EXHIBIT 10.14
SUPPLEMENTAL RETIREMENT AGREEMENT
This Supplemental Retirement Agreement is entered into this 31st day of
October, 1997, between Chesapeake Corporation (Chesapeake) and X. Xxxxxx Xxx
(Xxx) in connection with Fox's expressed desire to step down as Chesapeake's
President and Chief Executive Officer in order to facilitate and expedite
Chesapeake's management succession process. This Agreement is entered into
in consideration of Fox's uninterrupted and valued service to Chesapeake for
35 years, 17 of which were in the capacity of Chesapeake's Chief Executive
Officer, and in consideration of the other mutual promises and undertakings
set forth herein and in a separate Agreement and Release between Chesapeake
and Fox, attached as Attachment A to this Agreement, regarding certain other
matters not addressed in this Agreement. Accordingly, Chesapeake and Fox
have agreed to the following:
(1) Fox will cease active employment with Chesapeake on March 31, 1998.
Fox will be paid salary at the rate of $525,000 a year through that
date.
Fox will work actively through December 31, 1997 and will be on
call but on vacation from January 1, 1998 through March 31, 1998.
Fox will be entitled to receive an incentive award under the
Officers' Incentive Program for 1997 as determined by the Executive
Compensation Committee of Chesapeake's Board of Directors. This
incentive award will be determined in accordance with the
Committee's normal procedures and paid when the annual incentives
are paid to other senior officers of Chesapeake (the A Bonus
Payment Date). This incentive award was estimated by Xxxxx
Xxxxxxxxxx (A Xxxxxxxxxx), Chairman of Chesapeake's Executive
Compensation Committee, in a meeting with Fox on July 9, 1997 to be
$315,000 based on the then projected 1997 financial results for
Chesapeake.
In addition, at this meeting it was agreed that Fox would be paid
$200,000 as a bonus for his work on the sale to St. Laurent and
$100,000 as a bonus to cover the estimated FICA taxes on his
Supplemental Plan payments. These bonus payments are to be paid to
Fox on the Bonus Payment Date. All of these bonus payments ( the
annual incentive award, the $200,000 St. Laurent deal award and the
$100,000 FICA bonus) will be considered 1997 incentive bonuses in
calculating retirement benefits to Fox under the Supplemental Plan.
Fox will remain as an active participant in and be entitled to
receive any awards under the 1994-1997 Cycle and the Vision 2000
(1996-2000 Cycle) of the Long-Term Incentive Program earned for
Chesapeake's financial performance or Chesapeake's stock price
performance. These awards will be paid to Fox at the same time as
payments are made to other participants in these cycles of the
Long-Term Incentive Program. Except as otherwise provided in this
Agreement, Chesapeake has no other obligations to Fox for any
compensation, including but not limited to, salary, bonus,
severance or vacation pay.
Fox will be eligible to elect early retirement as of April 1, 1998
(his A Retirement Date) under the provisions of the Chesapeake
Corporation Retirement Plan for Salaried Employees (the A
Qualified Plan) and the Chesapeake Corporation Executive
Supplemental Retirement Plan (the A Supplemental Plan). If Fox
elects early retirement at that time or if Fox should die before
April 1, 1998, his benefits under both retirement plans will be
enhanced by adding five (5) years to his age and service. This
enhancement of both benefits will be paid as an additional benefit
under the Supplemental Plan and will be subject to the provisions
of the Supplemental Plan. The preceding notwithstanding, if Fox
should die before April 1, 1998, his additional benefit under the
Supplemental Plan, shall be reduced by any payment under Section
4.05(b) of the Supplemental Plan.
(2) Fox will continue to be eligible to participate in Chesapeake's
employee benefits plans on the same basis as active employees,
subject to their terms, as outlined below:
(A) Fox will continue to be covered under the group medical and
life insurance programs under the same terms and conditions
applicable to active employees until his Retirement Date. At
the time Fox's coverage ceases he will have the following
options concerning his group insurance.
If Fox elects early retirement, he will be eligible to
participate in the retiree medical and life insurance programs
in accordance with their terms.
If Fox does not elect early retirement, he will have the
option under the COBRA provisions to continue his medical
coverage after termination by paying the required premium
amounts. This option will be explained to him in a separate
letter at that time.
