EX 10.20
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of September 13, 1999, is between
CHESAPEAKE CORPORATION, a Virginia corporation (the "Company")
and Xxxxxx X. Xxxxx (the "Executive").
WHEREAS, the Executive is currently the duly elected and
qualified Vice President - Human Resources of the Company; and
WHEREAS, the Company recognizes that the Executive has made
substantial contributions to the Company and in the future is
expected to make substantial contributions to the success of the
Company; and
WHEREAS, the Company recognizes that, as with any publicly
traded corporation, a Change in Control of the Company is a
possibility; and
WHEREAS, the Company recognizes that the possibility of a
Change in Control of the Company or a negotiation of a
transaction that will result in a Change in Control of the
Company may cause the Executive uncertainty regarding his
continued service; and
WHEREAS, the Company desires to provide certain assurances
to the Executive regarding the terms applicable to certain
terminations of the Executive's service; and
WHEREAS, the Executive wishes to provide certain assurances
to the Company regarding his conduct during the Term of this
Agreement and following the Executive's termination of service;
NOW THEREFORE, in consideration of the premises and mutual
covenants and agreements set forth herein, the Company and the
Executive covenant and agree as follows:
1. Term. The Term of this Agreement is the period
described in the following paragraph (a) and any period for which
the same may be extended as provided in the following paragraphs
(b) and (c).
(a) The Term includes the period
beginning on September 13, 1999, and ending on
December 31, 2001.
(b) The period described in paragraph (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 paragraph (a) until
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December 31, 2002, unless written notice to the
contrary is provided to the Executive by the
Company before September 1, 2000.
(c) The period described in paragraph (a)
shall be extended if there is a Control Change
Date during the Term of this Agreement. In
that event, the period described in paragraph
(a) shall be extended automatically until the
second anniversary of the Control Change Date.
The period described in paragraph (a) shall be
further extended by twelve months under this
paragraph (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
paragraph (a) (after giving effect to the
extension provided in the second sentence of
this paragraph (c)), until the third
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.
2. Change in Control Benefits. The Executive shall be
entitled to receive the severance and welfare benefits and the
pension supplement described in this Section 2 if, during the
Term of this Agreement, (x) there is a Change in Control and the
Executive's employment with the Company and its successors is
terminated or terminates after the Control Change Date without
Cause or for Good Reason or (y) there is a sale or other
divestiture of the business unit of the Company or its successor
to which the Executive is assigned and the Executive's employment
with the Company and its successors is terminated or terminates
after such sale or divestiture without Cause or for Good Reason.
(a) The severance benefit payable under
this Section 2 is an amount equal to the sum of
(x) two 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) two 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 2, 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.
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(b) The welfare benefits provided under
this Section 2 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 2 shall continue until the
earlier of (x) the second 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 2 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 second 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 2 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 2, 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 2 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.
3. Benefits Prior to a Change in Control. Subject to the
final sentence of this Section 3, the Executive shall be entitled
to receive the severance and welfare benefits described in this
Section 3 if, during the Term of this Agreement but prior to a
Change in Control or the sale or divestiture of the business unit
of the Company or its successor to which the Executive is
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assigned, 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 2 is an amount equal to two 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). 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 3,
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 2 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 3 shall continue
until the earlier of (x) the second 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 3 unless the Executive executes a release and
waiver of the Company in a form satisfactory to the
Company and the Executive complies with Sections 4 and 5.
4. 4. Confidentiality. During the period of employment
with the Company, the Executive has had access to certain
confidential, non-public information concerning the Company (the
"Information"). The Executive agrees to maintain the Information
as confidential and not disclose it to third parties or use it in
the Executive's employment with any direct or indirect competitor
of the Company or its successors during employment with the
Company and its successors and thereafter following a termination
of employment described in Section 3. The
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Executive agrees that compliance with this confidentiality
obligation is a condition precedent to the Executive's right to
receive the benefits described in Section 3.
5. 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 3, 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.
6. 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.
7. Legal Fees. 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.
8. Definitions. When used in this Agreement, the following
terms shall have the meanings set forth below:
(a) "Cause" means the Executive's
conviction by a court of competent jurisdiction
for, or pleading no contest to, a felony.
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(b) "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).
(c) "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).
(d) "Good Reason" means (x) a material
reduction in the Executive's duties or
responsibilities; (y) the failure by the
Company or its successor 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.
9. Successors. This Agreement shall inure to the benefit
of and be binding on any successor (whether direct or indirect,
by purchase, merger consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company 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.
This Agreement shall inure to the benefit of and be enforceable
by the personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees of the Employee.
10. Modification, etc. No provision of this Agreement may
be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by
the Executive and a duly authorized officer of the Company. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the Commonwealth of Virginia, other than its choice of laws
provision.
11. Enforceability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
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12. Non-Disparagement. The Company and the Executive
agree, that after the Executive's employment with the Company
terminates, to refrain from taking any action or making any
statements, written or oral, which are intended to disparage the
goodwill or reputation of the Company or the Executive.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed on its behalf and the Executive has duly
executed this Agreement, all as of the date first above written.
XXXXXX X. XXXXX CHESAPEAKE CORPORATION
By: /s/ Xxxxxx X. Xxxxx By /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxx Xxxxxx X. Xxxxxxx
Date___12/23/99_________ President & CEO
Title
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