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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of September 9, 1996, by and
between XXXXXXXX CORPORATION, a Delaware corporation, ("Xxxxxxxx" or the
"Company") and Xxxxxxx X. Xxxxx (the "Executive").
WHEREAS the Company desires to employ Executive and to enter
into an agreement embodying the terms of such employment (the "Agreement"); and
WHEREAS Executive desires to accept such employment and enter
into such an Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
parties agree as follows:
1. Term of Employment. Executive's employment hereunder
shall be for a term which shall, subject to Sections 7 and 8, commence on
September 9, 1996 (the "Commencement Date") and shall, unless sooner terminated
pursuant to the provisions of Section 7 or 8 of this Agreement, expire on
September 9, 1999, provided that the Company shall have given notice of such
expiration on or before March 9, 1999. If such notice is not given, the term
of Executive's employment hereunder shall be automatically extended for
successive twelve month terms, subject to earlier termination pursuant to the
provisions of Section 7 or 8 of this Agreement, unless not later than six
months prior to any such automatic extension the Company shall have given
notice to the contrary. The period starting on the Commencement Date and
ending on the scheduled expiration of Executive's employment hereunder pursuant
to the foregoing provisions or, if sooner, on the date of the actual
termination of Executive's employment hereunder is referred to herein as the
Employment Term. The mere expiration of the Employment Term shall not
constitute a termination of Executive's employment for purposes of Section 7
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or 8. In the event of the termination of Executive's employment, other than
for Cause, as defined in Section 7 or 8 hereof, as applicable, or by reason of
his death (but including without limitation voluntary termination by the
Executive) upon or following the expiration of the Employment Term (such
expiration is hereinafter referred to as a "Non-Renewal"), Executive shall be
entitled to the payments and benefits set forth in Section 7(f) hereof.
2. Position. During the Employment Term Executive shall
serve as Chairman of the Board of Directors (the "Board"), President and Chief
Executive Officer of the Company. Executive shall devote substantially all of
his business time and energies to the business of the Company. Notwithstanding
the foregoing, Executive may (a) continue to serve on the board of directors of
any business corporation on which he is serving as of the date of this
Agreement (as
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shown on Schedule A), (b) serve on the boards of directors or committees of
non-profit organizations, (c) with the prior written approval of the Board of
Directors of the Company, such approval not to be unreasonably withheld, serve
on the boards of directors of other business corporations and (d) manage his
passive, personal investments; provided that in the Company's sole reasonable
discretion none of the foregoing activities materially interferes with the
performance of Executive's duties hereunder. In the event the Board determines
that one or more of the foregoing activities materially interferes with the
performance of Executive's duties, it shall give Executive 60 days notice with
specificity to reduce such activities.
3. Base Salary. Company shall pay Executive a base
salary, payable semi-monthly in arrears, at the rate of not less than $650,000
per year, as the same may from time to time be increased at the sole discretion
of the Compensation Committee of the Board of Directors of the Company or,
prior to a Change in Control, decreased in the event of across the board salary
reductions within the corporate staff group, such decrease not to exceed the
average reduction, expressed as a percentage, made to the salaries of other
executives ("Base Salary").
4. Incentive Compensation. (a) Executive shall
participate in the executive incentive compensation plans of
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the Company and its affiliates, as in effect from time to time during the
Employment Term for senior executives; provided that his annual incentive
compensation shall be as provided in paragraph (b) of this Section.
(b) Subject to his continued employment hereunder
throughout the relevant year, Executive shall be entitled to annual incentive
awards as follows:
(i) with respect to calendar 1996, an award of
the excess of $650,000 over the annual
incentive payment, if any, paid or payable to
Executive by X.X. XxXxxx De Nemours and
Company in respect of 1996 (the "1996 DuPont
Award"), such award to be payable by the
Company in January, 1997 or, if later,
promptly following the determination of the
amount of the 1996 DuPont Award, unless
deferred at the election of Executive;
(ii) with respect to calendar 1997, an award of
not less than $650,000; and
(iii) with respect to each calendar year during
the Employment Term after 1997, an annual
incentive opportunity, subject to
performance targets, of 100% of salary
payments actually paid to Executive during
such year at target
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performance, with a maximum annual incentive
opportunity of 200% of such salary payments.
5. Employee Benefits; Business Expenses; Relocation.
(a) Executive shall be eligible to participate in such other of the employee
benefit plans maintained by the Company and its affiliates and to receive such
fringe benefits and perquisites for which his level of employment makes him
eligible, in accordance with the policies of the Company and its affiliates as
in effect from time to time during the Employment Term; provided that Executive
shall in any event be entitled to (i) long term disability protection, on a
contributory basis consistent with that currently required under the long term
disability program of the Company and its affiliates, providing payments until
Executive reaches age 65 at the rate of $20,000 per month and (ii) the fringe
benefits and perquisites listed on Schedule B.
(b) Reasonable business expenses incurred by Executive
during the Employment Term shall be reimbursed in accordance with Company
policies.
(c) In connection with his relocation from Savannah,
Georgia to the Denver, Colorado area, Executive shall be entitled to relocation
assistance in accordance with the Company's existing relocation assistance
policy applicable to newly hired executives.
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6. Individual Retirement Arrangement. Subject to
Sections 12(e) and 12(f), Executive shall be entitled to a supplemental pension
benefit (the "Retirement Benefit") commencing upon termination of his
employment hereunder other than by reason of his death, in which case the
provisions of Section 6(e) below shall apply, calculated in accordance with the
following terms:
(a) Except as otherwise provided below and subject to
Section 6(d) below, the Retirement Benefit shall be a single
life annuity, payable in equal monthly installments, in the
amount of the excess of $932,740 per year over the sum of all
annual payments to which Executive is entitled under all
defined benefit plans (other than any benefit arising solely
under this Section) maintained by the Company and its
affiliates and by X.X. XxXxxx De Nemours and Company
("DuPont"), other than any such benefit accrued on account of
service with the Company or any of its affiliates after
Executive attains age 62 (the "Post-62 Benefit"), in each case
calculated on a single life annuity basis starting at age 62
(such aggregate annual benefit under all such plans maintained
by DuPont shall be the sum of the annual benefit on a single
life basis starting at age 62 accrued by Executive under all
such plans
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as of the termination of his employment with DuPont ($396,194)
plus the aggregate additional such annual benefit, if any,
accrued by Executive under all such plans as a result of any
bonus payments made by DuPont to Executive after such
termination, in each case without any reduction for retirement
before normal retirement age, the "DuPont Benefit"). The
Post-62 Benefit, if any, shall accrue and be payable in
accordance with the terms of the applicable plans.
(b) In the event Executive's employment is terminated by
the Company without Cause or by Executive with Good Reason (as
such terms are defined in Section 7 or 8, as applicable) prior
to his attaining age 62, the Retirement Benefit described in
paragraph (a) above commencing at the time of Executive's
termination shall be reduced by multiplying such benefit by
the percentage factor applicable to Executive's age as
follows:
age factor
--- ------
55 65%
56 70%
57 75%
58 80%
59 85%
60 90%
61 95%
62 100%
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For intermediate ages, the percentage factor will be
interpolated on a straight-line basis from the table above.
(c) In the event Executive's employment is terminated by
the Company for Cause, by Executive without Good Reason or by
reason of Executive's Disability (as defined in Section 7) in
any such case prior to age 62, notwithstanding the foregoing,
the Retirement Benefit shall be a single life annuity,
commencing upon termination of Executive's employment, payable
in equal monthly installments, in the annual amount of the
excess of (i) the product of (x) the number of full months not
exceeding 79 during which Executive was employed by the
Company times (y) the quotient of the excess of $932,740 over
the DuPont Benefit divided by 79 over (ii) the sum of (x) all
annual payments to which Executive is entitled under all
defined benefit plans maintained by the Company and its
affiliates other than any Post-62 Benefit, in each case
calculated on a single life annuity basis starting at age 62
and (y) in the case of termination by reason of Disability,
the actuarially equivalent value (determined based on the
DuPont Actuarial Assumptions, as defined below) of all long
term
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disability payments to which Executive is entitled pursuant to
Section 5(a) or otherwise, such excess to be reduced in the
event such termination occurs prior to Executive's attaining
age 58 by the percentage factor applicable to Executive's age
as follows:
age factor
--- ------
55 85%
56 90%
57 95%
58 100%
For intermediate ages, the percentage factor will be
interpolated on a straight-line basis from the table above.
