EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, by and between Polaroid Corporation, a Delaware corporation, with
headquarters located at 000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx, together
with its successors and assigns permitted under this Agreement (the "Company"),
and Xxxxxxx X. Xxxxxxxx residing at 00 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx (the
"Executive") effective this 6th day of June 2001.
W I T N E S S E T H:
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WHEREAS, the Company desires to employ the Executive and to enter into an
agreement embodying the terms of such employment (this "Agreement") and the
Executive desires to enter into this Agreement and to accept such employment,
subject to the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt of which is
mutually acknowledged, the Company and the Executive (individually a "Party" and
together the "Parties") agree as follows:
1. DEFINITIONS.
(a) "ANNUAL BONUS" shall mean a bonus amount payable under the
Company's executive annual bonus plan (currently the Polaroid
Incentive Plan for Executives).
(b) "BASE SALARY" shall mean the annual rate of base salary as
provided for in Section 3 below, as increased by the Board
from time to time.
(c) "BOARD" shall mean the Board of Directors of the Company.
(d) "CAUSE" means either of the following:
(i) Executive's willful malfeasance having a material
adverse effect on the Company; or,
(ii) Breach of a material policy of the Company; or
(iii) Executive's conviction of a felony;
provided, that any action or refusal by Executive shall not
constitute "Cause" if, in good faith, Executive believed such
action or refusal to be in,
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or not opposed to, the best interests of the Company, or if
Executive shall be entitled, under applicable law or under an
applicable Certificate of Incorporation or By-Laws of the
Company, as they may be amended or restated from time to time,
to be indemnified with respect to such action or refusal.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "CONSTRUCTIVE TERMINATION" shall occur when the Executive
voluntarily terminates his employment with the Company or
retires after the occurrence of one or more of the following
events without the Executive's consent:
(i) a reduction in Base Salary or the elimination of or
reduction of any benefit under any bonus, incentive
or other employee benefit plan, or the Executive's
participation or membership in the same, without an
economically equivalent replacement unless benefit or
compensation adjustments apply to all executives
receiving such benefit;
(ii) the reassignment of Executive without Executive's
consent to a location more than fifty (50) miles from
the Executive's regular workplace or the provision of
significantly less favorable working conditions;
(iii) the reduction in the Executive's job title or level
as an Executive Vice President; or
(iv) a significant diminution in duties or
responsibilities or the reassignment of Executive to
duties which represent a position of lesser
responsibility.
(g) "DISABILITY" shall mean the Executive's disability within the
meaning of the Polaroid Long Term Disability Plan.
(h) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as in effect on the date in question.
(i) "SEVERANCE PERIOD" shall mean the period of twenty-four (24)
months following such termination.
(j) "STOCK" shall mean the outstanding shares of Common Stock of
the Company and any other shares of capital stock of the
Company into which the Common Stock shall be reclassified or
changed.
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(k) "SUBSIDIARY" of the Company shall mean any corporation of
which the Company owns, directly or indirectly, more than
fifty percent (50%) of the Voting Stock.
(l) "SUPPLEMENTAL PLANS" shall mean any and all Company
non-qualified benefit plans including, but not limited to, any
supplemental retirement plan.
(m) "TERMINATION DATE" shall mean the date of the Executive's
termination of employment from the Company.
2. DUTIES AND RESPONSIBILITIES. The Executive shall be employed as
Executive Vice President and Chief Financial Officer of the Company.
Anything herein to the contrary notwithstanding, nothing shall preclude
the Executive from:
(a) serving, subject to approval of the Board, on the boards of
directors of a reasonable number of other corporations or the
boards of a reasonable number of trade associations and/or
charitable organizations;
(b) engaging in charitable activities and community affairs; and,
(c) managing his personal investments and affairs, provided that
such activities do not interfere with the proper performance
of his duties and responsibilities in the Company.
3. BASE SALARY. The Executive shall be paid an annualized Base Salary of
$390,000, payable in accordance with the regular payroll practices of
the Company. The Base Salary shall be reviewed periodically by the
Board.
4. HIRING BONUS. The Executive shall receive a hiring bonus of $100,000 as
soon as practical following the later of the Executive starting his
employment with the Company or the execution of this Agreement.
