EXHIBIT 10.51
EMPLOYMENT
AGREEMENT
AGREEMENT (the “
Agreement ”) dated as of October 27, 2005 (the
“ Effective Date ”), by and between Radnor
Holdings Corporation (the “ Company ”) and
Michael T. Kennedy (the “ Executive
”).
W I T N E S S E T
H :
WHEREAS, the Executive is presently
employed as Chairman of the Board of Directors (the “
Board ”), Chief Executive Officer and President of the
Company;
WHEREAS, the Company, through its
Board, considers it in the best interests of its stockholders to
secure the continued employment of Executive in his present
capacity, and desires to retain and continue to retain the
Executive in his present employment and current positions, subject
to certain terms and conditions as set forth more fully
below;
WHEREAS, Executive is willing to
continue his employment and remain in his current positions,
subject to certain terms and conditions as set forth more fully
below;
WHEREAS, the Company and the
Executive entered into an Employment Agreement dated
November 20, 2003, as amended by the First Amendment to
Employment Agreement, dated December 15, 2003 (the “
Existing Agreement ”), which was to be effective upon
the closing of an initial public offering of the Company’s
Shares (as hereafter defined);
WHEREAS, the Company and the
Executive wish to terminate the Existing Agreement and enter into
this Agreement whereby the Executive will be employed by the
Company in accordance with the terms and conditions stated below;
and
WHEREAS, the Board (exclusive of the
Executive, who has abstained from the relevant proceedings), has
specifically authorized the Company to enter into this
Agreement.
NOW, THEREFORE, in consideration of
the mutual promises and conditions herein set forth, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Executive agree
as follows:
1. Termination of Existing
Agreement; Term . The Existing Agreement is hereby
terminated and of no further force and effect. The initial term of
this Agreement shall be effective upon the Effective Date and shall
continue, unless terminated in accordance with Paragraph 4 herein
or as otherwise provided in this Agreement, until the end of the
calendar year following the fifth anniversary of the Effective Date
(the “ Initial Term ”).
At the end of the Initial Term, the term of this
Agreement shall be automatically extended for an additional 12
months absent written notice of non-renewal given by the Executive
or the Company to the other party hereto at least 90 days prior to
the relevant expiration date (the Initial Term, as may be extended,
the “ Term ”).
2. Duties and
Authority . During the Term, the Executive agrees to serve
the Company as Chairman, Chief Executive Officer, President and a
member of the Board. In serving in the aforementioned positions,
the Executive shall report directly to the Board and shall have
such authority and responsibilities as is customarily attendant to
such positions and as many be specified from time to time by the
Board (including without limitation, the right to consult the Board
or any committee thereof on the compensation and benefits to be
paid to other members of the Company’s senior management).
Except as otherwise permitted by the Board, the Executive shall
devote substantially all of his business time (excluding periods of
vacation and sick leave) and efforts to the performance of his
functions and responsibilities for the Company and its affiliates.
Executive will also serve, without additional compensation, in the
same positions with each subsidiary of the Company as he serves in
the Company and shall serve on such boards of directors of the
Company’s subsidiaries as the Board may request from time to
time. Executive agrees that he will not serve on the boards of
unaffiliated for-profit companies (and other entities) without the
prior consent of the Board. Notwithstanding the foregoing, the
Executive may manage his personal and family investments and
affairs and may serve on the boards of civil and charitable
organization, provided that such activities do not unreasonably
interfere with his duties and responsibilities
hereunder.
3. Place of
Performance . In connection with his employment during the
Term, unless otherwise agreed in writing by the Executive, the
Executive shall be principally employed at the Company’s
headquarters in Radnor, Pennsylvania. The Executive will undertake
reasonable business travel on behalf of the Company, at Company
expense, as provided hereinbelow.
4. Compensation and
Benefits . In full consideration for all services rendered
by the Executive during the Term, the Executive will receive the
following compensation and benefits:
a. Base Salary .
Subject to the following two sentences, the Executive shall receive
an annual base salary of two million dollars ($2,000,000)
commencing on January 1, 2006 (as may be modified in this
Section 4(a), the “ Base Salary ”) payable
in accordance with the customary payroll practices of the Company.
Effective upon the completion of a Qualified IPO (as hereafter
defined), Base Salary shall be reduced, on a prospective annual
basis, to one million dollars ($1,000,000). Qualified IPO means the
initial firm commitment underwritten public offering by the Company
of shares of its common stock (the “ Shares ”)
pursuant to a registration statement under the Securities Act of
1933, which results in aggregate proceeds to the Company of at
least $50.0 million (before deducting underwriting discounts and
commissions and offering expenses).
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b. Annual Bonus . All
bonuses payable during, or in respect of, the Term shall be set by
the Committee based upon reasonable performance criteria
established by such Committee no later than March 31 of the
year to which it relates and after consultation with the Executive.
For calendar year 2005, the Executive shall be eligible to receive
an annual bonus in accordance with the 2005 CEO Bonus Plan approved
by the Committee on March 30, 2005, a copy of which is
attached as Exhibit A (the “ 2005 Bonus Plan ”).