(d) The Retirement Benefit may be elected by Executive in
such forms of benefits and subject to such administrative
procedures as are provided under the Xxxxxxxx International
Employees Retirement Plan or, at the election of Executive, in
a lump sum; provided that if Executive elects a form of
benefit other than a single life annuity, such benefit shall
be adjusted to an actuarially equivalent benefit based on the
interest rate and/or mortality assumptions, as the case may
be, comprising, the DuPont Actuarial Assumptions as defined
below. The "DuPont Actuarial Assumptions" shall mean (A) a
discount rate equal to Xxxxx'x
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AAA 10-Year Municipal Bond Rate for the 13 weeks prior to the
date of Executive's termination of employment and (B) the 1971
Group Annuity Mortality Table for Males with a one year
set-back.
(e) In the event of Executive's death prior to
termination of his employment, the beneficiary designated by
Executive by written notice to the Company or, if none, his
estate shall receive (i) in the case of his death upon or
after attaining age 62, the amount Executive would have
received if he had terminated his employment and elected a
lump sum payment of the Retirement Benefit on the day before
his death or (ii) in the case of his death prior to attaining
age 62, a lump sum equal to 33 1/3% of the amount Executive
would have received if he had terminated his employment
without Good Reason and elected a lump sum payment of the
Retirement Benefit (calculated pursuant to paragraph (c)
above) on the day before his death.
7. Termination Prior to a Change in Control.
(a) Retirement. Executive's employment shall terminate
automatically upon Executive's Retirement, as defined hereafter. For purposes
of this Agreement,
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"Retirement" means termination of Executive's employment initiated by
Executive, other than for Good Reason as defined in Section 7(e) or Section
8(e) hereof, whichever is applicable, after attaining age 62 or with the
consent of Board prior to attaining age 62 or by the Company at or after the
date Executive attains age 65. Upon termination of Executive's employment by
reason of Retirement during the Employment Term prior to a Change in Control,
Executive shall be entitled to (i) his Base Salary, benefits and perquisites
through the date of such termination, (ii) a payment equal to a fraction of the
annual incentive payment which Executive would have earned with respect to the
year of termination under the annual executive incentive compensation plan of
the Company or any of its affiliates then in effect for which Executive is
eligible (the "Xxxxxxxx Annual Plan"), computed based on the higher of actual
and target performance, the numerator of which fraction is the number of days
in such year prior to such termination and the denominator of which is 365,
such payment to be made at the time annual incentive payments are otherwise
made with respect to such year, (iii) the Retirement Benefit (subject to the
provisions of Section 6), (iv) an amount, if any, equal to the annual incentive
payment earned under the Xxxxxxxx Annual Plan by Executive in respect of the
year preceding the year of such termination to the extent such amount has not
been paid as
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of the date of such termination (the "Unpaid Prior Year's Bonus") and (v) any
other payments or benefits to which he may be entitled upon Retirement
determined in accordance with the applicable agreements, plans, policies and
practices of the Company or its affiliates.
(b) Death or Disability.
(i) Disability. Executive's employment may be
terminated by the Company upon 30 days
notice if Executive becomes physically or
mentally incapacitated and is therefore
unable for an aggregate of six months in
any 12 month period to perform his material
duties (such incapacity is hereinafter
referred to as "Disability"). Any question
as to the existence of the Disability of
Executive as to which Executive and the
Company cannot agree shall be determined in
writing by a qualified independent
physician mutually acceptable to Executive
and the Company. Upon any such termination
for Disability during the Employment Term
prior to a Change in Control, Executive
shall be entitled to receive (A) his Base
Salary, benefits and perquisites through
the date of such
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termination, (B) a payment equal to a
fraction of the annual incentive payment
which Executive would have earned with
respect to the year of termination under
the Xxxxxxxx Annual Plan, computed based on
the higher of actual and target
performance, the numerator of which
fraction is the number of days in such year
prior to such termination and the
denominator of which is 365, such payment
to be made at the time annual incentive
payments are otherwise made with respect to
such year, (C) long term disability
benefits under the arrangements referred to
in Section 5(a) and (D) the Unpaid Prior
Year's Bonus.
(ii) Death. Upon termination for death during
the Employment Term prior to a Change in
Control, subject to Section 12(e),
Executive shall be entitled to (A) his Base
Salary, benefits and perquisites through
the date of such termination, (B) a payment
equal to a fraction of the annual incentive
payment which Executive would have earned
with respect to the year of termination
under
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the Xxxxxxxx Annual Plan, computed based on
the higher of actual and target
performance, the numerator of which
fraction is the number of days in such year
prior to such termination and the
denominator of which is 365, such payment
to be made at the time annual incentive
payments are otherwise made with respect to
such year and (C) the Unpaid Prior Year's
Bonus.
(iii) Other Payments or Benefits. Any other
payments or benefits (including the
Retirement Benefit, subject to the
provisions of Section 6) to which Executive
may be entitled following Executive's
termination during the Employment Term for
death or Disability prior to a Change in
Control shall be determined in accordance
with the applicable agreements, plans,
policies and practices of the Company and
its affiliates.
(c) For Cause by the Company; Voluntary Termination by
Executive. Executive's employment may be terminated by the Company for
"Cause". For purposes of this Agreement, prior to a Change in Control, "Cause"
shall mean
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(i) Executive's continued failure to devote substantially all of his business
time and energies to the performance of his duties except to the extent
permitted by Section 2 hereof (other than as a result of total or partial
incapacity due to physical or mental illness or as a result of termination by
Executive for Good Reason as defined in Section 7(e) below) after written
demand for substantial performance is delivered to Executive personally, (ii)
Executive's willful failure to attempt in good faith to follow within a
reasonable time in view of the circumstances any written direction of the Board
which is lawful, (iii) any act or omission by Executive constituting dishonesty
(other than a good faith expense account dispute) or fraud, in either case with
respect to the Company or any of its affiliates, or any other willful
misconduct which is injurious to the financial condition of the Company or any
of its affiliates or is injurious to the business reputation of the Company or
any of its affiliates, (iv) Executive's conviction of a felony under the laws
of the United States or any state thereof (other than merely for exceeding the
speed limit in a vehicle) or (v) willful breach of any covenant contained in
Section 12. For purposes of this Section 7(c) no act or failure to act on
Executive's part shall be deemed willful unless done or omitted to be done by
Executive not in good faith and without reasonable belief that Executive's
action or omission was in the best interest
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of the Company. If during the Employment Term Executive's employment is
terminated for Cause, or if Executive voluntarily terminates employment (other
than for Good Reason or Retirement), in either case prior to a Change in
Control, he shall be entitled to receive his Base Salary, benefits and
perquisites through the date of such termination. Any other payments or
benefits (including the Retirement Benefit, subject to the provisions of
Section 6), if any, payable to Executive following such termination of
Executive's employment during the Employment Term shall be determined in
accordance with the applicable agreements, plans, policies and practices of the
Company and its affiliates.
(d) Without Cause by the Company or with Good Reason by
Executive. If prior to a Change in Control Executive's employment during the
Employment Term is terminated by the Company without Cause (other than by
reason of death, Disability or Retirement) or by Executive with "Good Reason"
(as defined in Section 7(e) below) asserted in a Notice of Termination pursuant
to Section 13(f) within 60 days of the event alleged to constitute such Good
Reason, subject to Section 9 and Sections 12(e) and 12(f), Executive shall be
entitled to receive the following benefits:
(i) The Company shall pay Executive at the
time of such termination in a lump sum a
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cash amount equal to the sum of (A) two
times his Base Salary in effect at the time
of such termination or, in the event of
termination by Executive on account of an
event described in Section 7(e)(iv) below,
the Base Salary as in effect prior to the
reduction or reductions referred to
therein, (B) an amount equal to the annual
incentive payment Executive would have
earned in respect of the year of
termination under the Xxxxxxxx Annual Plan,
if any, in effect at the date of
termination or, in the event of a
termination by Executive by reason of an
event described in Section 7(e)(vi), the
plan in effect prior to the elimination
referred to therein, determined as if
Executive had been employed by the Company
for the full year and without regard to any
right reserved by the Company to decrease
or eliminate such bonus, and assuming
actual performance had equaled the target
performance objective established for such
year pursuant to
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the terms of such plan and (C) the Unpaid
Prior Year's Bonus.
