EX 10.13
FIRST AMENDMENT TO
EMPLOYMENT AND SEVERANCE BENEFITS AGREEMENT
FIRST AMENDMENT TO EMPLOYMENT AND SEVERANCE BENEFITS
AGREEMENT, dated as of September 13, 1999, between CHESAPEAKE
CORPORATION, a Virginia corporation (the "Company"), and XXXXXX
X. XXXXXXX (the "Executive").
WHEREAS, the Company and the Executive entered into an
Employment and Severance Benefits Agreement (the "Agreement") as
of July 17, 1997; and
WHEREAS, the Company has approved the terms of agreements
with selected officers of the Company to provide certain
assurances to the officers regarding the terms applicable to
certain terminations of the officers service and to provide
certain assurances to the Company regarding the officers' conduct
during the term of the agreements and following the officers'
termination of service; and
WHEREAS, the Company and the Executive desire to amend the
Agreement to conform certain provisions to the terms of the
agreements between the Company and other officers of the Company;
NOW THEREFORE, the Agreement is hereby amended in the
following respects:
FIRST: Section 1(a) of the Agreement is amended to read as
follows:
(a) Cause. "Cause" means the Executive's conviction by
a court of competent jurisdiction for, or pleading no
contest to, a felony.
SECOND: Section 1(b) of the Agreement is amended to read as
follows:
(b) Change in Control. "Change in Control" has the same
meaning, as of any applicable date, as set forth in the
Chesapeake Corporation Benefits Plan Trust (as in effect
on such date).
THIRD: Section 1(d) of the Agreement is renumbered as
Section 1(e) and the following new Section 1(d) is added to the
Agreement:
(d) Control Change Date. "Control Change Date" has the
same meaning, as of any applicable date, as set forth in
the Chesapeake Corporation Benefits Plan Trust (as in
effect on such date).
FOURTH: A new Section 1(f) is added to the Agreement to
provide as follows:
(f) Good Reason. "Good Reason" means (x) a material
reduction in the Executive's duties or responsibilities;
(y) the failure by the Company or its successors to
permit the Executive to exercise such responsibilities as
are consistent with the Executive's position; (z) a
requirement that the Executive relocate his principal
place of employment to a location that is at least fifty
miles farther from his principal residence than was his
former principal place of employment; (x) the failure by
the Company or its successor to award the Executive
annual incentive, long-term incentive or stock option
opportunities consistent with those provided to similarly
situated executives and (y) the failure by the Company or
its successor to make a payment when due to the
Executive.
FIFTH: Section 2 is hereby amended to read as follows:
2. Term. Subject to Section 7 hereof, the term of this
Agreement (the "Employment Term") shall be the period
described in the following Section 2(a) and any period
for which the same may be extended as provided in the
following Sections 2(b) and 2(c).
(a) The Employment Term includes the period
beginning on July 17, 1997, and ending on December 31,
2002.
(b) The period described in Section 2(a) shall be
extended for an additional twelve months unless the
Company, before each September 1 of any year, provides
written notice to the Executive that the period will not
be extended. The preceding sentence shall first be
effective to extend the period described in Section 2(a)
until December 31, 2003, unless written notice to the
contrary is provided to the Executive by the Company
before September 1, 2000.
(c) The period described in Section 2(a) shall
be extended if there is a Control Change Date during the
Employment Term. In that event, the period described in
Section 2(a) shall be extended automatically until the
third anniversary of the Control Change Date. The period
described in Section 2(a) shall be further extended by
twelve months under this Section 2(c) unless the Company,
at least ninety days prior to an anniversary of the
Control Change Date, provides written notice to the
Executive that the period will not be extended. The
preceding sentence shall first be effective to extend the
period described in Section 2(a) (after giving effect to
the extension provided in the second sentence of this
Section 2(c)), until the fourth anniversary of the
Control Change Date unless written notice to the contrary
is provided to the Executive at least ninety days prior
to the first anniversary of the Control Change Date.
SIXTH: Section 7(c) of the Agreement is amended to read as
follows:
(c) By the Company Without Cause. The Company may terminate
the Executive's employment under this Agreement without
Cause, and other than by reason of his death or Disability,
by sending written notice of termination to the Executive,
which notice shall specify a date not less than ten (10) and
not more than ninety (90) days after the date of such notice
as the effective date of such termination (the "Termination
Date"). From the date of such notice through the Termination
Date, the Executive shall continue to perform the normal
duties of his employment hereunder and shall be entitled to
receive when due all compensation and benefits applicable to
the Executive hereunder. Promptly following the Termination
Date, the Company shall pay the Standard Termination Payments
to the Executive. In addition, the Company shall pay or
provide the Executive the amounts and the benefits described
in the following Section 7(c)(i) or Section 7(c)(ii), as
applicable.