Fox will also have the option of converting his group life
insurance coverage that is not continued under the retiree
life insurance program, or any part of that coverage, to an
individual insurance policy. His application for conversion
to an individual policy must be received by the insurance
carrier within 31 days from the date his coverage terminates
or he loses this conversion right.
(B) Fox will continue to be covered under the group dental program
until his Retirement Date. At that time he will have the
option to continue coverage for up to 18 months under the
COBRA provisions by paying the required premium amounts.
(C) Fox's elections under the Flexible Benefits Program will
continue in effect in accordance with the terms of the Program
until his Retirement Date.
(D) Unless Fox otherwise notifies Chesapeake in writing, he will
remain a participant in the Chesapeake Corporation Salaried
Employees' Stock Purchase Plan, the 401(k) Savings Plan and
the 401(k) Restoration Plan, subject to the terms of each
Plan, until his Retirement Date. Fox may continue to
participate in these Plans after his retirement to the extent,
and with the same rights, as other retired Chesapeake
employees.
(E) Fox will continue until his Retirement Date as a participant
in the Qualified Plan and the Supplemental Plan in accordance
with the terms of each plan.
(F) Fox's rights to exercise any stock options granted to him will
expire on his Retirement Date unless he elects early
retirement. If Fox elects early retirement, his rights to
exercise his outstanding stock options will continue
thereafter until the original expiration dates of the
individual option grants.
(G) Fox will continue to be eligible to receive reimbursement for
his monthly dues at the Commonwealth Club and his automobile
reimbursement under the terms of Chesapeake's reimbursement
programs until his Retirement Date.
(H) Fox will be eligible to participate under Chesapeake's
financial planning program until his Retirement Date to assist
him in his retirement financial planning.
(I) Fox's participation in or entitlement to any and all other
benefits or benefits plans will terminate effective as of
March 31, 1998.
(3) Chesapeake agrees to reimburse Fox for his travel expenses
reasonably incurred as an active employee of Chesapeake through
March 31, 1998 upon presentation by him of proper vouchers for such
expenses. It is understood that Fox will pay all personal expenses
incurred by him on credit cards that may be issued in the name of,
or guaranteed by Chesapeake or its affiliates. Fox will return to
Chesapeake all credit cards issued to him on which Chesapeake or
its affiliates are liable either directly or as guarantor on March
31, 1998. Chesapeake will provide office space, in a location
utilized by Chesapeake in the metropolitan Richmond area, and
administrative assistance to Fox for the period August 1, 1997
through September 8, 2004. Fox may retain for his personal use the
personal computers he currently uses for business purposes.
(4) Except as authorized by, or under the terms of, the letter dated
October 31, 1997 from Xxxxx X. Xxxxxx to Xxx attached as Attachment
B to this Agreement, Fox shall not enter into an employment or
other arrangement with an enterprise in competition with Chesapeake
during the period August 1, 1997 through March 31, 1998 or during
the period Fox is receiving benefits under the Supplemental Plan.
If Chesapeake believes Fox has entered into an employment or other
arrangement in competition with Chesapeake, Chesapeake shall give
written notice to Fox and Fox shall have ninety (90) days to
terminate such employment or other arrangement. If the employment
or other arrangement is in competition with Chesapeake and Fox
fails to terminate such relationship, the payments and benefits
provided under this Agreement and the Supplemental Plan shall cease
as of the date of such written notice. If the employment or other
arrangement in competition with Chesapeake occurs before March 31,
1998 and Fox fails to terminate the relationship, Chesapeake
reserves the right to also require Fox to cease the competing
employment or other arrangement in competition with Chesapeake. If
the employment or other arrangement is in competition with
Chesapeake and occurs after March 31, 1998 and during the period
Fox is entitled to receive benefits under the Supplemental Plan and
Fox fails to terminate such relationship, Chesapeake=s sole remedy
for Fox=s failure to cease the competing employment or other
arrangement shall be cessation of the benefits payable under the
Supplemental Plan. If the parties cannot agree as to whether Fox is
in competition with Chesapeake, Chesapeake and Fox agree to use
their best efforts to resolve the dispute through mediation or
arbitration during the 90-day period. In any mediation,
arbitration, or litigation over these issues, the reasonable legal
fees and expenses shall be paid by the party incurring the
expenses. For purposes of this Agreement, including Fox's rights to
receive benefits under the Supplemental Plan, Fox will be deemed to
be in competition with Chesapeake if he engages in competitive
activities as set forth in Section 4.07(b) of the Supplemental
Plan. Notwithstanding the foregoing, nothing in this Agreement
shall prohibit the ownership by Fox of investments in one or more
businesses that are registered under section 12 of the Securities
Exchange Act of 1934 and constitute together with all such
investments owned by any immediate family member or affiliate of or
person acting in concert with Fox less than 5% of the outstanding
registered investments in each such business.