(ii) For a 24-month period after such
termination, the Company shall cause
Executive to be provided with life,
accident, medical, dental and prescription
insurance benefits substantially similar
to, and on the same terms as, those
benefits elected and received by Executive
under the "Flex Benefit" program of the
Company or its affiliates immediately prior
to such termination; provided that
Executive shall be charged an amount equal
to any monthly payroll deduction charged
for similar benefits to executives in
positions similar to that which Executive
held before his termination; and provided
further that, if Executive receives medical
benefits under the Xxxxxxxx Retiree
Comprehensive Health Care Plan and
post-retirement life insurance benefits
(collectively, "Retiree Medical and Life
Insurance Benefits"), at any time during
the 24-month period referred to above, once
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such benefits begin Executive shall be
entitled only to Retiree Medical and Life
Insurance Benefits.
(iii) For a period of 24 months after such
termination, the Company shall provide or
cause Executive to be provided with the
fringe benefits and perquisites provided to
Executive at the time of Executive's
termination.
(iv) In addition to all other amounts payable to
Executive under this Section 7(d),
Executive shall receive any other payments
and benefits (including the Retirement
Benefit, subject to the provisions of
Section 6) to which Executive is entitled
under any agreement, plan, policy or
practice of the Company or its affiliates,
determined in accordance with the terms of
such agreements, plans, policies or
practices; provided that amounts paid
pursuant to this Section 7(d) shall be in
lieu of any payments under any separation
policy of the Company or any of its
affiliates.
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(v) The Company shall provide Executive with
outplacement services from the firm of
Executive's choice at a cost to the Company
not to exceed $50,000.
(e) Good Reason. For purposes of this Agreement, prior
to a Change in Control, "Good Reason" shall mean the occurrence of any of the
following without Executive's written consent:
(i) a material reduction in Executive's
responsibilities, authorities or duties,
all as contemplated by Section 2 hereof;
provided, however, that such reduction by
reason of a termination for Cause or
Disability shall not constitute Good
Reason;
(ii) Executive is removed from or not appointed
to any of the positions specified in
Section 2, other than by reason of
termination for Cause or Disability;
(iii) the Company fails to pay Executive when due
any amount due hereunder or under any plan
or policy of the Company or any of its
affiliates;
(iv) a reduction in Executive's Base Salary
except in the event of an across the
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board salary reduction within the corporate
staff group in accordance with Section 3
hereof;
(v) a reduction in Executive's aggregate level
of benefits under the pension, life
insurance, medical, health and accident,
disability, deferred compensation or
savings or similar plans of the Company or
any of its affiliates, except in the event
of an across the board reduction in such
benefits within the corporate staff group
provided that any reduction in the
Retirement Benefit or the long term
disability protection specified in Section
5(a) above shall not be subject to such
across the board reduction;
(vi) the failure of the Company or its
affiliates to maintain an annual incentive
compensation plan for which Executive is
eligible providing potential annual
incentive awards to Executive at the level
required by Section 4 hereof; or
(vii) Executive's office is relocated outside of
a 00-xxxx xxxxxx xx Xxxxxx, Xxxxxxxx.
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If Executive provides to the Company a Notice of Termination,
pursuant to Section 13(f), in connection with an event described in clauses (i)
through (vii) of this Section 7(e), the Company shall have ten (10) business
days from the date of receipt of such notice to effect a cure of the event
described therein, and upon cure thereof by the Company to Executive's
reasonable satisfaction, such event shall no longer constitute Good Reason for
purposes of this Agreement.
(f) If upon or following a Non-Renewal or following the
giving a notice of Non-Renewal after September 9, 2001 and on or before March
9, 2002 Executive's employment with the Company is terminated by Executive for
any reason other than death (including without limitation voluntarily) or by
the Company for any reason other than for Cause, subject to Sections 12(e) and
(f), Executive shall be entitled to the following payments and benefits. If
such termination occurs before the date Executive attains age 62, Executive
shall be entitled to the payments and benefits provided in Section 7(d) hereof;
provided that if such termination occurs after Executive's 60th birthday, the
payments and benefits (other than the Retirement Benefit and the Unpaid Prior
Year's Bonus, if any) shall be reduced to a fraction of such payments and
benefits the numerator of which shall be the number of days after such
termination until Executive's 62nd birthday and the denominator of which
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is 730. If such termination occurs on or after Executive attains age 62,
Executive shall be entitled to receive only those payments and benefits
(including the Retirement Benefit, subject to the provisions of Section 6) to
which Executive is entitled under any agreement, plan, policy or practice of
the Company or its affiliates, determined in accordance with the terms of such
agreements, plans, policies or practices.
8. Termination Following a Change in Control.
(a) Retirement. Executive's employment shall terminate
automatically upon Executive's Retirement. Upon a termination of Executive's
employment by reason of Retirement during the Employment Term following a
Change in Control, Executive shall be entitled to (i) his Base Salary, benefits
and perquisites through the date of such termination, (ii) a payment equal to a
fraction of the annual incentive payment which Executive would have earned with
respect to the year of termination under the Xxxxxxxx Annual Plan, computed
based on the higher of actual and target performance, the numerator of which
fraction is the number of days in such year prior to such termination and the
denominator of which is 365, such payment to be made at the time annual
incentive payments are otherwise made with respect to such year, (iii) the
Retirement Benefit (subject to the provisions of Section 6), (iv) the Unpaid
Prior Year's Bonus and (v) any other payments or benefits to which
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he may be entitled upon Retirement determined in accordance with the applicable
agreements, plans, policies and practices of the Company or its affiliates in
effect immediately prior to the Change in Control or, if more generous, such
programs in effect at the time of such Retirement.
(b) Death or Disability.
(i) Disability. Executive's employment may be
terminated by the Company upon 30 days
notice by reason of Executive's Disability,
subject to the procedure for determining
such Disability outlined in Section
7(b)(i). Upon any termination for
Disability during the Employment Term
following a Change in Control, Executive
shall be entitled to receive (A) subject to
the following sentence, his Base Salary for
a two-year period ending on the second
anniversary of Executive's date of
termination, (B) perquisites through the
date of such termination, (C) a payment
equal to a fraction of the annual incentive
payment which Executive would have earned
with respect to the year of termination
under the Xxxxxxxx Annual Plan, computed
based
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on the higher of actual and target
performance, the numerator of which
fraction is the number of days in such year
prior to such termination and the
denominator of which is 365, such payment
to be made at the time annual incentive
payments are otherwise made with respect to
such year, (D) long term disability
benefits under the arrangements referred to
in Section 5(a) and (E) the Unpaid Prior
Year's Bonus. Such continued Base Salary
shall be paid in equal monthly installments
and shall be reduced by any amounts
received as disability benefits in lieu of
salary under the arrangements referred to
in Section 5(a).
(ii) Death. Upon termination for death during
the Employment Term following a Change in
Control, subject to Section 12(e),
Executive shall be entitled to (A) his Base
Salary, benefits and perquisites through
the date of such termination, (B) a payment
equal to a fraction of the annual incentive
payment which Executive would have earned
with
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respect to the year of termination under
the Xxxxxxxx Annual Plan, computed based on
the higher of actual and target
performance, the numerator of which
fraction is the number of days in such year
prior to such termination and the
denominator of which is 365, such payment
to be made at the time annual incentive
payments are otherwise made with respect to
such year, (C) if and to the extent the
death benefits provided Executive by the
Company are less than would have been paid
immediately prior to a Change in Control, a
lump sum payment of cash in an amount equal
to the value of such shortfall and (D) the
Unpaid Prior Year's Bonus. Any such lump
sum payment shall be made within ten (10)
business days following Executive's death.
(iii) Other Payments or Benefits.
Any other payments or benefits (including
the Retirement Benefit, subject to the
provisions of Section 6) to which Executive
may be entitled upon Executive's
termination during the
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Employment Term for death or Disability
following a Change in Control shall be
determined in accordance with the
applicable agreements, plans, policies and
practices of the Company or its affiliates
in effect immediately prior to the Change
in Control or, if more generous, such
agreements, plans, policies and practices
as in effect at any time following the
Change in Control; provided that nothing in
this Section 8(b)(iii) shall be interpreted
so as to result in the duplication of the
benefits provided under Section 8(b)(i) or
(ii).