(i) The Executive shall be entitled to receive the
severance and welfare benefits and the pension supplement
described in this Section 7(c)(i) if, during the Employment
Term, there is a Change in Control and the Executive's
employment with the Company and its successors is terminated
after the Control Change Date without Cause.
(a) The severance benefit payable under
this Section 7(c)(i) is an amount equal to the
sum of (x) three times the Executive's annual
base salary (as in effect on the date the
Executive ceases to be employed by the Company
and its successors or, if greater, the highest
annual rate of base salary as in effect during
the twelve months preceding such cessation of
employment) and (y) three times the Executive's
annual incentive plan target for the year in
which the Executive ceases to be employed by
the Company and its successors or, if greater,
the year preceding such cessation of
employment. The severance benefit described in
the preceding sentence shall be reduced by the
amount of any severance benefit payable to the
Executive under the Chesapeake Corporation
Salaried Employees' Benefits Continuation Plan.
The severance benefit payable under this
Section 7(c)(i), less applicable income and
employment taxes and other authorized
deductions, shall be paid in a single sum as
soon as practicable following the Executive's
cessation of employment with the Company and
its successors.
(b) The welfare benefits provided under
this Section 7(c)(i) are continued coverage of
the Executive and the Executive's eligible
dependents under all life, disability, medical
and dental benefit plans and programs in which
the Executive participates immediately prior to
the Executive's date of termination on such
terms as are then in effect. In the event that
the continued coverage of the Executive or the
Executive's eligible dependents in any such
plan or program is barred by its terms, the
Company shall arrange to provide the Executive
and the Executive's eligible dependents with
benefits substantially similar to those to
which they are entitled to receive under such
plans or programs including, by way of example
and not of limitation, the reimbursement of the
Executive of the cost or premium for continued
coverage available pursuant to Section 4980B of
the Internal Revenue Code of 1986, as amended
("COBRA"). The continued coverage provided
under this Section 7(c)(i) shall continue until
the earlier of (x) the third anniversary of the
Executive's cessation of service to the Company
and its successors and (y) the date that the
Executive is eligible for similar coverage
under another employer's plan.
(c) The pension supplement payable under
this Section 7(c)(i) is an amount equal to the
benefit that the Executive would have accrued
under the Chesapeake Corporation Executive
Supplemental Retirement Plan (the "ESRP") had
the Executive remained an employee of the
Company until the third anniversary of the
Executive's cessation of service to the Company
and its successors (i.e., recognizing as
service with the Company the months during such
period and the Executive's attained age as of
the end of such period). The pension
supplement payable under this Section 7(c)(i)
shall be reduced, but not below zero, by any
benefit that the Executive accrues during such
period under any employee pension benefit plan
maintained by the Company or its successor.
The present value of the pension supplement
payable under this Section 7(c)(i), less
applicable income and employment taxes and
other authorized deductions, shall be paid in a
single sum to the Executive as soon as
practicable following the cessation of the
Executive's employment with the Company and its
successors. The present value of the pension
supplement payable under this Section 7(c)(i)
and any offset or reductions for benefits
provided by the Company or its successor shall
be made on an actuarially equivalent basis
using the SERP's actuarial assumptions and
methods.
(ii) Subject to the final sentence of this Section
7(c)(ii), the Executive shall be entitled to receive the
severance and welfare benefits described in this Section
7(c)(ii) if, during the Employment Term but prior to a
Change in Control, the Executive's employment with the
Company and its successors is terminated by the Company or
its successor without Cause.
(a) The severance benefit payable under
this Section 7(c)(ii) is an amount equal to the
sum of (x) three times the Executive's annual
base salary (as in effect on the date the
Executive ceases to be employed by the Company
and its successors or, if greater, the highest
annual rate of base salary as in effect during
the twelve months preceding such cessation of
employment) and (y) three times the Executive's
annual incentive plan target for the year in
which the Executive ceases to be employed by
the Company and its successors or, if greater,
the year preceding such cessation of
employment. The severance benefit described in
the preceding sentence shall be reduced by the
amount of any severance benefit payable to the
Executive under the Chesapeake Corporation
Salaried Employees' Benefits Continuation Plan.
The severance benefit payable under this
Section 7(c)(ii), less applicable income and
employment taxes and other authorized
deductions, shall be paid in a single sum as
soon as practicable following the Executive's
cessation of employment with the Company and
its successors.
