Exhibit 99.1
EXECUTION VERSION
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement")
is made and entered into as of October 1, 2005, between VERSO TECHNOLOGIES,
INC., a Minnesota corporation (the "Company"), and XXXXXX X. XXXX (the
"Employee"), an individual resident of the State of Georgia.
RECITALS:
WHEREAS, the Company and the Employee have entered into that certain
Executive Employment Agreement dated as of September 29, 2000 (the "Original
Agreement"); and
WHEREAS, the Company and the Employee desire to amend and restate the
Original Agreement as provided hereby;
NOW, THEREFORE, in consideration of the premises and of the promises and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, do hereby agree as to amend and restate the Original Agreement as
follows:
1. TERM. The term (the "Term") of this Agreement shall begin on the date
hereof (the "Effective Date") and shall continue in effect until the termination
of the Employee's employment hereunder; provided, however, the obligations and
covenants of the Company and the Employee hereunder that are to be performed or
observed following such termination shall survive the expiration of the Term.
2. EMPLOYMENT AND DUTIES. The Employee shall serve as the Company's
Executive Chairman of the Board of Directors of the Company (the "Board") for so
long as he is elected to serve as a member of the Board, reporting only to the
Board, and, in addition to the duties prescribed by the Company's Amended and
Restated Bylaws (which duties must be consistent with the duties of Chairmen of
Boards of Directors generally), shall be responsible for providing direction to
the Company with respect to mergers, acquisitions and dispositions involving the
Company or any of its subsidiaries or divisions, strategic relationships,
partnerships or joint ventures in which the Company has or may have an interest
and strategic planning regarding the Company's product and service offerings,
shall serve as the Chairman of and preside at all meetings of the Board and the
Company's shareholders at which he is present, and shall have such other powers
and duties as may from time to time be prescribed by the Board and consented to
by the Employee, which consent shall not be unreasonably withheld, delayed or
conditioned. The Company shall provide the Employee with a private office,
secretarial and administrative assistance, office equipment, supplies and other
facilities and services suitable to the Employee's position.
3. COMPENSATION.
3.1 SALARY. For all services to be rendered by the Employee pursuant
to this Agreement, the Company hereby agrees to pay the Employee a base salary
at an annual rate per year of $450,000.00 (the "Base Salary"), payable in
accordance with the Company's payroll practices in effect from time to time. The
Base Salary shall be reviewed from time to time in the discretion of the
compensation committee of the Board. Any increase in Base Salary or other
compensation granted by the compensation committee of the Board shall in no way
limit or reduce any other obligation of the Company hereunder. Once established
at an increased specified rate, the Base Salary hereunder shall not thereafter
be reduced, and the term Base Salary used in this Agreement shall refer to the
Base Salary as so increased.
3.2 BONUS. In addition to his Base Salary, in the discretion of the
Board, the Employee may be awarded for each calendar year during the Term an
annual bonus (an "Annual Bonus") either pursuant to a bonus or incentive plan of
the Company or otherwise on terms no less favorable than those awarded to other
executive officers of the Company.
4. [INTENTIONALLY OMITTED].
5. BENEFITS. The Employee shall be entitled to all benefits and conditions
of employment provided by the Company to its executive officers, including,
without limitation, insurance, participation in the Company's vacation policy,
and participation in any stock option or incentive compensation plans, pension,
profit sharing or other retirement plans, subject (in each case) to the terms of
such plans and any provisions, rules, regulations and laws applicable to such
plans.
6. [INTENTIONALLY OMITTED].
7. REIMBURSEMENT FOR BUSINESS EXPENSES. The Employee shall be reimbursed
for all reasonable out-of-pocket business expenses incurred by him in the direct
performance of his duties during his employment with the Company pursuant to the
terms of this Agreement and in accordance with the Company's policies in effect
from time to time. All requests for reimbursement shall be substantiated by
invoices and other pertinent data reasonably satisfactory to the Company.
8. PERFORMANCE. Employee shall devote substantially all of his working time
and efforts to the business and affairs of the Company and to the diligent
performance of the duties and responsibilities assigned to him pursuant to this
Agreement, except for vacations, weekends and holidays. Notwithstanding the
foregoing, the Employee may invest in stocks, bonds, securities, commodities,
real estate or other forms of investment for his benefit and that of Employee's
family and manage such investments, and render charitable, civic and outside
board services so long as such services do not materially interfere with the
Employee's ability to discharge his duties, including without limitation, such
outside services as Employee is currently performing.
