AGREEMENT
AGREEMENT made December 31, 1996, between PrimeSource Corporation, a
Pennsylvania corporation (the "Company") and Xxxxx X. Xxxxxx ("Executive").
WHEREAS, Executive is the duly elected Chief Executive Officer and
President of the Company and has made and is currently making a significant
contribution to the Company's business;
WHEREAS, the Board of Directors (the "Board") of the Company believe
that the continued services of Executive will be of great value and importance
to the Company and are desirous of ensuring the continuation of Executive's
services for a period of time; and
WHEREAS, Executive is willing to enter into an agreement with the
Company upon the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and of the mutual benefits herein provided, and intending to be
legally bound hereby, the Company and Executive hereby agree as follows:
1. Term of Employment. The Company hereby employs Executive as Chief
Executive Officer and President, and Executive accepts such employment by the
Company on the terms and conditions herein contained for a period commencing as
of the date hereof and subject to termination only as hereinafter provided (the
period from the date hereof through termination as hereinafter provided is
referred to as the "Employment Period").
2. Duties. During the Employment Period, Executive shall have such
duties, responsibility and authority and perform such services for the Company
as are consistent with Executive's background, training and experience as may
from time to time be assigned to Executive by the Board.
3.Compensation.
(a) Commencing as of the date hereof and thereafter during the
Employment Period, the Company shall pay Executive a base salary at the annual
rate of no less than $250,000, which amount may be increased from time to time
in accordance with the Company's policies regarding general increases and at the
discretion of the Board. Payment shall be made in accordance with the Company's
regular practice for senior executive employees as in effect from time to time.
(b) In addition to the Executive's base salary, Executive
shall be entitled to participate in the normal course of business in the annual
executive bonus program(s) of the Company and to receive such bonus payments as
are customarily granted for the purposes of providing additional compensation to
senior executives.
(c) A change-of-control of the Company is defined to be any of
the following: (a) the effective date of a Major Transaction which is subject to
and satisfies the special voting requirement set forth in Article VIII of the
Company's Amended and Restated Articles of Incorporation ("Articles"), (b) the
completion of a tender or exchange offer for Voting Stock (other than a tender
offer by the Company) which is accepted by the holders of 51% of the Voting
Power of the outstanding Voting Stock, (c) the effective date of a merger,
consolidation, or dissolution in which the Company is not the surviving entity,
or (d) the date on which there is a "Significant Change" in the membership of
the Company's Board occurring by the third annual meeting after the effective
date of a merger, consolidation, reorganization or a Major Transaction or the
date on which any Person becomes a 15% shareholder (each of which is referred to
as a "Significant Event"). A Significant Change in the Board shall be deemed to
have occurred if one-third or more of the directors are individuals who (i) are
or were Affiliates or Associates of the 15% shareholder or any party to the
Significant Event and (ii) were not Affiliates or Associates of the Company
prior to the Significant Event. A sale or series of sales or other disposition
of a subsidiary, division or other operating units, or the assets thereof, not
constituting a sale of substantially all of the assets of the Company, shall not
constitute a change-of-control. The definitions for Affiliates, Associates,
Major Transaction, Person, Voting Stock, and Voting Power are set out in Article
VII of the Articles.
In the event of a change-of-control, as defined in the prior paragraph,
and the termination of the Executive's employment, the Executive shall be
entitled to the continuation of his compensation and benefits for a total of two
(2) years from the date of such termination of employment at the rates set out
in 3(a) and (b) above, payable in equal payments at least monthly. A termination
of employment entitling the Executive to a continuation of compensation as set
out in this Section 3 shall be deemed to have occurred upon any resignation or
termination of the Executive's employment for any reason other than Cause as
defined in Section 5 (a) below during the two year period commencing with the
effective time of the first change-of-control event. For example, if the
change-of-control event occurred on March 1, 1997 and the Executive voluntarily
left the Company's employ on September 15, 1997, then he would continue to
receive payments from the Company each month through September 15, 1999 equal to
one twelfth (1/12) of the greater of (a) the Executive's total compensation
(salary plus bonus) for the prior calendar year or (b) the average annual
compensation (salary plus bonus) of the Executive for the prior two calendar
years. For calculation purposes, the bonus shall apply to the year for which it
was earned, which may not be the year in which it was actually paid.
Notwithstanding the foregoing, Executive shall not be entitled to such
continuation of compensation for any period after he (a) reaches age 66, (b)
dies, (c) is disabled and eligible to receive disability payments under the
Company's long term disability plan, or in the case of a termination not
preceeded by a change-of-control within the prior two years, (d) voluntarily
retires from the Company.
In addition to continuation of salary and bonus referenced above, for
the said two year period the Company shall also continue the Executive's normal
fringe benefits to the extent reasonably possible and shall fairly compensate
the Executive for the value of any fringe benefits it can not reasonably
continue.
In the event of a change-of-control and termination of employment, all
stock options held by the Executive shall be fully vested and immediately
exercisable during the normal post-employment option exercise period as set out
in the applicable stock option plan (but in no event for less than 90 days after
the employment relationship terminates).
4. Additional Terms.
(a) The Company will reimburse Executive for all reasonable
expenses properly incurred by Executive in the performance of Executive's duties
hereunder in accordance with established practices for senior executives of the
Company.