5. ANNUAL BONUS. The Executive shall participate in the Company's annual
bonus plan using the targets and performance factors set forth in the
Company's annual bonus plan, with an annual target award opportunity of
at least fifty-five percent (55%) of Base Salary. For the year 2001,
the Executive shall be guaranteed a minimum bonus of $100,000 payable
in 2002 at such time as the payments of annual bonuses shall normally
be made to other executives.
6. EMPLOYEE BENEFIT PROGRAMS. During the Term of Employment, the Executive
shall be entitled to participate in all employee pension and welfare
benefit plans and programs made available to the Company's senior level
executives, as such plans or programs may be in effect from time to
time, including, without limitation, long term incentive plan(s),
pension, savings and other retirement plans or
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programs, medical, dental, hospitalization, short-term and long-term
disability and life insurance. Notwithstanding anything in this
Agreement to the contrary, the terms of this Agreement shall replace
the Executive's participation in The Polaroid Extended Severance Plan.
7. RETIREMENT PLANS.
(a) The Executive is eligible to make 401(k) and voluntary
after-tax contributions through the Company's current Polaroid
Retirement Savings Plan, subject to change by the Company. Any
portion of Executive's contribution that cannot be made into
the Retirement Savings Plan due to the IRS limits shall be
contributed into the Polaroid Elective Deferred Compensation
Plan, a supplemental executive retirement plan.
(b) The Executive is eligible to participate in the Polaroid
Pension Plan, which is subject to change by the Company. The
Executive's pension benefits shall provide an opening account
balance of $250,000 and shall include a retirement crediting
rate equal to two (2) years of credited benefit accrual for
each year of credited benefit accrual earned for a period of
up to seven (7) years from the Executive's original date of
hire. Amounts contributed in excess of the IRS statutory
limits shall be placed in the current supplemental executive
retirement plan.
8. RESTRICTED STOCK AWARD. The Executive shall receive 45,000 shares of
restricted stock that will vest equally over three (3) years.
9. OPTION AWARD. As part of the 2001 long-term incentive program, the
Executive shall receive an Option grant of 100,000 options. These
grants shall be priced as of the Executive's date of hire and be issued
using the Company's 2001 Option Agreement.
10. PERFORMANCE AWARD. As part of the Company 2001 long-term incentive
program, the Executive shall also receive a Performance Share Award for
the three-year period from 2001 - 2003. This Award shall be issued
using the Company's 2001 Performance Share Award Agreement and shall
provide a payout at target of 30,000 shares. The value of the award
depends on the price of common stock at the time of the award and the
ability to meet the performance factors set forth in the award. Should
target be exceeded, the share amount shall increase, consistent with
the terms of the Performance Share Award agreement.
11. REIMBURSEMENT OF BUSINESS AND OTHER EXPENSES. The Executive is
authorized to incur reasonable expenses in carrying out his duties and
responsibilities under this Agreement and the Company shall promptly
reimburse him for all business expenses incurred in connection with
carrying out the business of the Company, subject to documentation in
accordance with the Company's policy.
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12. VACATION. The Executive is entitled to at least four (4) weeks of
vacation annually, which will be administered in accordance with the
Company's vacation policy and prorated for the year 2001.
13. TERMINATION DUE TO DISABILITY OR DEATH. In the event the Executive's
employment is terminated due to Executive's Disability or death,
Executive, or Executive's estate or beneficiaries, as the case may be,
shall be entitled to:
(a) ANNUAL BONUS. Pro-rata portion of the Annual Bonus for the
year in which the Executive's Disability or death occurs; and,
(b) OTHER BENEFITS. Other benefits or entitlements in accordance
with applicable plans and programs of the Company.
14. TERMINATION BY THE COMPANY FOR CAUSE. In the event the Company
terminates the Executive's employment for Cause, the Executive shall be
entitled to Base Salary through the date of the termination. Executive
will not be entitled to receive a severance or any other benefits and
all long-term incentive awards shall be forfeited. Nothing in this
Agreement shall be construed to prevent the Company from terminating
the Executive's employment for Cause. If the Executive is terminated
for Cause, only this section shall apply.
