EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of April 30, 1998, is made between Laminates
Acquisition Co. (the "Company"), and Xxxxxxx Xxxxxxx ("Executive").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board") believes
that the services of Executive would be of great value to the Company and its
subsidiaries and is desirous of retaining his services for a number of years;
and
WHEREAS, Executive is willing to accept employment by the Company upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the foregoing premises,
the mutual agreements and covenants herein contained, the mutual benefits herein
provided, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and Executive hereby agree as
follows:
ARTICLE I.
TERM OF EMPLOYMENT
Subject to termination as provided in Article VI hereof, the Company
shall employ Executive, and Executive accepts employment by the Company, on the
terms and conditions herein contained, for a period commencing as of May 1, 1998
(the "Effective Date") and ending on the third anniversary thereof, except that
the term of employment shall be automatically extended for successive periods of
one year each at the second anniversary of the Effective Date and each
subsequent such anniversary unless, prior to 30 days before any such
anniversary, either party notifies the other of its intention not to renew the
employment period (the period from the date hereof through the earlier of (i)
such third anniversary, together with any successive yearly renewal periods, or
(ii) the date of such termination, as the case may be, being hereinafter
referred to as the "Employment Period").
ARTICLE II.
DUTIES
SECTION 2.01 General Duties. During the Employment Period, Executive
shall serve as Chairman of the Board and President and Chief Executive Officer
of the Company, with the customary duties and responsibilities accorded chairmen
of the board, presidents and chief executive officers of companies of comparable
size, type and nature, and shall report to the Board. Executive shall serve as a
member of all committees of the Board except the Audit Committee; however,
Executive shall recuse himself as appropriate from considerations by the
Compensation Committee. Except upon the prior written consent of the Board,
Executive will not during the Employment Period (i) accept any other employment
or (ii) engage, directly or indirectly, in any other business activity (whether
or not pursued for pecuniary advantage) that is or may be competitive with, or
that might place him in a competing position to that of the Company or any
subsidiary thereof. Nothing in this Agreement shall preclude Executive from (i)
engaging, consistent with his duties and responsibilities hereunder, in
charitable and community affairs, (ii) managing his personal investments
(including acquiring or retaining securities of other companies and entities,
provided such securities are publicly traded or such investments are passive),
(iii) continuing to serve on the boards of directors on which he presently
serves (to the extent such service is not precluded by federal or state law or
by conflict of interest by reason of his positions with the Company), or (iv)
subject to approval of the Board, serving as a member of boards of directors of
other companies or entities, or engaging in other activities that do not
otherwise conflict with the provisions of this Agreement.
SECTION 2.02 Primary Activity. During the Employment Period, Executive
shall devote substantially all of his working time and energy to the interests
and business of the Company and its subsidiaries; provided, however, that
Executive shall be excused from performing any services for the Company and its
subsidiaries hereunder during periods of temporary illness or incapacity and
during reasonable vacations. During the Employment Period, Executive shall, to
the best of his skill and ability, use his best efforts and endeavors to the
extension and promotion of the business of the Company and its subsidiaries.
ARTICLE III.
COMPENSATION
As full compensation to Executive for performance of his services
hereunder, the Company agrees to pay or provide to Executive and Executive
agrees to accept the salary and other compensation and benefits specified in
this Article and in Article IV during the Employment Period.
SECTION 3.01 Salary. The Company shall pay Executive a base salary at
the annual rate of $600,000 or at such higher rate as may be fixed by the
Compensation Committee of the Board from time to time during the Employment
Period (the "Base Salary"). Base Salary shall be payable in accordance with the
ordinary payroll practices of the Company, but not less frequently than monthly.
SECTION 3.02 Bonus. Executive shall also be entitled to an annual cash
bonus (the "Bonus") calculated as set forth in Exhibit A hereto, payable on or
before March 31st of the fiscal year immediately succeeding the fiscal year in
respect of which such Bonus was so calculated. Executive shall also be entitled
to the transaction fees specified in Exhibit A.