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9. NON-DISCLOSURE OF PROPRIETARY INFORMATION; NON-COMPETITION;
NON-SOLICITATION.
9.1. CONFIDENTIAL INFORMATION; TRADE SECRETS. As used in this
Agreement, the term "Confidential Information" shall mean valuable, non-public,
competitively sensitive data and information relating to the Company's business
or the business of any entity affiliated with the Company, other than Trade
Secrets (as defined below). "Confidential Information" shall include, among
other things, information specifically designated as a Trade Secret that is,
notwithstanding the designation, determined by a court of competent jurisdiction
not to be a "trade secret" under applicable law. As used in this Agreement, the
term "Trade Secrets" shall mean information or data of or about the Company or
any entity affiliated with the Company, including, without limitation, technical
or non-technical data, formulas, patterns, compilations, programs, devices,
methods, techniques, drawings, processes, financial data, financial plans,
product plans, or lists of actual or potential customers or suppliers, that (i)
derive economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from their disclosure or use; and (ii) are subject of
efforts that are reasonable under the circumstances to maintain their secrecy.
To the extent that the foregoing definition is inconsistent with a definition of
"trade secret" under applicable law, the foregoing definition shall be deemed
amended to the extent necessary to render it consistent with applicable law.
9.2. NON-DISCLOSURE. The Employee will be exposed to Trade Secrets and
Confidential Information as a result of his employment by the Company as
provided in this Agreement. The Employee acknowledges and agrees that any
unauthorized disclosure or use of any of the Trade Secrets or Confidential
Information of the Company would be wrongful and would likely result in
immediate and irreparable injury to the Company. In consideration of the
Employee's right to employment (or continued employment) under the terms of this
Agreement, except as appropriate in connection with the performance of his
obligations under this Agreement, the Employee shall not, without the express
prior written consent of an executive officer of the Company other than the
Employee, redistribute, market, publish, disclose or divulge to any other person
or entity, or use or modify for use, directly or indirectly, in any way for any
person or entity (i) any Confidential Information during the Term of this
Agreement and for a period of two (2) years after the final date of the Term of
this Agreement; and (ii) any Trade Secrets at any time (during or after the Term
of this Agreement) during which such information or data shall continue to
constitute a "trade secret" under applicable law. The Employee agrees to
cooperate with any reasonable confidentiality requirements of the Company. The
Employee shall immediately notify the Company of any unauthorized disclosure or
use of any Trade Secrets or Confidential Information of which the Employee
becomes aware.
9.3. NON-COMPETITION. The Employee shall not, either directly or
indirectly, alone or in partnership, manage, control, operate or own any
business that is substantially similar to the business of the Company during the
Term hereof in any geographic area of the United States of America (a "Competing
Business") during the term
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hereof and, if the Employee's employment with the Company shall be terminated
pursuant to Section 13.1 or Section 13.3 hereof, during the one (1) year period
following the term hereof, except that the Employee may own up to three percent
(3%) of the outstanding securities of a Competing Business the securities of
which are registered with the Securities and Exchange Commission if such
Competing Business is subject to the periodic reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act").
9.4. NON-SOLICITATION. For a period of one (1) year immediately
following any termination of the Employee's employment (other than a termination
pursuant to Section 13.2. or Section 13.4 hereof), the Employee will not
solicit, or participate in any solicitation of, the customers, suppliers,
employees or representatives of the Company (or any of its subsidiaries or
affiliated companies) to breach any contract with the Company, terminate any
relationship with the Company or leave the Company. For purposes of this
Agreement, customers shall be limited to actual customers or actively-sought
prospective customers of the Company or any subsidiary or affiliate of the
Company with whom the Employee has had substantial contact during the Term of
this Agreement.
10. CERTAIN DEFINITIONS.
10.1. ACCRUED COMPENSATION. For purposes of this Agreement, "Accrued
Compensation" shall mean an amount which shall include all amounts earned or
accrued through the "Termination Date" (as hereinafter defined) but not paid as
of the Termination Date, including, without limitation, (i) Base Salary, (ii)
reimbursement for reasonable and necessary expenses incurred by the Employee on
behalf of the Company during the period ending on the Termination Date, (iii)
vacation pay, (iv) bonuses, including, without limitation, an amount in cash
equal to the product of (a) the Annual Bonus, if any, which otherwise would have
been payable to the Employee for the calendar year in which the Termination Date
occurs pursuant to Section 3.2 hereof had the Employee's employment with the
Company not terminated, and (b) a fraction, the numerator of which equals the
number of days in such calendar year prior to the Termination Date and the
denominator of which equals 365, and incentive compensation, and (v) all other
amounts to which the Employee is entitled under any compensation plan of the
Company at the times such payments are due.