15. TERMINATION OR CONSTRUCTIVE TERMINATION BY THE COMPANY WITHOUT CAUSE.
If prior to Change in Control, the Executive's employment is terminated
by the Company without Cause or upon a Constructive Termination, upon
the execution of a full and complete release, the Executive shall be
entitled to:
(a) SEVERANCE PAYMENT. Base Salary, at the annualized rate in
effect on the date of termination of the Executive's
employment, in a stream of payments in accordance with the
Company's regular payroll schedule beginning on the regular
payroll distribution date next succeeding Executive's
Termination Date, for the Severance Period;
(b) ANNUAL BONUS. Annual Bonus payments for the period from the
beginning of the year in which the termination occurs through
the end of the Severance Period based on the actual
performance of the Company without regard to any other factors
(such as personal performance factors) that could reduce the
ultimate distribution; any such payment for a period of less
than a full year shall be pro-rated by the number of days for
which payment is made;
(c) INSURANCE. Medical, dental and executive life insurance
benefits (collectively "Insurance Benefits") at the same rate
as to actively employed officers of the Company for a period
equal to twenty-four (24) months following the Executive's
Termination Date or until the Executive is eligible
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to receive such Insurance Benefits through another employer
(this benefit shall run coterminous with COBRA rights),
whichever occurs first;
(d) DISABILITY COVERAGE. Short- and long-term disability coverage
that is reasonably comparable to the coverage provided to the
Executive on his Termination Date and which can be purchased
on the open market shall be for a period equal to the lesser
of twenty-four (24) months following the Executive's
Termination Date or until the Executive is eligible to receive
comparable benefits through another employer;
(e) OPTIONS. For all options granted through Executive's
Termination Date the Executive shall have an exercise period
being the lesser of two (2) years from the Executive's
Termination Date or the exercise period stated in the
Executive's applicable Option or Supplemental Option Agreement
and subject to all other terms of such agreements governing
the Options;
(f) PERFORMANCE AWARDS. A distribution of a pro-rata portion of
Performance Awards (including but not limited to Performance
Shares, PARS, and Restricted Stock) as earned through the
Executive's Termination Date will be made when distributions
from similar awards are made to active employees. The
Performance Award distributions, as adjusted for the pro-rata
period, shall be based on the Company's actual performance
during the performance period for such award. Determination of
award distributions shall be on the same basis as applied to
senior officers employed by the Company at the time such
awards are delivered. Notwithstanding the foregoing, no less
than seventy-five percent (75%) of all Restricted Stock Awards
granted on the effective date of this Agreement shall vest;
(g) FINANCIAL PLANNING AND OUTPLACEMENT COUNSELING. Financial
planning and outplacement services will be available to the
Executive. For reimbursement of these expenses Executive will
submit the necessary supporting documentation to Human
Resources. Specifically, the Company agrees to reimburse the
Executive up to a maximum of seventy five thousand dollars
($75,000) for expenses that are related to the Executive's
financial planning and/or search for a new position, and/or
for expenses related to the Executive's setting himself up to
do independent consulting; including, but not limited to,
outplacement services, membership in and travel to
professional associations, home office equipment, supplies,
and financial planning. Such reimbursement shall be made upon
the submission by the Executive of periodic expense reports
accompanied by receipts for expenditures. The Executive's
entitlement to such outplacement services will end on the
earlier of one (1) year from the Executive's Termination Date
or the date the Company has reimbursed a total of seventy five
thousand dollars ($75,000).
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(h) OTHER BENEFITS. Other benefits or entitlements in accordance
with applicable plans and programs of the Company.
(i) SURVIVOR BENEFITS. Should the Executive become eligible to
receive payments and benefits under this section and die prior
to receipt of all such payments and benefits, the residual
payments shall be made to the Executive's beneficiary(ies).
Any residual family medical and dental benefits which the
Executive was receiving on the Executive's date of death shall
continue to the family members the Executive had covered in
such medical and dental plans on such date.
Modifications to this Section may be made by the Company or its
successors; however, any modifications which decrease the benefits or
restrict the eligibility conditions will not be made before June 2003
and thereafter require twelve (12) months prior written notice by the
Company.
16. INDEMNIFICATION; DIRECTOR'S AND OFFICER'S LIABILITY INSURANCE. The
Executive shall, after the Termination Date, retain all rights to
indemnification under applicable law or under the Company's Certificate
of Incorporation or By-Laws, as they may be amended or restated from
time to time. In addition, the Company shall maintain Director's and
Officer's liability insurance on behalf of the Executive, at the better
of the level in effect immediately prior to the Change in Control or
the Executive's Termination Date, for the two (2) year period following
the Termination Date, and throughout the period of any applicable
statute of limitations.