(b) The welfare benefits provided under
this Section 7(c)(ii) are continued coverage of
the Executive and the Executive's eligible
dependents under all life, disability, medical
and dental benefit plans and programs in which
the Executive participates immediately prior to
the Executive's date of termination on such
terms as are then in effect. In the event that
the continued coverage of the Executive or the
Executive's eligible dependents in any such
plan or program is barred by its terms, the
Company shall arrange to provide the Executive
and the Executive's eligible dependents with
benefits substantially similar to those to
which they are entitled to receive under such
plans or programs including, by way of example
and not of limitation, the reimbursement of the
Executive of the cost or premium for continued
coverage under COBRA. The continued coverage
provided under this Section 7(c)(ii) shall
continue until the earlier of (x) the third
anniversary of the Executive's cessation of
service to the Company and its successors and
(y) the date that the Executive is eligible for
similar coverage under another employer's plan.
No benefits will be payable or available under this
Section 7(c)(ii) unless the Executive executes a
release and waiver of the Company in a form
satisfactory to the Company and the Executive
complies with Sections 8 and 9.
The Executive shall have no obligation whatsoever to
mitigate any damages, costs or expenses suffered or incurred
by the Company with respect to the severance obligations set
forth in this Section 7(c) and, except as set forth in this
Section 7(c), no such severance payments or benefits
received or receivable by the Executive shall be subject to
any reduction, offset, rebate, or repayment as a result of
any subsequent employment or other business activity by the
Executive.
SEVENTH: Section 7(d) of the Agreement is hereby amended to
read as follows:
(d) By the Executive. (i) The Executive may
terminate his employment, and any further obligations
which the Executive may have to perform services on
behalf of the Company hereunder at any time after the
date hereof, by sending written notice of termination to
the Company, not less than ninety (90) days prior to the
effective date of such termination. During such ninety
(90) day period, the Executive shall continue to perform
the normal duties of his employment hereunder, and shall
be entitled to receive when due all compensation and
benefits applicable to the Executive hereunder. If the
Executive elects to terminate his employment hereunder
(other than as a result of Disability), then the
Executive shall be entitled to receive the Standard
Termination Payments, but the Company shall have no
obligation to make payments or provide benefits to the
Executive except as provided in the following Section
7(d)(ii).
(ii) The Executive shall be entitled to receive the
severance and welfare benefits and the pension supplement
described in this Section 7(d)(ii) if, during the Employment
Term, there is a Change in Control and the Executive
terminates his employment with the Company and its
successors within one (1) year after the Control Change Date
(with or without Good Reason) or thereafter with Good
Reason.
(a) The severance benefit payable under
this Section 7(d)(ii) is an amount equal to the
sum of (x) three times the Executive's annual
base salary (as in effect on the date the
Executive ceases to be employed by the Company
and its successors or, if greater, the highest
annual rate of base salary as in effect during
the twelve months preceding such cessation of
employment) and (y) three times the Executive's
annual incentive plan target for the year in
which the Executive ceases to be employed by
the Company and its successors or, if greater,
the year preceding such cessation of
employment. The severance benefit described in
the preceding sentence shall be reduced by the
amount of any severance benefit payable to the
Executive under the Chesapeake Corporation
Salaried Employees' Benefits Continuation Plan.
The severance benefit payable under this
Section 7(d)(ii), less applicable income and
employment taxes and other authorized
deductions, shall be paid in a single sum as
soon as practicable following the Executive's
cessation of employment with the Company and
its successors.
(b) The welfare benefits provided under
this Section 7(d)(ii) are continued coverage of
the Executive and the Executive's eligible
dependents under all life, disability, medical
and dental benefit plans and programs in which
the Executive participates immediately prior to
the Executive's date of termination on such
terms as are then in effect. In the event that
the continued coverage of the Executive or the
Executive's eligible dependents in any such
plan or program is barred by its terms, the
Company shall arrange to provide the Executive
and the Executive's eligible dependents with
benefits substantially similar to those to
which they are entitled to receive under such
plans or programs including, by way of example
and not of limitation, the reimbursement of the
Executive of the cost or premium for continued
coverage available pursuant to Section 4980B of
the Internal Revenue Code of 1986, as amended
("COBRA"). The continued coverage provided
under this Section 7(d)(ii) shall continue
until the earlier of (x) the third anniversary
of the Executive's cessation of service to the
Company and its successors and (y) the date
that the Executive is eligible for similar
coverage under another employer's plan.