Amounts payable to Executive under the 2005 Bonus Plan, if any,
shall be paid not later than March 31, 2006. Except as
provided in the following sentence, for calendar year 2006 and all
subsequent years during the Term, the executive shall be eligible
for a target bonus equal to not less than 100% of Base Salary,
subject to such criteria as shall be approved annually by the
Committee. With respect to each target bonus award for calendar
year 2006 and subsequent calendar years, 80% of such target bonus
opportunity shall be based upon achievement of predetermined
financial goals and 20% of such target bonus opportunity shall be
based upon subjective criteria, in each case as determined by the
Committee. Attached as Exhibit B are the financial goals
established by the Committee for calendar year 2006.
Notwithstanding the foregoing provisions of this Section 4(b),
following the completion of a qualified IPO, the target bonus shall
be not less than 200% of Base Salary (prorated for the calendar
year in which the Qualified IPO occurs), subject to approval by the
Committee, after consultation with such outside advisors
(including, without limitation, a nationally recognized
compensation consulting firm and/or nationally recognized law firm)
as the Committee deems necessary or appropriate. All annual bonuses
shall be paid no later than the time annual bonuses are paid
generally to other senior executives of the Company, but in no
event later than March 31 of the calendar year following the
calendar year in respect of which such bonus was earned. The
Committee shall have the right to determine whether any bonus which
may become payable to Executive shall be payable in the form of
cash or Shares. If the Term is not extended for any reason,
Executive shall be eligible to receive any bonus earned in respect
of such final year of employment even if he is no longer employed
on the date of payment of such bonus.
c. Equity Grants . The
Executive shall be eligible to receive equity grants (including,
without limitation, restricted Shares and stock options) during the
Term in such form and amount and on such terms as the Committee, as
applicable, shall determine. The Committee shall consider, at least
annually as part of its annual review of the Executive’s
compensation, whether the Executive shall receive an equity grant
for that year.
d. Expense
Reimbursement . The Company will reimburse the Executive
for all business and travel expenses reasonably incurred in the
performance of the Executive’s duties in accordance with the
Company’s standard procedures in effect for the senior most
executives of the Company and consistent with past
practice.
e. Employee and Executive
Benefits . In addition to the compensation described in
this Section 4 and subject to all of the provisions of this
Section 4, the Company will make or cause to be made available
to the Executive and his spouse and other eligible dependents,
subject to the terms and conditions of the applicable
plans,
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including, without limitation, the
eligibility rules, participation in all employee pension, health,
welfare and benefit plans, including all 401(k) plans, employee
retirement income and welfare benefit policies, plans, programs, or
arrangements, in which senior executives of the Company participate
from time to time, including any stock purchase, savings, pension,
supplemental executive retirement or other retirement income or
welfare benefit, disability, salary continuation, and any other
deferred compensation, group and/or executive life, health,
medical/hospital, or other insurance (whether funded by actual
insurance or self-insured by the Company or an affiliate), expense
reimbursement, or other employee benefit policies, plans, programs,
or arrangements. Nothing paid to the Executive under any plan or
arrangement presently in effect or made available in the future
shall be deemed to be in lieu of the Base Salary payable to the
Executive pursuant to Section 4(f). Any payments or benefits
payable to the Executive under this Section 4(e) in respect of
any calendar year during which the Executive is employed by the
Company for less than the entire such year shall, unless otherwise
provided in the applicable plan or arrangement, be prorated in
accordance with the number of days in such calendar year during
which he is so employed.
f. Vacation and
Benefits . During the Term, the Executive shall be entitled
to vacation, paid holidays and other personal days in such amounts
as shall be available under the Company’s normal vacation
policies applicable to senior executives (but not less than six
weeks vacation per annum), as in effect from time to time, such
vacation to be taken in accordance with such normal vacation
policies; and the Executive shall be entitled to the perquisites
and other fringe benefits made available to senior executives of
the Company, commensurate with his position and level of
responsibility with the Company, and to such other perquisites and
fringe benefits as currently provided to him on the date of
execution of this Agreement consistent with past
practice.
g. Office and Support
Staff . During the Term, the Executive shall be entitled to
an appropriate office and furnishings and other appointments, and
to secretarial and other assistance, as provided to other key
employees of the Company and otherwise commensurate with his
positions, duties and responsibilities hereunder.