(c) For Cause by the Company; Voluntary Termination by
Executive. Executive's employment may be terminated by the Company for Cause.
For purposes of this Agreement, following a Change in Control, "Cause" shall
mean (i) Executive's continued failure to devote substantially all of his
business time and energies to the performance of his duties except to the
extent permitted by Section 2 hereof (other than as a result of total or
partial incapacity due to physical or mental illness or as a result of
termination by Executive for Good Reason as defined in Section 8(e) below)
after a written demand for substantial
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performance is delivered to Executive personally and Executive shall have
failed during the sixty-day period following such written demand to have
corrected such failure, (ii) Executive's willful failure to attempt in good
faith to follow within a reasonable time in view of the circumstances any
written direction of the Board which is lawful, (iii) any act or omission by
Executive constituting dishonesty (other than a good faith expense account
dispute) or fraud, in either case with respect to the Company or any of its
affiliates, or any other willful misconduct which is materially injurious to
the financial condition or the business reputation of either the Company
individually or of the Company and its affiliates in the aggregate, (iv)
Executive's conviction of a felony under the laws of the United States or any
state thereof (other than merely for exceeding the speed limit in a vehicle) or
(v) willful breach of any covenant contained in Section 12. For purposes of
this Section 8(c) no act or failure to act on Executive's part shall be deemed
willful unless done or omitted to be done by Executive not in good faith and
without reasonable belief that Executive's action or omission was in the best
interest of the Company.
If during the Employment Term Executive's employment is
terminated for Cause or if Executive voluntarily terminates his employment with
the Company (other than for Good Reason or Retirement), in either case,
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following a Change in Control, he shall be entitled to receive his Base Salary,
benefits and perquisites through the date of such termination. Any other
payments or benefits (including the Retirement Benefit, subject to the
provisions of Section 6), if any, payable to Executive following such
termination of Executive's employment during )the Employment Term shall be
determined in accordance with the applicable agreements, plans, policies and
practices of the Company or its affiliates.
(d) Without Cause by the Company or with Good Reason by
Executive. If following a Change in Control Executive's employment during the
Employment Term is terminated by the Company without Cause (other than by
reason of death, Disability or Retirement) or by Executive with "Good Reason"
(which following a Change in Control shall have the meaning set forth in
Section 8(e) below) asserted in a Notice of Termination pursuant to Section
13(f) within 180 days of the event alleged to constitute such Good Reason,
subject to Section 9 and Sections 12(e) and 12(f), Executive shall be entitled
to receive the following benefits:
(i) The Company shall pay Executive at the time
of such termination in a lump sum the sum
of (x) a cash amount equal to two times the
sum of (A) his Base Salary in effect at the
time of such
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termination or, in the event of termination
by Executive by reason of an event
described in Section 8(e)(iv) below, the
Base Salary as in effect prior to the
reduction or reductions referred to therein
plus (B) the annual incentive payment
Executive would have earned in respect of
the year of termination under the Xxxxxxxx
Annual Plan, if any, in effect at the date
of termination or in the event of a
termination by Executive by reason of an
event described in Section 8(e)(v), the
plan in effect immediately prior to the
reduction or reductions referred to
therein, determined as if Executive had
been employed by the Company for the full
year and without regard to any right
reserved by the Company to decrease or
eliminate such bonus, and assuming actual
performance had equaled the target
performance objective established for such
year pursuant to the terms of such plan,
and (y) the Unpaid Prior Year's Bonus.
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(ii) The Company shall pay Executive in a lump
sum a cash amount equal to a fraction of
the annual bonus which (absent such
termination and without regard to any right
reserved by the Company to decrease or
eliminate such bonus) Executive would have
earned with respect to the year of
termination under the Xxxxxxxx Annual Plan,
if any, in effect at the date of
termination or, in the event of a
termination by Executive by reason of an
event described in Section 8(e)(v), the
plan in effect prior to the reduction or
reductions referred to therein, assuming
actual performance had equaled the target
performance objective established for such
year pursuant to the terms of such plan,
the numerator of which fraction is the
number of days in such year prior to such
termination and the denominator of which is
365. Such payment shall be made at the
time of Executive's termination.
(iii) For a 36-month period following Executive's
termination, the Company
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shall pay Executive in monthly installments
the sum of the monthly costs to Executive
of purchasing life, accident, medical,
dental and prescription insurance benefits
substantially similar to such benefits
elected and received by Executive under the
"Flex Benefit" program of the Company or
its affiliates immediately prior to
Executive's termination or, if more
generous, immediately prior to the Change
in Control ("Continued Benefits") less the
monthly payroll deduction, if any, charged
to Executive immediately prior to
Executive's termination, or, if applicable,
immediately prior to the Change in Control,
for any of such Continued Benefits;
notwithstanding the foregoing, if Executive
begins to receive Retiree Medical and Life
Insurance Benefits at any time during the
36-month period referred to above, once
such benefits begin, the monthly payment
due Executive under the preceding clause
shall equal the monthly costs to Executive
of purchasing
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Continued Benefits not provided by the
Company or any of its affiliates to
Executive as Retiree Medical and Life
Insurance Benefits.
(iv) For a 24-month period after such
termination, the Company shall provide or
cause Executive to be provided with the
fringe benefits and perquisites provided to
Executive at the time of Executive's
termination.
(v) In addition to all other amounts payable to
Executive under this Section 8(d),
Executive shall receive any other payments
and benefits (including the Retirement
Benefit, subject to the provisions of
Section 6) to which Executive is entitled
under any agreement, plan, policy or
practice of the Company or its affiliates
determined in accordance with the terms of
such agreements, plans, policies or
practices; provided that amounts paid
pursuant to this Section 8(d) shall be in
lieu of any payments under any separation
policy of the Company or any of its
affiliates.
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(vi) The Company shall provide Executive with
outplacement services from the firm of
Executive's choice at a cost to the Company
not to exceed $50,000.
(e) Good Reason Following a Change in Control. For
purposes of this Agreement, following a Change in Control, "Good Reason" shall
mean the occurrence of any of the following without Executive's written
consent:
(i) a material adverse change in the nature or
scope of Executive's responsibilities,
authorities, duties and/or positions
(including without limitation by reason of
an acquisition of the Company by a public
company as a result of which Executive is
no longer the chief executive officer of a
public company);
(ii) Executive is removed from or not appointed
to any of the positions specified in
Section 2, other than by reason of
termination for Cause or Disability;
(iii) the Company fails to pay Executive when due
any amounts due hereunder or under any plan
or policy of the Company or any of its
affiliates;
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(iv) a reduction in Executive's Base Salary in
effect immediately prior to the Change in
Control or as the same may be increased
from time to time;
(v) a reduction in Executive's incentive
compensation opportunity, as defined below,
under the executive incentive compensation
plans of the Company or its affiliates for
which Executive is eligible as in effect
immediately prior to the Change in Control
or as the same may be increased from time
to time (absent, in the case of any such
reduction relative to Executive's annual
incentive payment, a corresponding increase
in his Base Salary);
(vi) the failure of the Company to continue to
provide Executive with benefits and
perquisites which are substantially similar
in the aggregate to those enjoyed by
Executive under the pension, life
insurance, medical, health and accident,
disability, deferred compensation or
savings or similar plans and fringe benefit
programs (including vacation) of the
Company or its
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affiliates in which Executive was
participating immediately prior to the
Change in Control; or the failure by the
Company to continue to provide Executive
with directors' or officers' insurance, as
applicable, at the level maintained
immediately prior to the Change in Control;
(vii) Executive's office is relocated outside of
a 00-xxxx xxxxxx xx Xxxxxx, Xxxxxxxx;
(viii) the failure of the Company to obtain an
agreement from any successor to assume
and agree to perform this Agreement, as
contemplated in Section 13(e) hereof; or
(ix) any purported termination of Executive's
employment by the Company which is not
effected pursuant to a Notice of
Termination satisfying the requirements
of Section 13(f) and, if applicable,
following the written demand described in
Section 8(c) and the relevant cure
period.