10.2. BASE AMOUNT. For purposes of this Agreement, "Base Amount" shall
mean the Employee's annual Base Salary at the highest rate in effect on, or at
any time during the ninety (90) day period prior to, the Termination Date and
shall include all amounts of the Employee's Base Salary that are deferred under
any qualified and non-qualified employee benefit plans of the Company or any
other agreement or arrangement.
10.3. CAUSE. For purposes of this Agreement, a termination of
employment is for "Cause" if the Employee has been convicted of a felony or if
the termination is evidenced by a resolution adopted in good faith by all of the
non-employee members of the Board that the Employee (i) intentionally and
continually failed substantially to perform his reasonably assigned duties with
the Company (other than a failure resulting from the
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Employee's incapacity due to physical or mental illness or from the Employee's
assignment of duties that would constitute "Good Reason" (as hereinafter
defined)) which failure continued for a period of at least thirty (30) days
after a written notice of demand for substantial performance has been delivered
to the Employee specifying the manner in which the Employee has failed
substantially to perform, or (ii) intentionally engaged in illegal conduct or
gross misconduct which results in material economic harm to the Company;
provided, however, that (A) where the Employee has been terminated for Cause
because a felony prosecution has been brought against him and no conviction or
plea of guilty or plea of nolo contendere or its equivalent results therefrom,
then said termination shall no longer be deemed to have been for Cause and the
Employee shall be entitled to all the benefits provided by Section 11.1(i)
hereof from and after the date on which the prosecution of the Employee has been
dismissed or a judgement of acquittal has been entered, whichever shall first
occur; and (B) no termination of the Employee's employment shall be for Cause as
set forth in clause (ii) above until (x) there shall have been delivered to the
Employee a copy of a written notice setting forth that the Employee was guilty
of the conduct set forth in clause (ii) and specifying the particulars thereof
in detail, and (y) the Employee shall have been provided an opportunity to be
heard in person by the Board (with the assistance of the Employee's counsel if
the Employee so desires). No act, or failure to act, on the Employee's part
shall be considered "intentional" unless the Employee has acted or failed to act
with a lack of good faith and with a lack of reasonable belief that the
Employee's action or failure to act was in the best interests of the Company.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of any senior officer of the
Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Employee in good
faith and in the best interests of the Company. Any termination of the
Employee's employment by the Company hereunder shall be deemed to be a
termination other than for Cause unless it meets all requirements of this
Section 10.3.
10.4. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall have occurred if:
(i) a majority of the directors of the Company shall be persons
other than persons: (A) for whose election proxies shall have been solicited by
the Board, or (B) who are then serving as directors appointed by the Board to
fill vacancies on the Board caused by death or resignation (but not by removal)
or to fill newly-created directorships;
(ii) a majority of the outstanding voting power of the Company
shall have been acquired or beneficially owned (as defined in Rule 13d-3 under
the 1934 Act or any successor rule thereto) by any person (other than the
Company, a subsidiary of the Company or the Employee) or Group (as defined
below), which Group does not include the Employee; or
(iii) there shall have occurred:
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(A) a merger or consolidation of the Company with or into
another corporation (other than (1) a merger or consolidation with a subsidiary
of the Company or (2) a merger or consolidation in which (a) the holders of
voting stock of the Company immediately prior to the merger as a class continue
to hold immediately after the merger at least a majority of all outstanding
voting power of the surviving or resulting corporation or its parent and (b) all
holders of each outstanding class or series of voting stock of the Company
immediately prior to the merger or consolidation have the right to receive
substantially the same cash, securities or other property in exchange for their
voting stock of the Company as all other holders of such class or series);
(B) a statutory exchange of shares of one or more classes or
series of outstanding voting stock of the Company for cash, securities or other
property;
(C) the sale or other disposition of all or substantially
all of the assets of the Company (in one transaction or a series of
transactions); or
(D) the liquidation or dissolution of the Company;
unless more than twenty-five percent (25%) of the voting stock (or the voting
equity interest) of the surviving corporation or the corporation or other entity
acquiring all or substantially all of the assets of the Company (in the case of
a merger, consolidation or disposition of assets) or of the Company or its
resulting parent corporation (in the case of a statutory share exchange) is
beneficially owned by the Employee or a Group that includes the Employee.