(5) Fox shall continue to have the benefit and rights of
indemnification as a director and officer for claims against him in
connection with his activities on or before March 31, 1998 as an
officer or director of Chesapeake and as long thereafter as Fox
serves as a Director of Chesapeake or any of its subsidiaries or
affiliates.
(6) If Fox serves as a Director of Chesapeake or any of its
subsidiaries or affiliates after March 31, 1998, he will be paid on
the same basis as other outside directors.
(7) This Agreement contains all the promises and covenants made by Fox
and Chesapeake with respect to its subject matter except Chesapeake
may designate, by written notification to Fox, any specific
activity by Fox as an activity not considered in competition with
Chesapeake under the terms of Attachment B to this Agreement.
(8) This Agreement shall be binding upon Chesapeake and any purchasers
or successors to all or a substantial portion of the business of
Chesapeake.
(9) This Agreement shall be construed and enforced, to the extent not
preempted by federal law, in accordance with the laws of the
Commonwealth of Virginia (except the provisions thereof regarding
conflicts of law).
IN WITNESS WHEREOF, the parties hereto affix their signatures on the
dates indicated as follows:
CHESAPEAKE CORPORATION
Date:___________________
By:_________________________
Chairman, Committee of
Outside Directors
_________________________
Vice President
Date:___________________
_________________________
X. Xxxxxx Xxx
Attachment A to
Supplemental Retirement
Agreement dated
October 31, 1997
by and between
Chesapeake Corporation
and X. Xxxxxx Fox
AGREEMENT AND RELEASE
In consideration of the mutual promises and undertakings set forth
herein, X. Xxxxxx Xxx ("Xxx") and Chesapeake Corporation, and its corporate
affiliates and their officers, agents and employees ("Chesapeake"), do hereby
covenant and agree as follows:
(1) Fox acknowledges his responsibility to not use or divulge any
confidential or proprietary information to which he has had access during
his employment with Chesapeake to others in any way except by subpoena,
court order or in connection with a legal proceeding
(2) In exchange for the benefits provided by the Supplemental
Retirement Agreement (to which Fox acknowledges he would not
otherwise be entitled), Fox waives, releases, quitclaims and
covenants not to xxx Chesapeake from or on account of each and
every claim, damage, demand, liability or cause of action which he
may have of any kind or nature whatsoever (whether arising under
the various state and federal laws, including, by way of example,
but not limited to, rights and possible remedies under Title VII of
the Civil Rights Act of 1964 and the Age Discrimination in
Employment Act of 1967 as amended, or any other law, order,
regulation or under the common law) occurring or arising on or
before the date that this Agreement becomes effective, which he may
have or may have had against Chesapeake, its corporate affiliates,
and their officers, agents and employees and their successors and
assigns as a result of his employment or his retirement from his
employment. This means that if Fox has any kind of legal claim
against Chesapeake because of his employment or his retirement,
whether under the Age Discrimination in Employment Act or any other
law, order, regulation or under the common law, he is giving it up
forever by signing and accepting benefits under this Agreement. He
is giving up such claims and agreeing not to xxx Chesapeake for
them, if they arose before the date of this Agreement, even if he
may not know about them when he signs this Agreement. He does not
give up any right or claim which may arise after he signs this
Agreement.
(3) Fox may revoke this Agreement at any time within seven (7) days
following the date he signs it. In the event he does not revoke
it, this Agreement shall become effective on the eighth day
following the date he has signed it.