If Executive provides a Notice of Termination, as defined in Section 13(f), in
connection with an event described in clauses (i) through (vii) of this Section
8(e), to the Company, the Company shall have ten (10) business days from
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the date of receipt of such notice to effect a cure of the event described
therein, and upon cure thereof by the Company to Executive's reasonable
satisfaction, such event shall no longer constitute Good Reason for purposes of
this Agreement.
(f) Reduction in Incentive Compensation Opportunity. For
purposes of this Agreement, a "reduction in Executive's incentive compensation
opportunity" shall include:
(i) the failure by the Company or an
affiliate to maintain both an annual and
a long term executive incentive plan for
which Executive is eligible providing
potential annual incentive awards to
Executive at the level required by
Section 4 hereof;
(ii) any reduction or elimination by the
Company or any of its affiliates of
Executive's annual or long term incentive
compensation pursuant to any reserved
right under any such plan to decrease or
eliminate such payment or award;
(iii) any reduction in Executive's
participation level under any such plan;
and
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(iv) any adverse change in the payout schedule
or its equivalent or in the manner of
assessing actual performance under any
such plan and/or any extraordinary change
in the applicable performance criteria
thereunder.
(g) Change in Control. For purposes of this Agreement,
the phrase "Change in Control" shall mean the following and shall be deemed to
have occurred if any of the following events shall have occurred:
(i) any person (as defined in Section 3(a)(9)
of the Securities Exchange Act of 1934,
as amended from time to time, (the
"Exchange Act") and as used in Sections
13(d) and 14(d) thereof, including a
group as defined in Section 13(d)
thereof, (a "Person") (other than the
Company, any trustee or other fiduciary
holding securities under any employee
benefit plan of the Company, or any
company owned, directly or indirectly, by
the stockholders of the Company in
substantially the same proportions as
their ownership of the common stock of
the Company) becomes the Beneficial Owner
(except that a Person
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shall be deemed to be the Beneficial
Owner of all shares that any such Person
has the right to acquire pursuant to any
agreement or arrangement or upon exercise
of conversion rights, warrants, or
options or otherwise, without regard to
the sixty day period referred to in Rule
13d-3 under the Exchange Act, directly or
indirectly, of securities of the Company
or any Significant Subsidiary (as defined
below), representing 30 percent or more
of the combined voting power of the
Company's or such subsidiary's then
outstanding securities; provided,
however, that such event shall not
constitute a Change in Control unless or
until the percentage of such securities
owned beneficially, directly or
indirectly, by such Person is equal to or
more than all such securities owned
beneficially, directly or indirectly, by
Manville Personal Injury Settlement Trust
(the "Trust");
(ii) during any period of two consecutive
years (not including any period prior to
the date hereof), individuals who at the
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beginning of such period constitute the
Board, and any new director (other than a
director designated by a person who has
entered into an agreement with the
Company to effect a transaction described
in clause (i), (iii), or (iv) of this
paragraph) whose election by the Board or
nomination for election by the Company's
stockholders was approved by a vote of at
least two-thirds of the directors then
still in office who either were directors
at the beginning of such two-year period
or whose election or nomination for
election was previously so approved but
excluding for this purpose any such new
director whose initial assumption of
office occurs as a result of either an
actual or threatened election contest (as
such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the
Exchange Act) or other actual or
threatened solicitation of proxies or
consents by or on behalf of an
individual, corporation, partnership,
group, associate or other entity or
Person other than the Board,
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cease for any reason to constitute at
least a majority of the Board; provided,
however, that such event shall not
constitute a Change in Control unless or
until the percentage of voting securities
of the Company owned beneficially,
directly or indirectly, by Manville
Personal Injury Settlement Trust is less
than 50 percent of all such outstanding
securities;
(iii) the consummation of a merger or
consolidation of the Company or any
subsidiary owning directly or indirectly
all or substantially all of the
consolidated assets of the Company (a
"Significant Subsidiary") with any other
corporation, other than a merger or
consolidation which would result in the
voting securities of the Company or a
Significant Subsidiary outstanding
immediately prior thereto continuing to
represent (either by remaining
outstanding or by being converted into
voting securities of the surviving or
resulting entity) more than 50 percent of
the combined voting power of the
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surviving or resulting entity outstanding
immediately after such merger or
consolidation;
(iv) the stockholders of the Company or any
affiliate approve a plan or agreement for
the sale or disposition of all or
substantially all of the consolidated
assets of the Company (other than such a
sale or disposition immediately after
which such assets will be owned directly
or indirectly by the stockholders of the
Company in substantially the same
proportions as their ownership of the
common stock of the Company immediately
prior to such sale or disposition) in
which case the Board shall determine the
effective date of the Change in Control
resulting therefrom; or
(v) any other event occurs which the Board
determines, in its discretion, would
materially alter the structure of the
Company or its ownership.
(h) If upon or following a Non-Renewal or following the
giving of a notice of Non-Renewal after September 9, 2001 and on or before
March 9, 2002, and after a Change in Control, Executive's employment with the
Company
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is terminated by Executive for any reason other than death (including without
limitation voluntarily) or by the Company for any reason other than for Cause,
subject to Sections 12(e) and 12(f), Executive shall be entitled to the
benefits and payments provided under, and on the terms provided in, Section
7(f) hereof.
9. Reduction of Payments. (a) No Mitigation. In the
event of termination of Executive's employment hereunder, Executive shall not
be required to mitigate the amount of any payment or benefit to be provided
pursuant to Section 7 or 8 by seeking other employment, and any amounts earned
from other employment shall not reduce such payments or benefits, except that
in the event Executive engages in such post-termination employment, the
benefits otherwise receivable by Executive pursuant to Section 7(d)(ii) or
(iii) or Section 8(d)(iii) or (iv) shall be reduced to the extent of any
comparable benefits to which Executive becomes entitled with respect to the
relevant period following such termination. Executive shall report to the
Company any such benefits to which he becomes entitled. It is understood that
if the medical benefits provided to Executive in connection with his
post-termination employment do not cover pre-existing conditions, such benefits
will not be deemed comparable to the extent of such non-coverage.
(b) Notwithstanding any other provision of this Agreement
or any other agreement between Executive and the
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Company or any affiliate, if a reduction in the aggregate amount of payments
Executive otherwise would be entitled to receive from the Company or any
affiliate, which payments are deemed contingent on a change described in
Section 280G(b)(2)(A)(i) of the Code, (the "Contingent Payments") would result
in a greater "Net After-Tax Amount", as such term is defined below, then such
payments shall be reduced to provide the greatest Net After-Tax Amount, the
first such reduction to be a reduction to the amount of the lump sum payment,
if any, under Section 7 or 8 hereof, as the case may be, and any other such
reduction to be made to such other payments as the parties shall agree. For
these purposes, the term "Net After-Tax Amount" shall mean the net amount of
the Contingent Payments after giving effect to all taxes which would be
applicable to such payments, including, but not limited to, any tax under
Section 4999 of the Code. The determination of whether any such payment
reduction shall be effected shall be made at the expense of the Company by a
nationally recognized accounting firm acceptable to Executive and the Company
and such determination shall be binding upon Executive and the Company.
(c) In the event Executive's employment is terminated by
the Company without Cause or by Executive with Good Reason after Executive
shall have reached the age of 63, the payments and benefits to be provided to
Executive
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pursuant to Section 7(d) or Section 8(d), as the case may be, other than the
Retirement Benefit, shall be eliminated if Executive shall have reached the age
of 65 prior to the date of such termination or, if not, shall be reduced to a
fraction of such payments and benefits the numerator of which shall be the
number of days after such termination until Executive's 65th birthday and the
denominator of which is 730.
10. Indemnification. The Company will indemnify
Executive (and his legal representatives or other successors) to the fullest
extent permitted (including payment of expenses in advance of final disposition
of a proceeding) by the laws of the jurisdiction of incorporation of the
Company, as in effect at the time of the subject act or omission, or by the
Restated Certificate of Incorporation and By-Laws of the Company, as in effect
at such time or on the effective date of this Agreement, or by the terms of any
indemnification agreement between the Company and Executive, whichever affords
or afforded greatest protection to Executive, and Executive shall be entitled
to the protection of any insurance policies the Company may elect to maintain
generally for the benefit of its directors and officers (and to the extent the
Company maintains such an insurance policy or policies, Executive shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any Company
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officer or director), against all costs, charges and expenses whatsoever
incurred or sustained by him or his legal representatives at the time such
costs, charges and expenses are incurred or sustained, in connection with any
action, suit or proceeding to which he (or his legal representatives or other
successors) may be made a party by reason of his being or having been a
director, officer or employee of the Company, or any subsidiary or his serving
or having served any other enterprise as a director, officer, employee or
fiduciary at the request of the Company.