10.5. GROUP. For purposes of this Agreement, "Group" shall mean any
two or more persons acting as a partnership, limited partnership, syndicate, or
other group acting in concert for the purpose of acquiring, holding or disposing
of voting stock of the Company.
10.6. DISABILITY. For purposes of this Agreement, "Disability" shall
mean a physical or mental infirmity which impairs the Employee's ability to
substantially perform his duties with the Company for a period of one hundred
eighty (180) consecutive days and the Employee has not returned to his full time
employment prior to the Termination Date as stated in the "Notice of
Termination" (as hereinafter defined).
10.7. GOOD REASON.
10.7.1. For purposes of this Agreement, "Good Reason" shall mean
a good faith determination by the Employee, in the Employee's sole and absolute
judgment, that any one or more of the following events has occurred, without the
Employee's express written consent:
(i) the assignment to the Employee of any duties
inconsistent with the Employee's position (including, without limitation,
status, titles and reporting requirements), authority, duties or
responsibilities as in effect immediately prior to the date of such assignment,
or any other action by the Company that results in a material
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diminution in such position, authority, duties or responsibilities, excluding
for this purpose isolated and inadvertent action not taken in bad faith and
remedied by the Company promptly after receipt of notice thereof given by the
Employee;
(ii) a reduction by the Company in the Employee's Base
Salary, as the same may be increased from time to time, or a change in the
eligibility requirements or performance criteria under any bonus, incentive or
compensation plan, program or arrangement under which the Employee is covered
immediately prior to the Termination Date which adversely affects the Employee;
(iii) any failure to pay the Employee any compensation or
benefits to which he is entitled within five (5) days of the date due after
notice of the failure to so pay is given by the Employee;
(iv) the Company's requiring the Employee to be based
anywhere other than within fifty (50) miles of the Employee's job location as of
the date hereof, except for reasonably required travel on the Company's business
which is not greater than such travel requirements prior to the date hereof;
(v) the taking of any action by the Company that would
materially adversely affect the physical conditions existing in or under which
the Employee performs his employment duties;
(vi) the insolvency or the filing by any party, including
the Company, of a petition for bankruptcy by the Company;
(vii) any purported termination of the Employee's employment
for Cause by the Company which does not comply with the terms of Section 10.3
hereof; or
(viii) any breach by the Company of any provision of this
Agreement.
10.7.2. The Employee's right to terminate his employment pursuant
to this Section 10 shall not be affected by his incapacity due to physical or
mental illness.
10.8. NOTICE OF TERMINATION. For purposes of this Agreement, "Notice
of Termination" shall mean a written notice of termination from the Company of
the Employee's employment which indicates the specific termination provision in
this Agreement relied upon and which sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated.
10.9. TERMINATION DATE. For purposes of this Agreement, "Termination
Date" shall mean, in the case of the Employee's death, his date of death, in the
case of the
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Employee's voluntary termination, the last day of employment, in the case of
termination pursuant to Section 13.7, the date of the shareholder meeting at
which he was not elected and in all other cases (other than in the case of a
successor or an assignee, which is provided for in Section 14.1 hereof), the
date specified in the Notice of Termination; provided, however, that if the
Employee's employment is terminated by the Company for Cause or due to
Disability, the date specified in the Notice of Termination shall be at least
thirty (30) days from the date the Notice of Termination is given to the
Employee; and provided further that in the case of Disability the Employee shall
not have returned to the full-time performance of his duties during such period
of at least thirty (30) days.
11. BENEFITS AND PAYMENTS UPON TERMINATION OF EMPLOYMENT.
11.1. COMPENSATION AND BENEFITS. If, during the term of this
Agreement, the Employee's employment with the Company shall be terminated, the
Employee shall be entitled to the following compensation and benefits in the
following circumstances:
(i) If the Employee's employment with the Company shall be
terminated (A) by the Company for Cause or Disability; (B) by reason of the
Employee's death; or (C) by the Employee pursuant to Section 13.3 hereof, then
the Company shall pay to the Employee all Accrued Compensation.
