint a third physician who shall make such determination. In no
event shall the Executive be considered disabled for the purposes
of this Agreement unless the Executive is deemed disabled pursuant
to the Company’s long-term disability plan, if one is
maintained by the Company.
1.6. “Good Reason” means
and shall be deemed to exist if, without the prior express written
consent of the Executive, (a) the Executive suffers a material
adverse change in his reporting obligations, (b) the Executive
suffers a material adverse change in the duties, responsibilities
or effective authority associated with his titles and positions, as
set forth and described in Section 4 of this Agreement (other
than as a result of the Executive’s resignation from the
Board or a determination by the Board, that a nomination for
election to the Board would be prohibited by any governance, rule,
regulation or mandate promulgated by any governmental authority or
agency, or any stock exchange or other self-regulatory
organization, including, without limitation, the Securities and
Exchange Commission, NASDAQ and any other stock exchange, market or
automated quotation system upon which the Company’s
securities are listed or traded); (c) a reduction by the
Company of the Executive’s “Base Salary” (as
increased from time to time in accordance with Section 5.1
below) or in the other compensation and benefits (except for
benefits payable under the Company’s equity, incentive or
bonus plans) below a level which is substantially equivalent in the
aggregate, to those payable to the Executive hereunder, or a
material adverse change in the terms or conditions on which any
such compensation or benefits are payable as in effect on the date
hereof or as the same may be increased from time to time during the
term of this Agreement; (d) the Company discontinues the
AIMSPP without immediately replacing such plan with a plan that is
the substantial economic equivalent of such plan, (e) the
Company fails to pay the accrued Executive’s compensation or
to provide for the Executive’s accrued benefits when due;
(f) the Executive’s office location is moved to a
location more than 30 miles from Philadelphia, Pennsylvania; or
(g) the failure or refusal of the “Company’s
Successor” (as defined in Section 8.2 below) to
expressly assume this Agreement in writing, and all of the duties
and obligations of the Company hereunder in accordance with
Section 8.2.
1.7. “Restricted Period”
means the Term of Employment, plus (a) in the event the
Executive’s employment is terminated pursuant to
Section 6.3, the twenty-four (24) month period
immediately following such termination; (b) in the event the
Executive’s employment is terminated pursuant to
Section 6.4, the thirty-six (36) month period immediately
following such termination; or (c) in the event the
Executive’s employment is terminated for any other reason,
the twelve (12) month period immediately following the
Executive’s termination of employment.
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2. Employment
. Subject to the terms and
provisions set forth in this Agreement and specifically as provided
in Section 4.1, the Company hereby agrees that the Executive
shall during the “Term of Employment” (as defined in
Section 3 below) be nominated for election at the
Company’s regularly scheduled annual meeting of stockholders
as a member of and to the Board and further agrees that during the
Term of Employment that the Executive shall be employed as the
chief executive officer of the Company, and the Executive hereby
accepts such employment and, if so elected by the stockholders,
such directorship.
3. Term of
Employment . This
Agreement will become effective on the Effective Date. From and
after the Effective Date, this Agreement will govern the
Executive’s continued employment by the Company until that
employment ceases pursuant to Section 6 (such period of the
Executive’s employment is herein referred to as the
“Term of Employment”). Notwithstanding any other
provision of this Agreement to the contrary, to the extent that
this Agreement has not terminated in accordance with Section 6
prior to the third anniversary of the first Change in Control (as
defined above) that occurs following the Effective Date, this
Agreement shall terminate (other than as provided in
Section 10.13) on the third anniversary of such Change in
Control (with such termination constituting a “Change in
Control Non-renewal”) and, thereafter, the Executive shall
become an “at will” employee of the Company. Upon the
termination of Executive’s employment occurring on or after a
Change in Control Non-renewal (at which time the Executive will be
an “at will” employee of the Company), Executive will
not be entitled to any severance payments hereunder, including but
not limited to any severance payments to which he may otherwise
have been entitled had his employment been terminated during the
thirty-six month period immediately following a Change in
Control.
4. Positions, Responsibilities
and Duties .