ARTICLE IV.
EMPLOYEE BENEFITS; REIMBURSEMENTS
SECTION 4.01 Employee Benefit Plans and Programs. The Company shall
provide Executive during the Employment Period full and immediate coverage under
any employee benefit and incentive compensation programs, plans and practices
(commensurate with his position in the Company), other than an annual bonus
plan, which the Company currently makes available generally to its senior
executive officers, or which the Company, with Board approval, elects to make
available generally to its senior executive officers hereinafter, including, but
not limited to those providing (a) retirement, pension and profit-sharing
benefits, including supplemental benefits above those afforded under qualified
plans; and (b) medical, dental, hospitalization, split-dollar life insurance,
supplemental term life insurance, short and long-term disability, supplemental
disability, accidental death and dismemberment and travel accident coverage
benefits and payments to Executive and his eligible dependents. In addition, the
Company will continue to provide Executive with the split dollar life insurance,
supplemental term life insurance and supplemental disability insurance benefits
and payments currently provided to Executive by Formica Corp.
SECTION 4.02 Vacation, Fringe and Other Benefits. Executive shall be
entitled to the number of vacation days and paid holidays customarily accorded
senior executives of the Company. In addition, during the Employment Period, the
Company shall supply Executive with a reasonable automobile commensurate with
his status, and shall pay for all maintenance, repair, fuel and insurance
thereon. The Company shall also reimburse Executive, on an after-tax basis, for
(a) tax, financial planning, and related legal services; (b) all reasonable
legal expenses incurred by Executive in connection with the negotiation of this
Agreement (and any related agreements and documents); (c) the expense of a
comprehensive annual physical examination; and (d) the membership fees and
periodic dues payable to one club of Executive's choice.
SECTION 4.03 Reimbursement of Expenses. The Company shall reimburse
Executive for all reasonable expenses properly incurred by him in the
performance of his duties hereunder, including, without limitation, expenses for
travel, entertainment and similar items.
ARTICLE V.
CERTAIN COVENANTS
In order to induce the Company to enter into this Agreement, Executive
hereby acknowledges and agrees as follows:
SECTION 5.01 Proprietary Information. As used in this Agreement,
"Proprietary Information" shall mean information relating to the business and
operations of the Company that has not previously been publicly released by duly
authorized representatives of the Company and shall include Company information
encompassed in all research, drawings, designs, plans, proposals, marketing and
sales plans, financial information, costs, pricing information, customer
and supplier information, trade secrets, proprietary processes, specifications,
inventions and all proprietary methods, concepts, or ideas in or reasonably
related to the business of the Company. Notwithstanding the foregoing,
Proprietary Information does not include information which is or becomes
publicly released by duly authorized representatives of the Company (except as
may be disclosed by Executive in violation of this Agreement).
Executive agrees to regard and preserve as confidential all
Proprietary Information pertaining to the Company's or any of its subsidiaries'
business that has been or may be obtained by Executive in the course of his
employment with the Company, whether he has such information in his memory or in
writing or other physical form. Executive will not, without written authority
from the Company to do so, use for his benefit or purposes, or disclose to
others, either during the Employment Period or thereafter, except as required by
the conditions of his employment hereunder, or as required in any judicial
proceeding or to his attorney, any Proprietary Information connected with the
business or development of the Company or any of its subsidiaries.
SECTION 5.02 Competition: Nonsolicitation. (a) Executive agrees that
during his employment by the Company and the two-year period commencing upon
termination of his employment in circumstances to which Section 6.01 applies
(the "Restriction Period"), Executive will not directly or indirectly own,
manage, operate, control or participate in the ownership, management, operation
or control of, or be connected as an officer, employee, partner, director or
otherwise with, or have any financial interest in, any high-pressure laminate
business or other business that (i) is significant to the Company and its
subsidiaries as a whole and (ii) was initiated during Executive's employment
hereunder, which is in competition with the business conducted by the Company or
any of its subsidiaries in any geographic area where such business is being
conducted during such Restriction Period; provided, that ownership, for personal
investment purposes only, of no more than 5% of the voting stock of any publicly
held corporation shall not constitute a violation hereof.