11. Legal Fees. In the event of a dispute between
Executive and the Company with respect to any of Executive's rights under this
Agreement, the Company shall reimburse Executive for any and all reasonable
legal fees and related expenses incurred by him in connection with enforcing
such rights, including the costs of arbitration, if and to the extent provided
by the arbitral tribunal resolving such dispute, or if such dispute is resolved
without arbitration, if Executive is successful in enforcing any material right
originally disputed by the Company.
12. Covenants; Specific Performance.
(a) Confidentiality. Executive will not at any time
(whether during or after his employment with the Company) disclose or use, in
either case for his own benefit or purposes, or the benefit or purposes of any
other person, firm, partnership, joint venture, association, corporation
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or other business organization, entity or enterprise other than the Company and
any of its subsidiaries or affiliates, any trade secrets, information, data, or
other confidential information relating to customers, employees, development
programs, costs, marketing, trading, investment, sales activities, promotion,
credit and financial data, manufacturing processes, financing methods, plans,
or the business and affairs of the Company generally, or of any subsidiary or
affiliate of the Company, provided that the foregoing shall not apply to
information which is not unique to the Company or which is generally known to
the industry or the public other than as a result of Executive's breach of this
covenant and provided further, nothing shall preclude Executive from making
truthful statements or disclosures that are required by applicable law,
regulation or legal process. If Executive receives a request or subpoena
seeking production or disclosure of any confidential information which is the
subject of this paragraph (a), Executive agrees to give prompt written notice
to the Company of that request or subpoena in order to allow the Company an
opportunity to resist the request or subpoena.
Executive agrees that upon termination of his employment with
the Company for any reason, he will return to the Company immediately all
memoranda, books, papers, plans, information, letters and other data, and all
copies
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thereof or therefrom, in any way relating to the business of the Company and
its affiliates, except that he may retain personal notes, notebooks, telephone
and address directories, rolodexes and diaries and any documents provided to
him as a director. Executive further agrees that he will not retain or use for
his account at any time any trade names, trademark or other proprietary
business designation used or owned in connection with the business of the
Company or its affiliates.
(b) Non-Competition; Non-Solicitation. Executive
acknowledges and recognizes the highly competitive nature of the business of
the Company and its affiliates. In addition Executive acknowledges that he has
had access at the highest level to and possession of trade secrets and other
valuable confidential and proprietary information of the Company and its
affiliates. Accordingly in consideration of the agreements of the Company
herein Executive covenants and agrees as follows that:
(i) (A) During his employment by the Company
Executive shall not alone, or as a
partner, member, employee, agent,
director, stockholder or investor of any
corporation or other business entity or
in any other individual or representative
capacity, directly or indirectly, own,
manage, operate or
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control, or participate in the ownership,
management, operation or control of, or
work for or provide consulting services
to (including without limitation, without
receiving a fee or other compensation),
or lend money to, any business, activity
or person which competes with a business
or activity in which the Company or its
affiliates is engaged or in which the
Company or its affiliates is actively and
seriously considering engaging; provided
the foregoing shall not prohibit
Executive from directly or indirectly
making passive investments of not more
than one percent (1%) of the outstanding
equity interests in, or public debt of,
any company or entity listed or traded on
a national securities exchange or an over
the counter securities market.
(B) During the Post-Employment
Period, as defined below, without the
prior written consent of the Company,
Executive shall not alone, or as a
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partner, member, employee, agent,
stockholder or investor of any
corporation or other business entity or
in any other individual or representative
capacity (other than as a director),
directly or indirectly, own, manage,
operate or control, or participate in the
ownership, management, operation or
control of, or work for or provide
consulting services to (including without
limitation, without receiving a fee or
other compensation), or lend money to,
any business, activity or person in the
Territory, as defined below, which (I)
Executive could upon reasonable
investigation know competes with a
business or activity in which the Company
or any of its affiliates was engaged on
the date of termination of
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Executive's employment which accounts for
more than 5% of gross revenues or
earnings before taxes of the Company and
its affiliates (other than the Trust) in
any of the two fiscal years immediately
preceding the date of the termination of
Executive's employment but in any event
after 1995, disregarding for these
purposes in any year the impact of the
Company's former affiliate, Riverwood
International, Inc., determined on a
consolidated basis (a "Core Business") or
(II) is a business activity which was
actively and seriously being developed by
the Company or any of its affiliates at
any time during the Employment Term which
was projected by the Company to account
for more than 5% of gross revenues or
earnings before taxes of the Company and
its affiliates (other than the Trust) at
or before the end of the second fiscal
year following the termination of
Executive's employment (an "Actively
Developed Business"). (Hereinafter, such
partnership, corporation, business
entity, business, activity or person is
referred to as a "Competitive Business".)
The foregoing shall not prohibit
Executive from (i) serving as an
employee, officer, agent or consultant to
or of a Competitive Business if at such
Business he is not
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directly or indirectly involved with
activities that are in direct competition
with a Core Business or an Actively
Developed Business, (ii) directly or
indirectly making passive investments of
not more than one percent (1%) of the
outstanding equity interests in, or the
public debt of, any company or entity
listed or traded on a national securities
exchange or an over the counter
securities market or (iii) making
investments in a limited partnership or
other investment fund, provided that (w)
at the time of Executive's investment in
such fund, such fund has no significant
investment in a Competitive Business and,
to Executive's knowledge after due
inquiry, has not targeted as potential
investments companies that would be
likely to constitute Competitive
Businesses, (x) Executive's interest in
such fund at the time of his investment
represents less than 5% of such fund, (y)
investments by such fund are
discretionary with such fund's managers
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and (z) Executive is not consulted as to
such fund's investment decisions prior to
any investment decision by such fund.
(C) Notwithstanding the
foregoing, (I) during the Post-Employment
Period Executive may serve as a director
of (or in a similar capacity at) any
entity other than the seven or fewer
entities identified in writing by the
Company in its sole and absolute
discretion within 30 days following the
date of termination of Executive's
employment with the Company which the
Company in good faith believes compete
with the Company or any of its affiliates
and which is not on the date of
termination of Executive's employment
with the Company an entity of which
Executive served as a director (or in
such a similar capacity) with the prior
written approval of the Board of
Directors of the Company (hereinafter
such an identified entity is referred to
as a "Competitive Entity"); provided that
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(II) Executive shall not during the
Post-Employment Period serve as a
director of (or in any similar capacity
at) any Competitive Entity. In
addition, nothing herein shall limit the
receipt by Executive of any equity
compensation in connection with his
permitted service as such a director or
in such other similar capacity.
(ii) During the Post-Employment Period,
Executive shall not (x) participate
directly in any attempt to hire any
person who is or was an officer or
management level employee of the Company
or any affiliate, (y) willfully solicit
any such person to discontinue his or her
relationship with the Company or such
affiliate in order to accept employment
by, or to enter into a business
relationship with, any other entity or
(z) willfully identify any such person
for solicitation by any such entity,
unless in the case of clause (x) or (z)
such person shall have ceased to be
employed by the Company and all of its
affiliates for a period of at least
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six months. Notwithstanding the
foregoing, neither the mere giving by
Executive of employment references to
third parties at the request of an
employee or former employee of the
Company nor the mere referral of
unsolicited callers to other persons in
an organization who are in charge of
hiring shall constitute a violation of
this clause.
(iii) Executive hereby acknowledges that the
business of the Company and its
affiliates is international in scope and
that, accordingly, any geographical
limitation on the scope of the foregoing
covenants to less than those areas
specified below could be meaningless, and
that, by reason thereof, Executive
acknowledges that the scope of the
foregoing covenants is reasonable and
necessary in order to protect the
interests of the Company and its
affiliates sought to be protected hereby.