(ii) If the Employee's employment with the Company shall be
terminated (A) by the Company pursuant to Section 13.2 hereof, (B) as provided
in Section 13.7 hereof, or (C) by the Employee pursuant to section 13.4 hereof,
then the Employee shall be entitled to the following:
(1) the Company shall pay the Employee all Accrued
Compensation;
(2) the Company shall pay the Employee as severance pay and
in lieu of any further compensation for periods subsequent to the Termination
Date an amount in cash equal to two (2) times the Base Amount;
(3) for twenty-four (24) months or such longer period as may
be provided by the terms of the appropriate program, practice or policy, the
Company shall, at its expense, continue on behalf of the Employee and his
dependents and beneficiaries the life insurance, disability, medical, dental and
hospitalization benefits generally made available to the Company's executive
officers at any time during the 90-day period prior to the Termination Date or
at any time thereafter, provided that (i) the Company's obligation hereunder
with respect to the foregoing benefits shall be limited to the extent that the
Employee obtains any such benefits pursuant to a subsequent employer's benefit
plans, in which case the Company may reduce the coverage of any benefits it is
required to provide the Employee hereunder as long as the aggregate coverages
and benefits of the combined benefit plans are no less favorable to the Employee
than the coverages and benefits required to be provided hereunder, and (ii) this
clause (3) shall not be interpreted so
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as to limit any benefits to which the Employee or his dependents or
beneficiaries may be entitled under any of the Company's employee benefit plans,
programs or practices following the Employee's termination of employment,
including, without limitation, retiree medical and life insurance benefits; and
(4) the restrictions on any outstanding incentive awards
(including, without limitation, restricted stock and granted performance shares
or units) under any incentive plan or arrangement shall lapse and such incentive
award shall become 100% vested, all stock options, warrants and stock
appreciation rights granted to the Employee on or prior to the date of this
Agreement shall become immediately exercisable and 100% vested and,
notwithstanding anything to the contrary contained in the plan, agreement or
other instrument relating to such stock option, warrant or stock appreciation
rights with regard to the period of time within which such stock option, warrant
or stock appreciation rights must be exercised following the Employee's
termination of employment or provision of services to the Company, all such
stock options, warrants and stock appreciation rights may be exercised at any
time and from time to time until the one (1) year anniversary of the Termination
Date, and all performance units granted to the Employee shall become 100%
vested.
(iii) The amounts provided for in subsection 11.1(i) shall be
payable to Employee in a lump-sum on the Termination Date, and the amounts
provided for in subsection 11.1(ii) shall be payable to the Employee in
substantially equal bi-weekly installments for a twenty-four (24) month period
commencing on the Termination Date, and otherwise in accordance with the
Company's payroll practices in effect from time to time.
(iv) The Employee shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise, and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment,
except as provided in subsection 11.1(ii)(3).
11.2. NO SEVERANCE. The severance pay and benefits provided for in
this Section 11 shall be in lieu of any other severance or termination pay to
which the Employee may be entitled under any Company severance or termination
plan, program, practice or arrangement.
11.3. OTHER COMPENSATION AND BENEFITS. The Employee's entitlement to
any other compensation or benefits shall be determined in accordance with the
Company's employee benefit plans and other applicable programs, policies and
practices then in effect.
12. GROSS-UP PAYMENTS.
12.1. ADDITIONAL PAYMENTS. Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company to or for the benefit
of the Employee (whether paid
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or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 12) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
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, the Employee retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 12.1, if it shall be determined that the Employee is
entitled to a Gross-Up Payment, but that the Payments do not exceed 110% of the
greatest amount (the "Reduced Amount") that could be paid to the Employee such
that the receipt of Payments would not give rise to any Excise Tax, then no
Gross-Up Payment shall be made to the Employee and the Payments, in the
aggregate, shall be reduced to the Reduced Amount.
12.2 DETERMINATION. Subject to the provisions of Section 12.3, all
determinations required to be made under this Section 12, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by a nationally-recognized accounting firm selected by the Company and
reasonably acceptable to the Employee (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the Employee
within fifteen (15) business days of the receipt of notice from the Employee
that there has been a Payment, or such earlier times as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne solely by
the Company. Any Gross-Up Payment, as determined pursuant to this Section 12,
shall be paid by the Company to the Employee within five (5) days of the receipt
of the Accounting Firm's determination. Any determination by the accounting Firm
shall be binding upon the Company and the Employee. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 12.3 and the Employee thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee.