(b) During the Restriction Period, Executive will not, directly or
indirectly, solicit for employment by other than the Company or any of its
subsidiaries any person then employed by the Company or any of its subsidiaries.
(c) Executive acknowledges that a violation on his part of any of the
covenants contained in this Section 5.02 would cause immeasurable and
irreparable damage to the Company. Accordingly, Executive agrees that the
Company shall be entitled to injunctive relief in any court of competent
jurisdiction for any actual or threatened violation of any such covenant in
addition to any other remedies it may have. Executive agrees that in the event
that any court of competent jurisdiction shall finally hold that any provision
of this Section 5.02 is void or constitutes an unreasonable restriction against
Executive, the provisions of Section 5.02 shall not be rendered void but shall
apply to such extent as such court may determine constitutes a reasonable
restriction under the circumstances.
SECTION 5.03 Corporate Opportunities. Executive agrees that during the
Employment Period he will not take any action which might divert from the
Company or any of its subsidiaries any opportunity which would be within the
scope of any of the present businesses thereof or any of the businesses thereof
engaged in, or proposed to be engaged in, during the Employment Period.
ARTICLE VI.
TERMINATION OF EMPLOYMENT
SECTION 6.01 Termination Not for Cause or For Good Reason. The Company
may terminate Executive's employment at any time, and Executive may terminate
his employment at any time. If Executive's employment is terminated by the
Company other than for Cause (as hereinafter defined), if Executive terminates
his employment for Good Reason (as hereinafter defined), or if the Company ever
notifies Executive of its intention not to renew the employment period or fails
to renew this Agreement, then Executive shall be entitled to receive:
(a) in cash, in substantially equal monthly installments payable over a 24
month period, commencing on the date of any such termination, the sum of:
(i) the unpaid portion of his Base Salary accrued to the date his
accrued vacation time (as of the date of termination) runs out,
assuming such vacation commenced on the date of termination; plus
(ii) two times the sum of Executive's then-current annual Base
Salary and the higher of (A) the Bonus payable by the Company pursuant
to Section 3.02 hereunder to Executive in respect of the Company's
fiscal year in which the Employment Period terminates, based on the
assumption that the Company attains all of its budgeted performance
goals for such fiscal year; or (B) the Bonus payable for the prior
fiscal year; provided that if the termination should occur prior to
December 31, 1998, the Bonus used in this calculation shall be equal
to Executive's then-current annual Base Salary;
provided, however, that if any such termination should occur on or after a
Change of Control (as hereinafter defined), such sum shall be payable in cash in
one lump sum within five business days after such termination;
(b) on or before the Payment Date (as hereinafter defined), in cash, all
unpaid amounts, as of the date of such termination, in respect of any Bonus for
any fiscal year of the Company ending before the fiscal year in which such
termination occurs, which would have been payable had Executive remained in
employment until the date (the "Payment Date") such Bonus would otherwise have
been paid;
(c) for 36 months from the date of termination (or, if earlier, until the
date of his death), continued coverage (at the Company's expense) for Executive
and his eligible dependents under all of the Company's welfare benefit and
insurance programs, plans and practices, as specified in Section 4.01(c), or
equivalent coverage; provided that if Executive is provided with comparable
coverage by a successor employer, any such coverage by the Company shall cease;
(d) all benefits and payments to which Executive has vested rights as of
the expiration of the Employment Period under disability, insurance and other
employee benefit plans which provide for payments beyond the Employment Period;
(e) a fully vested supplemental retirement benefit, paid in one lump sum
within five business days after such termination, calculated as provided in
Exhibit B hereto, but adding two years to the number of years of "Benefit
Accrual Service" and "Years of Service" actually credited pursuant to the
Supplemental Executive Retirement Plan attached hereto as Exhibit B-1 (the
"SERP") (for the purposes of the SERP, it shall be assumed that Executive's
"Earnings" during such two additional years would have been equal to the
projected Base Salary and Bonus for such years, based on the further assumption
that the Company attained all of its budgeted performance goals for such years)
(the provisions of this Section 6.01(e) shall take precedence over conflicting
provisions of the SERP and shall survive the termination of this Agreement), and
full acceleration of vesting and exercisability of any time-based stock options
and timevested equity-based awards granted to or purchased by Executive
(including without limitation all the "Time Vesting Restricted Shares" purchased
by Executive under the Laminates Acquisition Co. Management Restricted Stock
Program); and
(f) a Gross-Up Amount (as hereinafter defined), in accordance with the
provisions of Section 6.03.