17. EFFECT ON EXISTING PLANS. All Change in Control provisions applicable
to the Executive and contained in any plan, program, agreement or
arrangement maintained as of the date this Agreement is signed
(including, but not limited to, any stock option, restricted stock or
pension plan) shall remain in effect through the date of a Change in
Control, and for such period thereafter as is necessary to carry out
such provisions and provide the benefits payable thereunder, and may
not be altered in a manner which adversely affects the Executive
without the Executive's prior written approval. This means that all
awards of options, performance shares or such other awards as may be
granted shall upon Change in Control be fully vested consistent with
these terms. Notwithstanding the foregoing, no benefits shall be paid
to the Executive, however, under the Polaroid Extended Severance Plan
or any other severance plan maintained generally for the employees of
the Company if the Executive is eligible to receive severance benefits
under this Agreement.
18. DISPUTES. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in
Boston, Massachusetts in accordance with the Rules of the American
Arbitration Association then in effect.
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Judgment may be entered on an arbitrator's award relating to this
Agreement in any court having jurisdiction.
19. NON-COMPETITION. During employment or any Severance Period pursuant to
the provisions of paragraph 15, or in no event for a period less than
twelve (12) months following any other termination of employment, the
Executive shall not engage in any activity directly or indirectly with
Xxxxxxx Kodak Company or Fuji, whether as a principal, partner,
executive, consultant, shareholder, director (other than as a holder of
not in excess of one percent (1%) of the outstanding voting shares of
any publicly traded company) or otherwise.
20. CONFIDENTIALITY. Without the prior written consent of the Company,
except to the extent required by an order of a court having competent
jurisdiction or under subpoena from an appropriate government agency,
the Executive shall comply with the Confidentiality Agreement Executive
executed when Executive was hired and further shall not disclose any
trade secrets, customer lists, drawings, designs, information regarding
product development, marketing plans, sales plans, manufacturing plans,
management organization information (including data and other
information relating to members of the Board and management), operating
policies or manuals, business plans, financial records or other
financial, commercial, business or technical information relating to
the Company or information designated as confidential or proprietary
that the Company may receive belonging to suppliers, customers or
others who do business with any of its Subsidiaries (collectively,
"Confidential Information") to any third person unless such
Confidential Information has been previously disclosed to the public by
the Company; is in the public domain (other than by reason of
Executive's breach of this Agreement); or has been disclosed to the
Executive prior to the date hereof from sources not breaching any
agreement with the Company.
21. COMPANY PROPERTY. Promptly following the Executive's termination of
employment, the Executive shall return to the Company all property of
the Company including but not limited to computer(s), identification
badge, and business cards, credit cards, and all copies of Confidential
Information in the Executive's possession or under Executive's control
whether on paper or electronic storage media.
22. MISCELLANEOUS ADJUSTMENTS UPON TERMINATION. Upon termination of the
Executive's employment, the Company shall have the right to deduct from
any cash payment due to Executive, all amounts required by applicable
law to be withheld and in addition, any amounts which Executive may owe
to the Company as of the Executive's Termination Date, including but
not limited to items such as company store, corporate credit card
obligations and Company property issued to Executive and not otherwise
accounted for or returned.
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23. NON-SOLICITATION OF EMPLOYEES. During employment or any Severance
Period pursuant to the provisions of paragraph 15, or in no event for a
period less than twelve (12) months following any other termination of
employment, the Executive shall not directly or indirectly induce any
employee of the Company to terminate employment with the Company, and
shall not directly or indirectly, either individually or as owner,
agent, consultant, director, officer, shareholder or otherwise, employ
or offer employment to any person who is employed by the Company.
24. NONDISPARAGEMENT. During the period in which the Executive is employed
by the Company or any of its Subsidiaries, and for a period of two (2)
years following the Executive's Termination Date, the Executive shall
not commit any act, or in any way assist others to commit any action,
intended to injure the Company, nor shall the Executive engage in any
public criticism regarding his employment or the business affairs of
the Company, nor to make any negative, detrimental, or derogatory
comments concerning the Company or its directors, officers, or
individuals known to the Executive to be employees, past and present;
the Company and its officers and directors agree to make no criticism
regarding the Executive or his employment with the Company.