(iv) As used in this Agreement, (a) the term
"Post-Employment Period" shall mean the
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period beginning on the date of
termination of Executive's employment
with the Company and ending on the second
anniversary of such date, (b) the term
"Territory" shall mean the United States
of America, its territories and
possessions, together with such other
jurisdictions in which the business of
the Company or its affiliates is
conducted in a meaningful manner on the
date of termination of Executive's
employment with the Company and its
affiliates, (c) the term "affiliate"
shall mean any corporation or other
entity controlling, controlled by or
under common control with the Company and
(d) for purposes only of this Section 12,
the term "willful" shall mean deliberate
or intentional.
(c) Non-Disparagement.
(i) The Executive shall not make any
statements or comments about the Company
or any of its affiliates or any of their
respective employees, officers, trustees
or directors in any form (A) to any form
of media or likely to come to the
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attention of any form of media, (B)
during the Post-Employment Period to any
employee of the Company, (C) to any
customer of the Company or any of its
affiliates or (D) to any competitor of
the Company or any of its affiliates that
reasonably could be expected to have an
adverse impact on the business or
reputation of the Company, any of its
affiliates or any of their respective
officers, trustees or directors, provided
that in no event shall the foregoing
limitations apply to (I) compliance with
legal process or subpoena, (II) the
bringing of any action or any statements
made in the context of any proceedings
related to such action, (III) truthful
statements in response to an inquiry from
a court or regulatory body, (IV) truthful
statements in rebuttal to published media
stories with regard to Executive, (V)
truthful statements to a possible future
employer in connection with employment
discussions, (VI) truthful statements in
response to an inquiry
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from the Board of Directors or (VII)
statements made while employed by the
Company which Executive in good faith
believes to be in the best interests of
the Company and its affiliates.
(ii) The Company shall not make any comments
or statements in any form about Executive
(A) to any form of media or likely to
come to the attention of any form of
media, (B) during the Post- Employment
Period to the employees of the Company or
any of its affiliates, (C) to any
customer of the Company or any of its
affiliates or (D) to any competitor of
the Company or any of its affiliates that
reasonably could be expected to have an
adverse impact on the Executive's
personal or professional reputation,
provided that in no event shall the
foregoing limitation apply to (I)
compliance with legal process or
subpoena, (II) the bringing of any action
or any statements made in the context of
any proceedings related to such action,
(III) truthful statements in response to
inquiry from a court or
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regulatory body or as required in
satisfaction of the Company's disclosure
obligations, (IV) truthful statements in
rebuttal to published media stories with
regard to the Company or any of its
affiliates, (V) truthful statements to a
possible future employer of Executive in
response to an inquiry from such a
prospective employer, (VI) truthful
statements in response to inquiries from
the Board of Directors or (VII)
statements by the Company while Executive
is employed by the Company which the
Board of Directors determines in good
faith are necessary to comply with its
fiduciary obligations.
(iii) Without prejudice to whether any other
party has third party beneficiary rights
hereunder or any admission that any other
party has such rights, Section 12(c)(i)
shall not create any third party
beneficiary rights in any employee or
officer (serving only as such) of the
Company or any of its affiliates.
(d) Availability for Litigation Support. Executive
agrees that following termination of Executive's
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employment with the Company prior to a Change in Control, for a period ending
on the earlier to occur of the fifth anniversary of such termination or a
Change in Control, Executive shall make himself reasonably available to the
Company and its legal counsel, taking into consideration Executive's other
obligations, and shall cooperate with the Company in connection with any
litigation, investigation or other proceeding relating to events occurring
during Executive's employment hereunder or facts as to which he has knowledge;
provided that Executive shall be entitled to reimbursement of necessary and
reasonable expenses incurred in connection therewith subject to provision of
receipts therefor and provided further that (i) nothing herein shall require
Executive to make any but truthful statements and (ii) Executive will not be
required so to cooperate to the extent his position is in conflict with that of
the Company.
(e) Execution of a Release. Executive agrees that in the
event of termination of his employment and as a condition to any payments or
benefits in connection with or following such termination he or his personal or
legal representative or the legal representative of his estate shall execute a
release, which shall be substantially in the form attached hereto as Appendix I
(the "Release") with such changes therein, if any, as shall be necessary to
accomplish the legal intent of the Release at the time of its execution.
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(f) Breach of this Section; Specific Performance; Remedies.
(i) The parties acknowledge and agree that
their respective remedies at law for a
breach or threatened breach of any of the
provisions of this Section 12 would be
inadequate and, in recognition of this
fact, the parties agree that, in the
event of such a breach or threatened
breach, in addition to any remedies at
law, the aggrieved party, without posting
any bond, shall be entitled to obtain
equitable relief in the form of specific
performance, temporary restraining order,
temporary or permanent injunction or any
other equitable remedy which may then be
available. The parties further
acknowledge that in any proceeding for an
injunction, a party's ability to answer
in damages shall not be a bar or
interposed as a defense to the granting
of such temporary or permanent injunction
against such party, and that the
aggrieved party shall be entitled to such
other legal and equitable relief as
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a tribunal of competent jurisdiction
shall determine.
(ii) Executive acknowledges that the damages
to the Company as a result of a breach by
Executive of any of paragraphs (a) or (b)
of this Section may be difficult to
calculate, but could nevertheless be
substantial. Accordingly, in the event
of (i) a material and willful breach by
Executive during the Post-Employment
Period of paragraph (a) of this Section
12 or (ii) any breach by Executive during
the Post-Employment Period of paragraph
(b) of this Section 12, the parties agree
that as liquidated damages for such
breach Executive shall cease to be
entitled to any payments or benefits
hereunder, and shall be obligated to
reimburse the Company for any amounts
theretofore received, in either case in
connection with the termination of his
employment with the Company, including
without limitation by the specification
thereof, the Retirement Benefit, but
excluding any benefits under a
tax-qualified retirement plan.
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13. Miscellaneous.
(a) Governing Law; Liability of the Executive. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Colorado without reference to principles of conflict of laws.
Executive shall not be subject to liability for breach of this Agreement by
reason of his termination of his employment hereunder.
(b) Entire Agreement/Amendments/Effectiveness. This
Agreement shall supersede any and all existing employment, change-in-control or
severance agreements between Executive and the Company or any of its affiliates
and contains the entire understanding of the parties with respect to the
employment of Executive by the Company. There are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties with
respect to the subject matter herein other than those expressly set forth
herein. ANY AMENDMENT HERETO SHALL BE IN WRITING AND SHALL NOT BE EFFECTIVE
UNLESS AND UNTIL SIGNED BY EXECUTIVE AND THE CHAIRMAN OF THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY AND ATTESTED TO BY THE
SECRETARY OF THE COMPANY.
(c) No Waiver. The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion shall not be
considered a waiver of such party's rights or deprive such party of the right
thereafter to
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insist upon strict adherence to that term or any other term of this Agreement.
(d) Severability. It is expressly understood and agreed
that although Executive and the Company consider the restrictions contained in
this Agreement to be reasonable, if a final judicial determination is made by a
tribunal of competent jurisdiction that the time or territory or any other
restriction contained in this Agreement is an unenforceable restriction against
Executive, the provisions of this Agreement shall not be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such maximum extent as such tribunal may determine or indicate to be
enforceable. Alternatively, if any tribunal of competent jurisdiction finds
that any restriction contained in this Agreement is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding shall
not affect the enforceability of any of the other restrictions contained
herein. In the event that any one or more of the provisions of this Agreement
shall be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby.
(e) Successors; Binding Agreement.
(i) In the event of a Change in Control, the
Company will require the successor to
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the Company as Executive's employer
(whether such succession is direct or
indirect, by purchase, merger,
consolidation or otherwise, to any
portion of the business and/or assets of
the Company) 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 had taken place.
As used in this Agreement, "Company"
shall mean the Company as hereinbefore
defined and any successor to its business
and/or assets as aforesaid which assumes
and agrees to perform this Agreement by
operation of law, or otherwise. The term
"Company" shall also mean any affiliate
of the Company to which Executive may be
transferred with his written consent,
which he may grant or deny in his sole
discretion, and the Company shall cause
such affiliate employer to be considered
the "Company" bound by the terms of this
Agreement and this Agreement shall be
amended so to provide.