SECTION 6.02 Good Reason. For purposes of this Agreement, "Good
Reason" shall mean any of the following (without Executive's express prior
written consent):
(a) The assignment to Executive by the Company of duties materially
inconsistent with Executive's positions, duties, responsibilities, titles or
offices as set forth in Article II hereof, or any material reduction by the
Company of his duties or responsibilities or any removal of Executive from or
any failure to elect or reelect Executive to the position of President and Chief
Executive Officer and Chairman of the Board, except in connection with the
termination of Executive's employment for Cause or Permanent Disability (as
hereinafter defined), or as a result of Executive's death, or the termination of
Executive's employment by Executive other than for Good Reason;
(b) A reduction by the Company in Executive's Base Salary, Bonus
opportunity or benefits (except as provided herein), as in effect at the
commencement of employment hereunder or as the same may be increased from time
to time during the Employment Period; provided, that a reduction in the level of
benefits described in Section 4.01 (other than the last sentence thereof) which
is generally applicable to employees of the Company shall not constitute "Good
Reason";
(c) The failure by the Company to obtain the specific assumption of this
Agreement by any successor or assigns of the Company or any person acquiring
substantially all of the Company's assets prior to the closing of the
acquisition or the event resulting in such succession or assignment;
(d) Failure by the Company to perform in any material respect its stated
duties under this Agreement, where such failure shall not have been remedied
within 30 days after Executive shall have notified the Company thereof;
(e) Movement of the Company's principal offices to a location more than 35
miles from Newark, New Jersey;
(f) A "Change of Control" shall occur (for this purpose, "Change of
Control" shall have the meaning set forth in the investors' agreement dated as
of April 30, 1998 among the Company, LMS I, Co., DLJ Merchant Banking Partners
II, L.P., DLJ Merchant Banking Partners XX-X, X.X., XXX Xxxxxxxx Xxxxxxxx XX,
X.X., XXX Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ
Millenium Partners, L.P., DLJ Millenium Partners-A, L.P., DLJMB Funding II,
Inc., UK Investment Plan 1997 Partners, DLJ EAB Partners, L.P., DLJ First ESC,
L.P., DLJ ESC II L.P., CVC European Equity Partners LP, CVC European Equity
Partners (Jersey) LP, MMI Products, L.L.C. and certain other Persons listed on
the signature pages thereto); or
(g) The Company shall cease to keep in effect the policy of directors' and
officers' liability insurance for Executive described in Section 4.03, where
such failure shall not have been remedied within 30 days after Executive shall
have notified the Company thereof.
SECTION 6.03 Excise Tax. If any amount payable to or other benefit
receivable by Executive pursuant to this Agreement, or any other agreement
referred to herein or other arrangement with the Company or any of its
subsidiaries, alone or when added to any other amount payable or paid to or
other benefit receivable or received by Executive (collectively, an "Excess
Parachute Payment"), would result in the imposition on Executive of an excise
tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), then, in addition to any other benefits to which Executive is entitled
under this Agreement, Executive shall be paid by the Company an amount (the
"Gross-Up Amount") in cash equal to the amount necessary to put Executive in the
same after-tax position as if no excise taxes, income taxes (with respect to the
Gross-Up Amount), interest and penalties had been imposed with respect to the
Excess Parachute Payment and the Gross-Up Amount. Whether a payment or benefit
results in the imposition of an excise tax and the amount of any payment under
this section shall be determined by a nationally recognized certified public
accounting firm designated by the Company. All fees and expenses of such
accounting firm shall be paid by the Company.
Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Amount. Such notification shall be given as soon as
practicable (but not later than 15 business
days after Executive is informed in writing of such claim) and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. Executive shall not pay such claim prior to the expiration
of the 30-day period following the date on which Executive gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive shall:
(a) provide the Company with any information reasonably requested by
it relating to such claim;
(b) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect so such claim by an attorney reasonably selected by the
Company;
(c) cooperate with the Company in good faith in order to effectively
contest such claim; and
(d ) permit the Company to participate in any proceedings relating to
such claim;
provided that the Company shall pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest.
SECTION 6.04 Permanent Disability. If, as a result of Executive's
incapacity due to physical or mental illness, Executive shall have been absent
from his duties with the Company on a full-time basis for six consecutive months
(either such situation, herein referred to as "Permanent Disability") during the
Employment Period, then Executive's employment shall terminate on the giving of
notice by the Company, and the compensation to which Executive is entitled
pursuant to Section 3.01 shall be paid up, in cash, through the last day of the
month in which the notice is given, within five business days of the date of
such notice. In addition, Executive shall be entitled to receive:
(a) on or before the Payment Date (as hereinafter defined), in cash, all
unpaid amounts, as of the date of such termination, in respect of any Bonus for
any fiscal year of the Company ending before the fiscal year in which such
termination occurs, which would have been payable had Executive remained in
employment until the date (the "Payment Date") such Bonus would otherwise have
been paid;
(b) for 18 months from the date of termination (or, if earlier, until the
date of his death), continued coverage (at the Company's expense) under the
Company's welfare benefit and insurance programs, plans and practices, as
provided in Section 4.01(c), or equivalent coverage; provided that if Executive
is provided with comparable coverage by a successor employer, any such coverage
by the Company shall cease;
(c) all benefits and payments to which Executive has vested rights as
of the expiration of the Employment Period under disability, insurance and other
employee benefit plans which provide for payments beyond the Employment Period;
(d) a proportionate amount of Executive's then-current Base Salary to
compensate Executive for any accrued but unpaid vacation time as of the date of
the notice of termination, payable, in cash, within five business days of such
notice; and
(e) a fully vested supplemental retirement benefit, paid in one lump
sum within five business days after such termination, calculated as provided in
Exhibit B hereto, but adding two years to the number of years of "Benefit
Accrual Service" and "Years of Service" actually credited pursuant to the
Supplemental Executive Retirement Plan attached hereto as Exhibit B-1 (the
"SERP") (for the purposes of the SERP, it shall be assumed that Executive's
"Earnings" during such two additional years would have been equal to the
projected Base Salary and Bonus for such years, based on the further assumption
that the Company attained all of its budgeted performance goals for such years)
(the provisions of this Section 6.04(e) shall take precedence over conflicting
provisions of the SERP and shall survive the termination of this Agreement), and
full acceleration of vesting and exercisability of any time-based stock options
and timevested equity-based awards granted to or purchased by Executive
(including without limitation all the "Time Vesting Restricted Shares" purchased
by Executive under the Laminates Acquisition Co. Management Restricted Stock
Program).