12.3 INTERNAL REVENUE SERVICE CLAIM. The Employee shall notify the
Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten
(10) business days after the Employee is informed in writing of such claim and
shall apprise the Company of the nature of such claim
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and the date on which such claim is requested to be paid. The Employee shall not
pay such claim prior to the expiration of the 30-day period following the date
on which the Employee gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Employee in writing prior to the expiration of such
period that it desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, without limitation, additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Employee harmless, on an after-tax basis, for any Excise Tax or income tax
(including, without limitation, interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 12.3, the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo 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 the Employee to pay the
tax claimed and xxx for a refund or contest the claim in any permissible manner,
and the 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 the Company shall determine; provided, however, that if the
Company directs the Employee to pay such claim and xxx for a refund, the Company
shall advance the amount of such payment to the Employee, on an interest-free
basis and shall indemnify and hold the Employee harmless, on an after-tax basis,
from any Excise Tax or income tax (including, without limitation, 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 further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Employee with respect to which such contested amount
is claimed to be due is limited solely to such contested amount. Furthermore,
the Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Employee shall be
entitled to settle or contest,
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as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
12.4 REFUNDS. If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 12.3, the Employee becomes entitled
to receive any refund with respect to such claim, then the Employee shall
(subject to the Company's complying with the requirements of Section 12.3)
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Employee of an amount advanced by the Company pursuant to Section
12.3, a determination is made that the Employee shall not be entitled to any
refund with respect to such claim and the Company does not notify the Employee
in writing of its intent to contest 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.
13. TERMINATION. The Employee's employment hereunder may be terminated
without any breach of this Agreement only in accordance with this Section 13.
13.1. TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
the Employee's employment at any time for Cause by providing to the Employee a
Notice of Termination, whereupon the Employee shall be entitled to all of the
benefits and payments provided for under Section 11 hereof.
13.2. TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may
terminate the Employee's employment at any time without Cause by providing to
the Employee a Notice of Termination, whereupon the Employee shall be entitled
to all of the benefits and payments provided for under Section 11 hereof.
13.3. TERMINATION BY THE EMPLOYEE. The Employee's employment may be
terminated by the Employee at any time by providing the Company with notice of
such termination and specifying in the notice the effective date of such
termination, which shall not be less than one hundred twenty (120) days after
giving such notice, whereupon the Employee's employment shall terminate on the
date specified in such notice and the Employee shall be entitled to all of the
benefits and payments provided for under Section 11 hereof; provided, however,
that following receipt of such notice, the Company may specify, in its
discretion, the date on which the Employee's employment shall terminate so long
as the date so specified is not more than one hundred twenty (120) days after
the date on which the Employee shall have given notice, in which case the
Employee's employment shall terminate on the date so specified by the Company.
13.4. TERMINATION BY THE EMPLOYEE FOR GOOD REASON FOLLOWING A CHANGE
OF CONTROL. For a (1) year period following a Change of Control, the Employee's
employment may be terminated by the Employee for Good Reason at any such time
during such one (1) year period by providing the Company with a notice of such
termination and specifying in the notice the effective date of such termination,
whereupon the Employee's
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employment shall terminate on the date specified in such notice and the Employee
shall be entitled to all of the benefits and payments provided for under Section
11 hereof.
13.5. TERMINATION UPON DISABILITY. The Company may terminate the
Employee's employment upon the Disability of the Employee by providing to the
Employee a Notice of Termination, whereupon the Employee shall be entitled to
all of the benefits and payments provided for under Section 11 hereof.
13.6. DEATH. In the event of the Employee's death during his
employment hereunder, the Employee's employment shall be automatically
terminated, whereupon the Employee shall be entitled to all of the benefits and
payments provided for under Section 11 hereof.
13.7. TERMINATION UPON FAILURE TO BE RE-ELECTED. The Employee's
employment with the Company shall terminate immediately upon the failure of the
Employee to be re-elected to serve as a member of the Board.