5. Termination of the
Executive’s Employment .
a. Death . Upon a
termination of Executives’ employment due to his death, the
Executive’s estate shall be entitled to (i) any accrued
but unpaid annual bonus for the calendar year prior to the calendar
year in which such termination is effective and the target annual
bonus for the year in which death occurs prorated to the date of
employment termination (or, if no target bonus has been
established, the most recent bonus paid or awarded); and
(ii) all accrued but unpaid Base Salary, vacation days and
benefits to the date of employment termination, including, but no
limited to, entitlements under the Company’s retirement,
disability and life insurance plans, if any.
b. Disability . If, as
a result of the Executive’s incapacity due to physical or
mental illness (a “ Disability ”), the Executive
shall have been absent from his duties hereunder on a full-time
basis for the entire period of six consecutive months,
and
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within thirty (30) days after
written notice of termination is given (which may occur before or
after the end of such six-month period) the Executive shall not
have returned to the performance of his duties hereunder on a
full-time basis, the Company may terminate the Executive’s
employment hereunder. Upon a termination of Executive’s
employment due to Disability, the Executive or his legal
representative, as the case may be, shall be entitled to
(i) any accrued but unpaid annual bonus for the calendar year
prior to the calendar year in which such termination is effective
and the target annual bonus for the year in which Executive’s
termination due to disability occurs prorated to the date of
employment termination (or, if no target bonus has been
established, the most recent bonus paid or awarded); and
(ii) all accrued but unpaid Base Salary, vacation days and
benefits to the date of employment termination, including, but no
limited to, entitlements under the Company’s retirement,
disability and life insurance plans, if any.
c. For Cause/Without Good
Reason . If the Executive’s employment is terminated
by the Company for Cause (as defined below) or by the Executive
without Good Reason (as defined in Section 5(d) below), the
Executive shall receive all accrued but unpaid Base Salary and
benefits to the date of employment termination, including any
accrued but unpaid annual bonus for the calendar year prior to the
calendar year in which such termination is effective. For purposes
hereof, “ Cause ” shall be defined as
(i) the Executive’s conviction of a felony under the
laws of the United States or any state thereof or any other
jurisdiction in which the Company or any of its affiliates conducts
business or the entering of a plea of nolo contendere to such a
felony charge; and (ii) Executive’s gross negligence or
willful misconduct which is materially injurious to the financial
condition of the Company. For purposes of this Section, no act or
failure to act on the part of the Executive shall be deemed
“willful” if it was due primarily to an error in
judgment or negligence, but shall be deemed “willful”
only if done or omitted to be done by the Executive not in good
faith and without reasonable belief that the Executive’s
action or omission was in the best interest of the Company. The
Executive shall have thirty (30) days following the receipt of
notice from the Company of the existence of circumstances
constituting Cause (under clause (ii) of the preceding
sentence) to correct such circumstances. Notwithstanding the
foregoing, the Executive shall not be deemed to have been
terminated for Cause hereunder unless and until (1) there
shall have been delivered to the Executive a written notice from
the Company stating that it has determined that the Executive had
committed an act constituting Cause as herein defined and
specifying the particulars thereof in detail, (2) the
Executive shall have had the opportunity to appear before the Board
(with counsel if he so elects) to respond to such particulars and
(3) at least 75% of the members of the Board (not including
the Executive ) shall have voted to terminate his employment for
Cause. Nothing herein will limit the right of the Executive or the
Executive’s beneficiaries to contest the validity or
propriety of any such determination.
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d. Without Cause/Good Reason
Termination . If the Executive’s employment is
terminated by the Company without Cause or by the Executive for
Good Reason, then, subject to execution by the Company and the
Executive of customary releases of the other party hereto on
mutually satisfactory terms agreed to in good faith by the Company
and the Executive, the Executive shall be entitled to the
following:
i. all accrued, but unpaid Base
Salary through the date of termination, plus two times the
Executive’s then-current Base Salary (increased to three
times if Executive’s employment termination occurs within two
years following a Change of Control), such amount to be payable in
a lump sum within five business days following Executive’s
termination of employment;
ii. two times the Executive’s
target bonus (or, if no such target bonus award has been
established for such year, the most recent annual bonus paid or
awarded to the Executive) amount (increased to three times if
Executive’s employment termination occurs within two years
following a Change of Control), such amount to be payable in a lump
sum within five business days following Executive’s
termination of employment;
iii. all accrued, but unpaid
entitlements and benefits from the Company, including, but no
limited to, entitlements under the Company’s retirement,
deferred compensation, disability and life insurance plan and
programs, if any, payable in accordance with the respective terms
of such plans and programs; and
iv. at the Company’s expense,
full benefit coverage for the Executive, his spouse and other
eligible dependents under each of the Company’s medical,
dental, life insurance, disability, accidental death and
dismemberment and other Executive welfare plans and programs in
which Executive, his spouse and such dependents were participating
at the time of Executive’s termination of employment for a
period of two years (increased to three years’ coverage if
Executive’s employment termination occurs within two years
following a Change of Control) from the date of Executive’s
termination, provided that if the Company’s health and
welfare programs do not permit continuation of coverage for the
Executive, his spouse or any eligible dependents, such individuals
will be provided with comparable insurance (determined on an
after-tax basis) at the Company’s expense.
“ Good Reason ”
shall be defined as (i) any reduction in Executive’s
base salary or any material reduction in Executive’s annual
bonus opportunity; (ii) a substantial diminution of the
Executive’s position, including status, offices, titles and
reporting relationships; (iii) a relocation of the
Company’s office by more than 35 miles; (iv) the breach
by the Company of any material terms of the employment agreement;
(v) the Company’s failure to obtain the express written
assumption of Executive’s employment agreement by any
successor to the Company; and (vi) the Executive’s
voluntary termination of employment for any reason within a 60-day
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