4.1. Positions . During the
Term of Employment, the Executive shall be employed and serve as
the chief executive officer of the Company and he shall be
nominated for election as a member of and to the Board of the
Company at the Company’s regularly scheduled annual meeting
of stockholders, provided that such nomination shall not be
prohibited by any governance, rule, regulation or mandate
promulgated by any governmental authority or agency, or any stock
exchange or other self-regulatory organization, including, without
limitation, the Securities and Exchange Commission, NASDAQ and any
other stock exchange, market or automated quotation system upon
which the Company’s securities are listed or traded. In such
positions, the Executive shall have the duties, responsibilities
and authority normally associated with the office and position of
director and chief executive officer of a publicly-traded
corporation. The Executive shall report to the Board. All other
employees of the Company shall report to the Executive and/or his
designees. Notwithstanding the above, the Executive shall not be
required to perform any duties and responsibilities which would be
likely to result in a non-compliance with or violation of any
applicable law or regulation.
4.2. Duties . During the Term
of Employment, the Executive shall have complete responsibility for
and authority over all day-to-day operations of the Company and its
Affiliates. Additionally, during the Term of Employment, the
Executive shall devote
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substantially all of his business time, during
normal business hours, to the business and affairs of the Company
and the Executive shall use his reasonable best efforts to perform
faithfully and efficiently the duties and responsibilities
contemplated by this Agreement; provided, however, that the
Executive shall be allowed, to the extent such activities do not
substantially interfere with the performance by the Executive of
his duties and responsibilities hereunder, to (a) manage the
Executive’s personal, financial and legal affairs, and
(b) serve on corporate, civic or charitable boards or
committees.
5. Compensation and Other
Benefits .
5.1. Base Salary . During the
Term of Employment, the Executive shall receive a base salary per
annum payable in accordance with the Company’s normal payroll
practices of no less than US $474,238, which the Board shall review
annually and may, in its sole discretion, increase (but not
decrease) (“Base Salary”).
5.2. Annual Bonus . During
the Term of Employment, the Executive shall participate in the
Company’s Annual Incentive & Management Stock
Purchase Plan (the “AIMSPP”) as maintained by the
Company from time to time for the benefit of senior executives. In
respect of each calendar year during the Term of Employment,
beginning in calendar year 2003, the Executive shall be eligible
for an annual bonus (the “Bonus”) if the Executive
and/or the Company achieves performance goals established by the
Board in good faith and consistent with the AIMSPP.
5.3. Retirement and Savings
Plans . During the Term of Employment, the Executive shall be
eligible to participate in all pension, retirement, savings, 401(k)
and other employee pension benefit plans, policies and programs
(the “Retirement Plans”) maintained by the Company from
time to time for the benefit of senior executives and/or other
employees. However, nothing in this Section 5.3 shall be
construed to require the Company to establish or maintain any such
Retirement Plans.
5.4. Supplemental Executive
Retirement Plan . During the Term of Employment, the Executive
shall participate in the Company’s Supplemental Executive
Retirement Plan (the “SERP”) as maintained by the
Company from time to time for the benefit of senior
executives.
5.5. Welfare Benefit Plans .
During the Term of Employment, the Executive, the Executive’s
spouse, if any, and his eligible dependents, if any, shall be
eligible to participate in and be covered on the same basis as
other senior executive officers of the Company under all the
welfare benefit plans, policies and/or programs maintained by the
Company from time to time including, without limitation, all
medical, hospitalization, dental, disability, life, accidental
death and dismemberment and travel accident insurance plans,
policies and/or programs (the “Welfare Plans”).
However, nothing in this Section 5.5 shall be construed to
require the Company to establish or maintain any such Welfare
Plans. The Welfare Plans and the Retirement Plans are sometimes
referred to collectively herein as the “Benefit
Plans.”
5.6. Expense Reimbursement .
During and in respect of the Term of Employment, the Executive
shall be entitled to receive prompt reimbursement for
expenses
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incurred by the Executive in performing his
duties and responsibilities hereunder in accordance with the
Company’s policy for senior executives of the Company.
Notwithstanding anything herein to the contrary or otherwise,
except to the extent any expense, reimbursement or in-kind benefit
provided pursuant to Section 5.5 and this Section 5.6
does not constitute a “deferral of compensation” within
the meaning of Section 409A of the Internal Revenue Code of
1986, as amended from time to time, and its implementing
regulations and guidance (“Section 409A”) (a) the
amount of expenses eligible for reimbursement or in-kind benefits
provided to the Executive during any calendar year will not affect
the amount of expenses eligible for reimbursement or in-kind
benefits provided to the Executive in any other calendar year,
(b) the reimbursements for expenses for which the Executive is
entitled to be reimbursed shall be made on or before the last day
of the calendar year following the calendar year in which the
applicable expense is incurred and (c) the right to payment or
reimbursement or in-kind benefits hereunder may not be liquidated
or exchanged for any other benefit.