(b) During the Employment Period, Executive shall be entitled
to participate, in accord with the terms thereof, in any present of future
bonus, insurance, pension, SERP, Thrift, ESOP, stock option, or other employee
benefit, compensation or incentive plan adopted by the Company and applicable to
senior executives generally.
5. Termination of Employment.
(a) The Employment Period shall cease and terminate upon the earliest
to occur of the events specified below:
(i) The second anniversary of receipt of written notice
by Executive from the Company of the Company's intent to terminate this
Agreement.
(ii) The death of Executive. If Executive dies during
the term of this Agreement, Executive's salary for 30 days after the date on
which death occurs shall be paid to Executive's estate.
(iii)The normal retirement date of Executive or upon
Executive's election of early retirement.
(iv)Termination of Executive's employment for Cause.
For these purposes "Cause" for termination of Executive shall be limited to
actions by Executive involving willful malfeasance or gross negligence or
failure to act by Executive involving willful and material nonfeasance which, at
the time of such willful malfeasance or gross negligence or willful and material
nonfeasance, would tend to have a materially adverse effect on the Company. Bad
judgment or negligence shall not constitute Cause nor shall any act or omission
reasonably believed by the Executive to have been in, or not opposed to, the
interests of the Company.
(b) In the event that Executive becomes "totally disabled"
within the meaning of the Company's Long Term Disability Plan, the Employment
Period shall be suspended (to resume following suspension unless otherwise
terminated under 5(a) above) during any period in which Executive is entitled to
receive long term disability payments under the Plan and, during such period of
suspension, Executive shall be entitled to the same benefits that any other
employee of the Company would enjoy under the Long Term Disability Plan.
(c) Except as to rights which have accrued hereunder, this
Agreement and all of the liabilities and obligations of the parties hereunder
shall cease and terminate effective upon the termination of the Employment
Period.
(d) If (i) Executive's employment hereunder is terminated by
the Company other than pursuant to Section 5(a) hereof, (ii) Executive
terminates his employment hereunder because his authority, duties or
responsibilities are altered so as to be inconsistent with Executive's
background, training and experience, or (iii) the Executive terminates his
employment hereunder because of the Company's continued failure to perform its
obligations hereunder, then the Executive shall be entitled to receive, in
addition to any other damages which Executive may suffer as a direct or indirect
result of the termination of Executive's employment by the Company, the
compensation and benefits which would otherwise have been payable to Executive
under Section 3 hereof through the remaining balance of the Employment Period
which would have pertained had the Company given Executive notice of intent to
terminate this Agreement on the date Executive's employment ceases, as provided
in Section 5(a) (i) above.
6. Non-Competition and Confidentiality. The Executive agrees that:
(a) The Company shall cease providing payments hereunder (other than
payments already earned or accrued) if, during the compensation period, the
Executive shall be employed by or otherwise engage in any business which is
competitive with any business of the Company, and
(b) during and after the compensation period, the Executive will not
divulge or appropriate to the Executive's own use or the use of others any
secret or confidential information or knowledge pertaining to the business of
the Company, or any of its subsidiaries, obtained during his employment by the
Company.
Executive agrees that the above covenant not to compete is fair and
reasonably necessary for the protection of the Company's confidential
information and business. In the event a court should decline to enforce any
part of this covenant, such covenant shall be deemed to be modified to restrict
Executive's competition with the Company to the maximum extent which the court
shall find enforceable.
The Board has determined, in its best judgment, that the payments to
the Executive hereunder are reasonable consideration for not competing as
defined in (a) and for maintaining the confidentiality of information as
provided for in (b) above.
7. Assignment. This Agreement shall not be assignable by the Company
except to a majority-owned subsidiary or parent entity of the Company or to a
successor to the Company and its business by way of merger, acquisition,
purchase of assets or otherwise and this Agreement is and shall be binding upon
and inure to the benefit of any such parent, subsidiary or successor. This
Agreement shall not be assignable by Executive but it shall be binding upon and
inure to the benefit of Executive's heirs, executors, administrators and legal
representatives.
8. Notices. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been given if delivered
by hand or mailed by first class, certified or registered mail, return receipt
requested, postage and registry fees prepaid, and addressed as follows:
To the Company: Vice President Finance
PrimeSource Corporation
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
To the Executive: Xxxxx X. Xxxxxx
11. X. Xxxxxxxx Avenue
Haddonfield, NJ 08033
Addresses may be changed by notice in writing to the other party.
9. Arbitration. Any dispute or disagreement arising between the parties
hereto with respect to this Agreement or its validity, construction or
performance shall be settled by binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association as amended
from time to time. The cost of arbitration shall be borne by the Company. Each
party shall, however, bear the cost of preparing and presenting its own case,
including counsel fees and expenses. Judgment upon the award of arbitrators may
be entered by either party in any court having jurisdiction.
10. Miscellaneous. This Agreement is the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings, oral or written, relating to the subject matter hereof, and no
change, alteration or modification hereof may be made except in writing signed
by both parities hereto. The headings in this Agreement are for convenience of
reference only and shall not be considered as part of this Agreement nor limit
or otherwise affect the meaning hereof. This Agreement shall in all respects be
governed by and construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
ATTEST: PRIMESOURCE CORPORATION
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Corporate Secretary Vice President Finance
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Xxxxx X. Xxxxxx