SECTION 6.05 Death. In the event of Executive's death while employed
hereunder, the Employment Period shall thereupon automatically terminate and
Executive's estate or designated beneficiaries shall receive (i) any death
benefits provided under the Company's employee benefit programs, in accordance
with their terms; (ii) on or before the Payment Date (as hereinafter defined),
in cash, all unpaid amounts, as of the date of such termination, in respect of
any Bonus for any fiscal year of the Company ending before the fiscal year in
which such termination occurs, which would have been payable had Executive
remained in employment until the date (the "Payment Date") such Bonus would
otherwise have been paid; and (iii) full acceleration of vesting and
exercisability of any time-based stock options and timevested equity-based
awards granted to or purchased by Executive (including without limitation all
the "Time Vesting Restricted Shares" purchased by Executive under the Laminates
Acquisition Co. Management Restricted Stock Program).
SECTION 6.06 Voluntary Resignation; Discharge for Cause. If Executive
resigns voluntarily, other than for Good Reason or Permanent Disability, or the
Company terminates the employment of Executive at any time for Cause, the
Company's obligations under this Agreement to make any further payments to
Executive shall thereupon, to the extent permitted by law, cease and terminate
except with respect to all unpaid Bonus amounts, accrued as of the fiscal year
ending before the fiscal year in which such termination occurs, which would have
been payable had Executive remained in employment until the date such Bonus
would otherwise have been paid. For purposes of this Agreement, the term "Cause"
shall mean (i) Executive's conviction by a court of competent jurisdiction or
entry of a plea of nolo contendere
for an act on Executive's part constituting a felony, which conviction or plea
causes damage to the reputation or financial position of the Company or which
undermines Executive's authority as Chairman, President and Chief Executive
Officer of the Company or (ii) a willful and gross breach of a substantial and
material obligation of Executive under this Agreement; provided, that no action
shall give rise to Cause if undertaken in the good faith belief that such action
was in the best interest of the Company or its subsidiaries. Any termination of
Executive's employment by the Company for any reason other than Cause (including
any breach of duty by Executive not specified above), or for no reason, shall be
deemed to be a termination without Cause for all purposes of this Agreement,
unless Executive's termination arises from death or Permanent Disability.
ARTICLE VII.
NO MITIGATION OF DAMAGES; EXPENSES
Executive shall not be required to mitigate damages or the amount of
any payments provided for under this Agreement by seeking other employment or
otherwise. Except as provided in Sections 6.01(b) or 6.04(a), no amounts paid to
or earned by Executive following his termination of employment shall reduce or
be set off against any amounts payable to Executive under this Agreement, nor
will any payments otherwise due to Executive hereunder be subject to offset in
respect of any claims that the Company may have against Executive. The Company
agrees to pay all reasonable out-of-pocket costs and expenses of Executive
(including attorney's fees and disbursements) as incurred by Executive in
connection with any actions taken in good faith in connection with the
enforcement of Executive's rights hereunder or the interpretation of any
provision(s) of this Agreement.
ARTICLE VIII.
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
heirs and representatives of Executive and to any person who succeeds to all or
substantially all of the business of the Company, but neither this Agreement nor
any rights hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or the Company.
ARTICLE IX.
NOTICES
All notices, requests, demands and other communications hereunder must
be in writing and shall be deemed to have been given if delivered by hand or
mailed by first class, registered mail, return receipt requested, postage and
registry fees prepaid and addressed as follows:
(a) If to the Company: 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
with a copy to: Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Fax: (000) 000-0000
(b) If to Executive: 00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
with a copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
Addresses may be changed by notice in writing signed by the addressee.
ARTICLE X.
MISCELLANEOUS
SECTION 10.01 Entire Agreement. This Agreement supersedes any prior
agreements and embodies the entire understanding between the parties hereto
respecting the subject matter hereof and no change, alteration or modification
hereof may be made except in a subsequent writing signed by both parties hereto.
SECTION 10.02 Headings. The headings in this Agreement are for
convenience of reference only and shall not be considered as part of this
Agreement or to limit or otherwise affect the meaning hereof.
SECTION 10.03 Severability. If any provision of this Agreement shall
be held invalid, illegal or unenforceable in whole or in part, neither the
validity of the remaining part of such provision nor the validity of any other
provision of this Agreement shall in any way be affected thereby.