5.7. Vacation and Fringe
Benefits . During the Term of Employment, the Executive shall
be entitled to at least four weeks paid vacation each calendar
year, plus paid time off due to illness or personal reasons in
accordance, in all such cases, with Company policy.
5.8. Equity Compensation .
During the Term of Employment, the Executive shall be eligible to
participate in and receive awards under the Company’s 2007
Stock-Based Incentive Compensation Plan, and any other equity-based
incentive plans as maintained by the Company from time to time for
the benefit of senior executives.
6. Termination
. Upon the occurrence of any
termination of the Executive’s employment as chief executive
officer, the Executive shall and shall be deemed to immediately
resign from any membership on the Board and from any committees
thereof (and the Executive shall promptly tender to the Board a
written resignation letter effecting the foregoing). For purposes
of determining under Section 409A whether there has been a
“separation from service” with the meaning of Treasury
Regulation Section 1.409A-1(h) (or any successor regulation),
the Executive shall be deemed to have incurred a separation from
service if his employment has been terminated in accordance with
Sections 6.1 through Section 6.6 hereof and he is performing
less than 20% of the average level of bona fide services he was
performing for the Company in the immediately preceding 36-month
period (“Separation From Service”).
6.1. Termination Due to Death
. In the event of the Executive’s death, the
Executive’s estate or his legal representative, as the case
may be, shall be entitled to: (a) any Base Salary earned but
unpaid as of the date of death and Base Salary continuation through
the end of the month in which the Executive’s death occurs;
(b) a pro-rata payment for the year of the Executive’s
death equal to the “target” Bonus plus the matching
incentive under the AIMSPP (the “Total Award”) for such
year multiplied by a fraction, the numerator which is the number of
days transpired in the calendar year up to and including the date
of the death of the Executive, and the denominator of which is 365;
(c) immediate payment of any unpaid expense reimbursements and
unused accrued vacation days through the date of the
Executive’s death; and (d) any other payments and/or
benefits which the Executive, the Executive’s estate or the
Executive’s legal representative is entitled to receive under
any of the Benefit Plans, the AIMSPP, the SERP or otherwise in
accordance with the terms of such plan or arrangement.
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6.2. Termination Due to the
Executive’s Disability . Upon 30 days prior written
notice to the Executive, the Company may terminate the
Executive’s employment hereunder due to Disability. In such
event, the Executive or his legal representative, as the case may
be, shall be entitled to: (a) any Base Salary earned but
unpaid as of the date of the Executive’s termination due to
Disability and Base Salary continuation through the end of the
month in which such termination occurs; (b) a pro-rata payment
for the year of termination equal to the Total Award under the
AIMSPP for such year multiplied by a fraction, the numerator of
which is the number of days transpired in the calendar year up to
and including the date on which the Executive is terminated by the
Company due to Disability, and the denominator of which is 365,
payable within 30 days following the date the Separation From
Service occurs; (c) immediate payment of any unpaid expense
reimbursements and unused accrued vacation days through the date of
the Separation From Service; and (d) any other payments and/or
benefits which the Executive or the Executive’s legal
representative is entitled to receive under any of the Benefit
Plans, the AIMSPP, the SERP or otherwise in accordance with the
terms of such plan or arrangement.
6.3. Termination Without Cause or
by the Executive for Good Reason Prior to Change in Control .
Prior to a Change in Control and upon 10 days prior written notice
to the Executive, the Company may terminate the Executive’s
employment hereunder without Cause. Prior to a Change in Control
and upon 30 days prior written notice to the Company, the Executive
may terminate his employment hereunder with the Company for Good
Reason. In either such event (unless the Executive has incurred a
termination under Section 6.1 or 6.2 above), the Executive
shall be entitled to, upon execution and effectiveness of a release
in substantially the form attached as Exhibit A and upon
resignation by the Executive from the Board: (a) Base Salary
earned but unpaid as of the date of the Executive’s
termination; (b) a lump sum payment equal to two times Base
Salary plus two times the Total Award under the AIMSPP for
the year in which any such termination occurs;
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