14. SUCCESSORS AND ASSIGNS.
14.1. ASSUMPTION AND AGREEMENT. This Agreement shall be binding upon
and shall inure to the benefit of the Company, its successors and assigns, and
the Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) or assign, by agreement in form and
substance satisfactory to the Employee, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession or assignment had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession or assignment shall be a breach of this
Agreement and shall entitle the Employee to compensation from the Company in the
same amount and on the same terms as he would be entitled to hereunder if his
employment had been terminated pursuant to Section 13.2 hereof, except that for
purposes of implementing the foregoing, the date on which any such succession or
assignment becomes effective shall be deemed the Termination Date hereunder. As
used in the Agreement, Company shall mean the Company as hereinbefore defined
and any successor or assign that executes and delivers the agreement provided
for in this Section 14.1 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
14.2. RIGHTS OF EMPLOYEE. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of and be enforceable by the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees. If the 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 the Employee's devise,
legatee or other designee or, if there be no such designee, to the Employee's
estate.
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15. INJUNCTIVE RELIEF. The Company and the Employee agree that damages are
an inadequate remedy for, and that the Company or any successor to the business
of the Company would be irreparably harmed by, any breach of Section 9 of this
Agreement, and that the Company, any successor to the business of the Company or
any permitted assignee of the Company shall be entitled to equitable relief in
the form of a preliminary or permanent injunction upon any breach of Section 9
hereof.
16. NOTICES. For the purpose of this Agreement, notices and all other
communications to either party hereunder provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when delivered in person
or mailed by first-class mail or airmail, postage prepaid, addressed:
If to the Employee:
Xx. Xxxxxx X. Xxxx
000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
If to the Company:
Verso Technologies, Inc.
000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
or to such other address(es) as either party may have furnished to the other
party in writing in accordance with this Section.
17. MISCELLANEOUS. No provision of this Agreement may be amended,
modified or waived unless such amendment, modification or waiver (i) is agreed
to in writing and is signed by the Employee and a representative of the Company,
its successor or permitted assignee and (ii) has been approved by the Board, its
successor or any permitted assignee of the Company. No waiver by either party to
this Agreement at any time of breach by the other party of, or compliance by the
other party with, any condition or provision of this Agreement to be performed
by the other party shall be deemed to be a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time. No
agreements or representations, oral or otherwise, expressed or implied, with
respect to the subject matter of this Agreement have been made by either party
that are not expressly set forth in this Agreement.
18. VALIDITY . The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which other provisions shall remain in
full force and effect, nor shall the invalidity or unenforceability of a portion
of any provision of this Agreement affect the validity or enforceability of the
balance of such provision.
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19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute a single agreement.
20. HEADINGS. The headings of the paragraphs contained in this
Agreement are for reference purposes only and shall not, in any way, affect the
meaning or interpretation of any provision of this Agreement.
21. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal substantive laws, and not the choice of law
rules, of the State of Georgia.
22. ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement or the breach thereof, other than the provisions of Section 9
hereof, shall, on the written request of one party served upon the other, be
settled by binding arbitration in Xxxxxx County, Georgia in accordance with the
commercial arbitration rules then recognized by the American Arbitration
Association, and judgment upon the award rendered may be entered and enforced in
any court having jurisdiction thereof.
23. FEES AND EXPENSES. The Company shall pay all legal fees and
related expenses incurred by the Employee as they become due as a result of or
in connection with (i) the Employee's termination of employment (including,
without limitation, all such fees and expenses, if any, incurred in contesting
or disputing any such termination of employment), (ii) the Employee seeking to
obtain or enforce any right or benefit provided by this Agreement (including,
without limitation, any such fees and expenses incurred in connection therewith)
or by any other plan or arrangement maintained by the Company under which the
Employee is or may be entitled to receive benefits, (iii) the Employee's hearing
before the Board as contemplated in Section 10.3 of this Agreement, (iv) any tax
audit or proceeding to the extent attributable to the application of any Excise
Tax with respect to any Payment or Payments hereunder, plus in each case
interest on any delayed payment at the "Applicable Federal Rate," as defined in
Section 1274(d) of the Code, as then in effect, and (v) the preparation and
execution of this Agreement.
24. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements (if any),
understandings and arrangements (oral or written) between the parties hereto,
including, without limitation, the Original Agreement.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and delivered by its duly authorized officer, and the Employee has executed and
delivered this Agreement, all as of the date first written above.
VERSO TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Its: EVP & CFO
-----------------------------------
/s/ Xxxxxx X. Xxxx
----------------------------------------
XXXXXX X. XXXX
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