SECTION 10.04 Governing Law. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the State of New Jersey
without regard to principles of conflicts of laws.
SECTION 10.05 Additional Assurances. Each party shall execute,
acknowledge and deliver such additional documents, writing or assurances as the
other may periodically require so as to give full force and effect to the terms
and provisions of this Agreement.
SECTION 10.06 Withholding. The Company will be entitled to withhold
from any payment hereunder the amount of withholding required by law.
SECTION 10.07 Liability Insurance and Indemnification. The Company
shall keep in effect during the Employment Period a standard policy of
directors' and officers' liability insurance for officers and directors of the
Company, to the extent available, at such reasonable levels of coverage as are
agreed to by Executive and the Board from time to time, but not less than the
levels in effect on the business day immediately preceding the date on which
Executive most recently, but prior to the Effective Date, terminated employment
with Formica Corp. In addition, the Company shall indemnify Executive for any
amounts Executive must pay (which are not covered by insurance) which in any way
relate to actions taken or omitted in his capacity as an officer and/or director
of the Company and/or its subsidiaries, and shall provide expense advances to
Executive in connection therewith to the maximum extent permitted by law. This
obligation shall survive this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
LAMINATES ACQUISITION CO.
By:
------------------------------------
Xxxxx Xxxxxxxxx, Chief Financial
Officer
Title:
---------------------------------
By:
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XXXXXXX XXXXXXX
Exhibit A
Bonus Formulation
A) Annual Cash Bonus Plan:
Upon completion of the acquisition of the Company and annually prior to
the commencement of the Company's fiscal year, the Board and Executive
will agree to the annual operating plan (the "Plan"). After the
completion of the fiscal year of the Plan and based upon audited
financial results, Executive will be paid a cash bonus based on the
Company and its subsidiaries achieving levels of earnings before
interest, taxes, depreciation and amortization ("EBITDA") as follows:
Bonus Matrix
------------
of Plan EBITDA 80% 100% 120% 140%
of Annual Base Salary 50% 100% 150% 200%
Below 80% of Plan EBITDA, no cash bonuses will be paid. Above 140% of
Plan EBITDA, the Compensation Committee of the Board may recommend a
special bonus for extraordinary performance. Performance between the
key benchmarks above will be calculated on a pro rata basis (i.e. 90%
of Plan EBITDA results in a bonus of 75% of Annual Base Salary). For
the purpose of calculating actual EBITDA for cash bonus purposes,
salaries will be charged against EBITDA, bonuses will not be charged to
EBITDA (i.e. charged below the EBITDA line). Equitable adjustments to
the Plan, agreed to between the Board and Executive, shall be made to
reflect the impact of any subsequent divestitures or acquisitions which
are not already incorporated in the Plan.
B) Transaction Fees:
In the event transaction fees are realized on acquisitions and/or
divestitures, Executive will be paid a transaction fee equivalent to
25% of any advisory fee paid to the combination of DLJMBII, CVC Capital
Partners, Citicorp Venture Capital Ltd. and any of their respective
affiliates; provided, Executive shall receive a $500,000 fee in respect
of the transactions completed in connection with the execution of this
Agreement. The transaction fee paid to Executive can be shared by other
members of management at the discretion of Executive.
Exhibit B
SERP Payment Calculation
The steps to be followed in calculating the lump sum payable are:
a) Calculate the Monthly Benefit Payable pursuant to the
Supplemental Executive Retirement Plan attached hereto as
Exhibit B-1, without reducing the Monthly Benefit Payable for
any payments made pursuant to any Company qualified pension
plan;
b) Determine the present value of a lifetime annuity of the
Monthly Benefit Payable, using a 6.5% interest rate, and the
1971 Towers Xxxxxx Mortality Table, set back 1 year; and
c) Subtract from the sum calculated in b) the present value of
that portion of all payments to be made pursuant to Company
qualified pension plans which constitutes the benefit accrual
attributable to Executive's employment with the Company after
1997.