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(ii) This Agreement shall inure to the benefit
of and be enforceable by Executive's
personal or legal representatives,
executors, administrators, successors,
heirs, distributees, devisees and
legatees. If Executive should die while
any amount would still be payable to
Executive hereunder if Executive had
continued to live, all such amounts,
unless otherwise provided herein, shall
be paid in accordance with the terms of
this Agreement to Executive's devisee,
legatee or other designee or, if there is
no such designee, to Executive's estate.
This Agreement shall not be assignable by
Executive or, without Executive's written
consent, by the Company.
(f) Notice; Notice of Termination.
(i) For the purpose of this Agreement,
notices and all other communications
provided for in the Agreement shall be in
writing and, except as otherwise provided
in paragraph (iii) below, shall be deemed
to have been duly given when
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delivered or mailed by United States
registered mail, return receipt
requested, postage prepaid, addressed to
the respective addresses set forth on the
signature page of this Agreement;
provided that all notices to the Company
shall be directed to the attention of the
General Counsel of the Company, or to
such other address as either party may
have furnished to the other in writing in
accordance herewith, except that notice
of change of address shall be effective
only upon receipt,
(ii) Any purported termination of Executive's
employment hereunder by the Company or by
Executive under this Agreement shall not
be effective unless communicated by
written Notice of Termination to the
other party hereto in accordance with
paragraph (i) above. For purposes of
this Agreement, a "Notice of Termination"
in the case of a termination for Cause
shall mean a notice given within six (6)
months (or following a Change in Control
within ten (10) business days) of the
Company's
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having actual knowledge of the events
giving rise to such termination and in
all cases shall mean a notice which
indicates the specific termination
provision in this Agreement relied upon
and shall set forth in reasonable detail
the facts and circumstances claimed to
provide a basis for termination of
Executive's employment under the
provision so indicated.
(iii) The date of termination of Executive's
employment hereunder shall be the date of
receipt of the Notice of Termination,
except in the case of (A) Executive's
death, in which case the date of
termination of employment shall be the
date of death or (B) Executive's
termination hereunder for Cause following
a Change in Control, in which case the
date of termination shall be ten (10)
business days after actual receipt by
Executive of the Notice of Termination;
provided that if within thirty (30) days
after any Notice of Termination following
a Change in Control is received, the
party receiving
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such Notice of Termination notifies the
other party that a dispute exists
concerning the termination, the date of
termination of Executive's employment
shall be the date on which the dispute is
finally determined, either by mutual
written agreement of the parties, by a
binding arbitration award, or by a final
judgment, order or decree of a court of
competent jurisdiction (which is not
appealable or the time for appeal
therefrom has expired and no appeal has
been perfected); and provided further
that the date of termination of
Executive's employment shall be extended
by a notice of dispute only if such
notice is given in good faith and the
party giving such notice pursues the
resolution of such dispute with
reasonable diligence. Notwithstanding
the pendency of any such dispute, the
Company will continue to pay Executive
his full compensation in effect when the
notice giving rise to the dispute was
given (including, but not limited to,
Base Salary and incentive compensation)
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or, if higher, the compensation in effect
immediately prior to the Change in
Control, and continue Executive as a
participant in all compensation, benefit
(including fringe benefits and
perquisites) and insurance plans in which
Executive was participating when the
notice giving rise to the dispute was
given, until the dispute is finally
resolved in accordance with this
paragraph (iii). Amounts paid under this
paragraph are in addition to all other
amounts due under this Agreement and
shall not be offset against or reduce any
other amounts due under this Agreement.
(g) Arbitration. The parties hereby agree to submit all
controversies, claims and matters of difference in any way related to this
Agreement or the performance or breach of the whole or any part hereof, other
than the seeking of injunctive relief pursuant to Section 12(f), to arbitration
in Denver, Colorado, according to the rules and practices of the American
Arbitration Association from time to time in force. If such rules and
practices shall conflict with the Colorado Rules of Civil Procedure or any
other provisions of Colorado law then in force, such
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Colorado rules and provisions shall govern. Arbitration of any such
controversy, claim or matter of difference shall be a condition precedent to
any legal action thereon. This submission and agreement to arbitration shall
be specifically enforceable.
Awards shall be final and binding on all parties to the extent
and in the manner provided by Colorado law. All awards may be filed by any
party with the Clerk of the District Court in the County of Denver, Colorado
and an appropriate judgment entered thereon and execution issued therefor. At
the election of any party, said award may also be filed, and judgment entered
thereon and execution issued therefor, with the clerk of one or more other
courts, state or federal, having jurisdiction over the party against whom such
award is rendered or its property.
In any action or proceeding as to a breach of this Agreement,
the parties agree that no remedy other than equitable relief and/or liquidated
damages as provided herein or, if not so provided, compensatory damages shall
be sought or claimed by either party and each party waives any claim, right or
entitlement to punitive, exemplary, statutory or consequential damages, or any
other damages, and each relevant arbitral tribunal is specifically divested of
any power to award any damages in the nature of punitive, exemplary, statutory
or consequential damages, or any other
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damages of any kind or nature in excess of such liquidated or compensatory
damages.
(h) Withholding Taxes. The Company may withhold from any
and all amounts payable under this Agreement such Federal, state and local
taxes as may be required to be withheld pursuant to any applicable law or
regulation.
(i) Counterparts. This Agreement may be signed in
several counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
(j) Survival. The respective rights of the parties and
their successors and permitted assigns under the provisions of Sections 1, 6,
7, 8, 9, 10, 11, 12 and 13 of this Agreement and any definitions related to the
foregoing sections contained herein, shall survive the expiration of the
Employment Term to the extent necessary to give effect to such provisions;
provided that Executive's rights hereunder upon a termination of Executive's
employment with the Company following a Non-Renewal or following notice after
September 9, 2001 and on or before March 9, 2002 of Non-Renewal shall be
limited to those provided in Section 7(f) hereof.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
/s/ Xxxxxxx X. Xxxxx
-----------------------------
Xxxxxxx X. Xxxxx
XXXXXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
Director
By authority of the Board
of Directors of the Company
ATTEST: /s/ Xxxxxxx X. Xxx Xxxx
-----------------------
Secretary
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Appendix I
Release. In consideration of (CERTAIN PAYMENTS) by the
Company, Executive hereby agrees to and does fully and completely release,
discharge and waive any and all claims, complaints, causes of action, actions,
suits, debts, sums of money, contracts, controversies, agreements, promises, or
demands of whatever kind, in law or in equity, which he ever had, now has or
which he, his heirs, executors or administrators may have against the Company
and its subsidiaries, predecessors, successors and assigns, and each and all of
their officers and directors in their capacities as such, by reason of any
event, matter, cause or thing which has occurred to the date of execution of
this agreement relating in any way to compensation, or to any other terms,
conditions or circumstances of Executive's employment with the Company or to
his termination of such employment as contemplated hereby, whether for
severance or based on statutory or common law claims for employment
discrimination (including any claims under the Age Discrimination in Employment
Act), wrongful discharge, breach of contract or any other theory, whether legal
or equitable. (SUBJECT TO MODIFICATION TO REFLECT THE CIRCUMSTANCES OF
TERMINATION, INCLUDING TO PRESERVE EXECUTIVE'S RIGHT TO PAYMENTS AND BENEFITS,
INCLUDING INDEMNIFICATION, TO WHICH EXECUTIVE MAY BE ENTITLED PURSUANT
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TO THE FOREGOING AGREEMENT FOLLOWING TERMINATION OF HIS EMPLOYMENT.)
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Schedule A
Boards of Directors of Business Corporations
on which Executive Serves on September 9, 1996
NONE
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Schedule B
Fringe Benefits and Prerequisites
! Club Initiation Fee and Dues
- The Company will pay reasonable initiation fees and dues for
two country clubs and three luncheon or city clubs of the
officer's choice, subject to Committee review. The initiation
fee and first year's dues will be "grossed-up" for tax
purposes.
! Financial and Estate Planning
- The Company will pay the reasonable cost of annual financial
and estate planning.
! Annual Executive Physical Exam Program
! Income Tax Return Preparation
- The Company will pay annually up to a reasonable amount plus
additional fees if incurred on account of job related
circumstances and the cost of representation by a return
preparer during an audit.
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