(4) Fox has read this Agreement and Release. He has had a full
twenty-one (21) days to review it and to consider it. He
has been advised and has had the opportunity to consult with
an attorney of his own choosing about it. He understands
its terms and he agrees to it voluntarily and knowingly,
understanding that it will be binding on himself, his
dependents and any successor in interest to them.
(5) Fox and Chesapeake agree that except as required by law or a
regulatory body neither party will disclose or allow anyone else to
disclose the terms of this Agreement and Release without
Chesapeake's or Fox's, as the case may be, prior written
authorization. In addition, Fox may make necessary disclosure to
his spouse, counsel, accountant, banks with which Fox regularly does
business and tax advisor and Chesapeake may make necessary
disclosure to its legal and financial advisors.
IN WITNESS WHEREOF, the parties hereto affix their signatures on the dates
indicated as follows:
CHESAPEAKE CORPORATION
Date: ____________________
By:______________________
Chairman, Committee of
Outside Directors
_______________________
Vice President
_____________________
X. Xxxxxx Xxx
Date:_____________________
Attachment B to
Supplemental Retirement
Agreement dated
October 31, 1997
by and between
Chesapeake Corporation
and X. Xxxxxx Fox
October 31, 1997
Xx. X. Xxxxxx Xxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Re: Executive Supplemental Retirement Plan
Dear Xxxxxx:
You have requested a waiver of the non-compete provisions of the Executive
Supplemental Retirement Plan (the "Plan") as to certain activities described
in your letter of July 9, 1997, to me and Xxxxx.
With regard to the category C activities (teaching and advocating
sustainable forestry), I concur that those activities would not violate the
non-compete provisions of the Plan.
With regard to the Category A activities (serving on Boards of Directors
and buying and operating small businesses), the provisions of the non-compete
would generally control, but the company will, upon your request, consider
from time to time whether specific activities you may consider would violate
the non-compete provisions of the Plan or not and, if they do appear to
violate the non-compete provisions, whether the Company would waive the non-
compete as to such activities. The Company will not unreasonably refuse to
consider, or unreasonably delay responding to, a request you may make for a
waiver of the non-compete. I suggest that such consideration be requested
before you make any significant investment in such activities so that any
issues which may exist can be resolved in an orderly manner.
With regard to the category B activities:
a. The Company waives the non-compete provisions of the Plan as to
(i) oyster culture and the oyster business in general and (ii) ownership
or management of Xxxxxxxxx Lumber Company.
b. The Company waives the non-compete provisions of the Plan as to
(i) consulting to commercial or investment banks on investment advice,
mergers and acquisitions, and financing, and (ii) securities analysis of
forest products, paper and packaging stocks. These waivers are subject
to the conditions that such activities (i) will not breach your
obligations to not disclose confidential, non-public information about
Chesapeake, (ii) will not involve your use or disclosure of information
obtained while you were an employee of Chesapeake which is restricted by
the terms of a confidentiality agreement signed by Chesapeake, and (iii)
will not involve advice on Chesapeake.
c. The Company waives the non-compete provisions of the Plan as to
your personal buying and selling of timberlands, including the growing,
harvesting and selling trees thereon, and advocating the practice of
sustainable forestry. The Company waives the non-compete provisions of
the Plan as to consulting forestry services conducted with regard to
land which lies outside the geographical area of Virginia, Delaware and
the Eastern Shore of Maryland. The Company waives the non-compete
provisions of the Plan as to consulting forestry activities involving
land within the geographical area of Virginia, Delaware and the Eastern
Shore of Maryland provided such services do not directly compete with
Chesapeake. To the extent that you consider specific activities which
you feel may violate the non-compete provisions of the Plan, the Company
will consider such matters in the same manner as Category A activities
are to be considered. In the event of a sale or transfer of
substantially all of Chesapeake's timberlands to an unrelated third
party or parties, the non-compete provisions of the Plan would be deemed
to not restrict your consulting forestry activities.
To the extent you have questions from time to time about the potential
application of the non-compete provisions of the Plan to activities you are
considering, please contact X.X. Xxxxxx and he will provide you a response.
Sincerely,
Xxxxx X. Xxxxxx
Chairman,
Committee of Outside
Directors