25. INJUNCTIVE RELIEF WITH RESPECT TO COVENANTS. Executive acknowledges and
agrees that the covenants and obligations of the Executive with respect
to noncompetition, nonsolicitation, confidentiality and Company
property relate to special, unique and extraordinary matters, including
his own skills, and that a violation of any of the terms of such
covenants and obligations will cause the Company irreparable injury for
which adequate remedies are not available at law. Therefore, the
Executive agrees that the Company shall be entitled to an injunction,
restraining order or such other equitable relief (without the
requirement to post bond) restraining Executive from committing any
violation of the covenants and obligations contained in this Agreement.
These injunctive remedies are cumulative and are in addition to any
other rights and remedies the Company may have at law or in equity.
26. PROVISIONS SURVIVING BEYOND TERMINATION DATE. The obligations of the
Executive set forth above shall not extend beyond his Termination Date
where such date follows a Change in Control.
27. EFFECT OF AGREEMENT ON OTHER BENEFITS. Except as specifically provided
in this Agreement, the existence of this Agreement shall not prohibit
or restrict the Executive's entitlement to full participation in the
employee benefit and other plans or programs in which senior executives
of the Company are eligible to participate.
28. ASSIGNMENT. Except as otherwise provided herein, this Agreement shall
be binding upon, inure to the benefit of and be enforceable by the
Company and the
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Executive and their respective heirs, legal representatives, successors
and assigns. If the Company shall be merged into or consolidated with
another entity, the provisions of this Agreement shall be binding upon
and inure to the benefit of the entity surviving such merger or
resulting from such consolidation.
29. REPRESENTATION. The Company represents and warrants that it is fully
authorized and empowered to enter into this Agreement and each of the
Parties represents and warrants that the performance of the obligations
of such Party under this Agreement will not violate any agreement
between that Party and any other person, firm or organization.
30. ENTIRE AGREEMENT. This Agreement, with the Change in Control Agreement,
the Company offer letter and the plans and grant agreements referenced
in such documents, contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and supersedes
all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the Parties with respect
thereto.
31. AMENDMENT OR WAIVER. No provision in this Agreement may be amended
unless such amendment is agreed to in writing and signed by the
Executive and an authorized officer of the Company. No waiver by either
Party of any breach by the other Party of any condition or provision
contained in this Agreement to be performed by such other Party shall
be deemed a waiver of a similar or dissimilar condition or provision at
the same or any prior or subsequent time. Any waiver must be in writing
and signed by the Executive or an authorized officer of the Company, as
the case may be.
32. SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions of this Agreement
shall be unaffected thereby and shall remain in full force and effect
to the fullest extent permitted by law.
33. SURVIVORSHIP. The respective rights and obligations of the Parties
hereunder shall survive any termination of the Executive's employment
to the extent necessary to the intended preservation of such rights and
obligations.
34. BENEFICIARIES/REFERENCES. The Executive shall be entitled to select
(and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit
payable hereunder following the Executive's death by giving the Company
written notice thereof. In the event of the Executive's death or a
judicial determination of his incompetence, reference in this Agreement
to the Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative. Absent any written
notice the beneficiary shall be the Executive's estate.
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35. GOVERNING LAW. This Agreement shall be governed by, construed, and
interpreted in accordance with the laws of Massachusetts without
reference to principles of conflict of laws.
36. NOTICES. Any notice given to a Party shall be in writing and shall be
deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may
subsequently give such notice of:
If to the Company:
Polaroid Corporation
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Vice President, Human Resources
If to the Executive:
Xxxxxxx X. Xxxxxxxx
00 Xxxxxx Xxxx
Xxxxxx, XX 00000
37. HEADINGS. The headings of the sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.
38. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts.
39. WITHHOLDING. The Company may, to the extent required by law, withhold
applicable federal, state and local income and other taxes from any
payments due to the Executive hereunder.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
POLAROID CORPORATION
By: /S/ XXXX X. XXXXXXXXX
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Name: Xxxx X. XxXxxxxxx
Title: Chairman and Chief Executive Officer
Accepted and Agreed to:
By: /S/ XXXXXXX X. XXXXXXXX
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Xxxxxxx X. Xxxxxxxx
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