(c) The pension supplement payable under
this Section 7(d)(ii) is an amount equal to the
benefit that the Executive would have accrued
under the Chesapeake Corporation Executive
Supplemental Retirement Plan (the "ESRP") had
the Executive remained an employee of the
Company until the third anniversary of the
Executive's cessation of service to the Company
and its successors (i.e., recognizing as
service with the Company the months during such
period and the Executive's attained age as of
the end of such period). The pension
supplement payable under this Section 7(d)(ii)
shall be reduced, but not below zero, by any
benefit that the Executive accrues during such
period under any employee pension benefit plan
maintained by the Company or its successor.
The present value of the pension supplement
payable under this Section 7(d)(ii), less
applicable income and employment taxes and
other authorized deductions, shall be paid in a
single sum to the Executive as soon as
practicable following the cessation of the
Executive's employment with the Company and its
successors. The present value of the pension
supplement payable under this Section 7(d)(ii)
and any offset or reductions for benefits
provided by the Company or its successor shall
be made on an actuarially equivalent basis
using the SERP's actuarial assumptions and
methods.
The Executive shall have no obligation whatsoever to
mitigate any damages, costs or expenses suffered or incurred
by the Company with respect to the severance obligations set
forth in this Section 7(d)(ii) and, except as set forth in
this Section 7(d)(ii), no such severance payments or benefits
received or receivable by the Executive shall be subject to
any reduction, offset, rebate, or repayment as a result of
any subsequent employment or other business activity by the
Executive.
EIGHTH: Section 7(e) of the Agreement is hereby amended by
deleting the language that follows the first sentence thereof.
NINTH: Sections 9 through 19 of the Agreement are
renumbered as Sections 11 through 21, respectively, and the
Agreement is further amended by adding the following as Sections
9 and 10:
9. Covenant Not to Compete. The Executive agrees
that he will not take certain actions that would be
damaging to the competitive position of the Company or
its successor. By making this commitment, the Executive
agrees that during Executive's employment with the
Company and its successors and for twelve months
thereafter if the Executive's employment ceases as
described in Section 7(c)(ii), the Executive will not
(x) accept any employment with, ownership interest in,
or engagement as a consultant, contractor or service
provider to any business engaged in a business that is
competitive with the Company or its successor or (y) on
behalf of any such business solicit any business that
was a customer of the Company or its successor during
the preceding twelve months The Executive understands
and agrees that each provision of this Agreement is a
separate and independent clause, and if any clause
should be found unenforceable, that will not affect the
enforceability of the other clauses. In the event that
any of the provisions of this Agreement should ever be
deemed to exceed the time, geographic area or activity
limitations permitted by applicable law, the Company and
the Executive agree that such provisions must be and are
reformed to the maximum time, geographic area and
activity limitations permitted by applicable law, and
expressly authorize a court having jurisdiction to
reform the provisions to the maximum time, geographic
area and activity limitations permitted by applicable
law.
10. Excise Tax, etc. Indemnity. One or more
benefits provided under this Agreement may constitute
"parachute payments" (as defined in Section
280G(b)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"), but without regard to Code section
280G(b)(2)(A)(ii)). In that event, the Company shall
indemnify and hold the Executive harmless from the
application of the tax imposed by Code section 4999. To
effect this indemnification, the Company must pay the
Executive an additional amount that is sufficient to pay
any excise tax imposed by Code section 4999 on the
payments and benefits to which the Executive is entitled
(whether payable under this Agreement or any other plan,
agreement or arrangement), plus the excise, employment
and income taxes on the additional amount. Such
additional amount shall be paid to the Executive at such
times as may be necessary for the Executive to satisfy
any such tax obligation, including the payment of
estimated taxes.
TENTH: Section 12 of the Agreement (numbered Section 10
prior to giving effect to the preceding amendment) is hereby
amended by designating the existing provisions as Section
12(a) and by adding a new Section 12(b) to read as follows:
(b) The Company or its successor will promptly
reimburse the Executive for reasonable legal fees and
costs that the Executive may incur in connection with
the enforcement of this Agreement.
Except as provided above, the terms of the Agreement,
effective as of July 17, 1997, shall remain in effect.
IN WITNESS WHEREOF, the Company has caused this First
Amendment to Employment and Severance Benefits Agreement to by
duly executed on its behalf and the Executive has duly executed
this First Amendment to Employment and Severance Benefits
Agreement, all as of the date first above written.
XXXXXX X. XXXXXXX CHESAPEAKE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxx
Date:____12/20/99____ Vice President - Human Resources
Title
