EX 10.1
EMPLOYMENT CONTINUITY AGREEMENT
THIS AGREEMENT, dated as of August 4, 1999, is between
CHESAPEAKE CORPORATION, a Virginia corporation (the "Company")
and Xxxxxxx X. Xxxxxx (the "Employee").
WHEREAS, Employee serves as the President of Wisconsin
Tissue Xxxxx Inc. (Wisconsin Tissue), a wholly owned subsidiary
of the Company; and
WHEREAS, the Company and Georgia-Pacific Corporation have
announced their intention to create a joint venture to be engaged
in the global manufacture or sale of "away from home" tissue
products and related commercial products; and
WHEREAS, Wisconsin Tissue intends to contribute its assets
as a capital contribution in connection with the formation of the
Joint Venture; and
WHEREAS, the Company recognizes that the Employee has made
substantial contributions to Wisconsin Tissue; and
WHEREAS, the Company desires that the Employee continue
employment with Wisconsin Tissue until the creation of the Joint
Venture; and
WHEREAS, the Company desires to alleviate or reduce the
uncertainties that the Employee may feel as a result of the
Employee's assignment, directly or indirectly, to a new endeavor
such as the Joint Venture;
NOW THEREFORE, in consideration of the premises and mutual
covenants and agreements set forth herein, the Company and the
Employee covenant and agree as follows:
1. Term. The "Term" of this Agreement is the period
beginning on the date first written above and ending on the day
before the second anniversary of the effective date of the
creation of the Joint Venture. Notwithstanding any other
provision of this Agreement, this Agreement shall terminate if
the creation of the Joint Venture is not effective before March
31, 2000.
2. Benefits. The Employee shall be entitled to receive the
severance and welfare benefits and the pension supplement
described in this paragraph if, during the Term, (i) the Employee
ceases to be employed by Wisconsin Tissue because the Employee's
service has been terminated by Wisconsin Tissue without Cause
(for purposes of this Agreement, the transfer of the Employee's
employment from Wisconsin Tissue to an affiliate of Wisconsin
Tissue or to the Joint Venture shall not be deemed to be a
termination of the Employee's employment), (ii) the Employee
ceases to be employed by the Joint Venture because the Employee's
service has been terminated by the Joint Venture without Cause or
(iii) the Employee ceases to be employed by Wisconsin Tissue or
the Joint Venture because the Employee resigned with Good Reason.
(a) The severance benefit payable under this
paragraph is an amount equal to three (3) years
of the Employee's annual compensation determined
as the Employee's annual base salary (as in
effect on the date he ceases to be employed by
Wisconsin Tissue or the Joint Venture) plus his
target annual incentive award calculated as 50%
of his annual base salary as in effect on his
termination date, reduced by the amount of any
severance benefit payable to the Employee by the
Joint Venture or payable to the Employee under
the Chesapeake Corporation Salaried Employees'
Benefits Continuation Plan. The severance benefit
payable under this paragraph, less applicable
income and employment taxes and other authorized
deductions, shall be paid in a single sum as soon
as practicable following the Employee's cessation
of employment with Wisconsin Tissue or the Joint
Venture.
(b) The welfare benefits provided under this
paragraph are continued coverage of the Employee
and the Employee's eligible dependents under all
life, medical and dental benefit plans and
programs in which the Employee participates
immediately prior to the Employee's date of
termination on such terms as are then in effect.
In the event that the continued coverage of the
Employee or the Employee's eligible dependents
in any such plan or program is barred by its
terms, the Company shall arrange to provide the
Employee and the Employee'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
Employee 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 paragraph shall continue until the
earlier of (i) the end of the Severance Period
or (ii) the date that the Employee is eligible
for similar coverage under another employer's
plan. For purposes of this Agreement, the term
"Severance Period" means the period beginning on
the date that the Employee ceases to be employed
by Wisconsin Tissue or the Joint Venture and
ending on the date that is three (3) years
thereafter.
(c) The pension supplement payable under this
paragraph is an amount equal to the benefit that
the Employee would have accrued under the
Chesapeake Corporation Executive Supplemental
Retirement Plan (the "ESRP") had the Employee
been an employee of the Company during the
Severance Period (i.e., recognizing as service
with the Company the months of the Severance
Period and the Employee's attained age as of the
end of the Severance Period). The pension
supplement payable under this paragraph shall be
reduced, but not below zero, by any benefit that
the Employee accrues during the Severance Period
under any employee pension benefit plan provided
by the Wisconsin Tissue or the Joint Venture. The
present value of the pension supplement payable
under this paragraph, less applicable income and
employment taxes and other authorized deductions,
shall be paid in a single sum to the Employee as
soon as practicable following the cessation of
Employee's employment with Wisconsin Tissue or
the Joint venture. The present value of the
pension supplement payable under this paragraph
and any offset or reductions for benefits
provided by Wisconsin Tissue or the Joint Venture
shall be made on an actuarially equivalent basis
using the ESRP's actuarial assumptions and
methods.
Except as provided under this paragraph, no severance, welfare or
other benefits are payable to the Employee under this Agreement
as a result of the cessation of his service to Wisconsin Tissue
or the Joint Venture.
3. Cause. For purposes of this Agreement, the term "Cause"
means the Employee's (i) conviction by a court of competent
jurisdiction for, or pleading no contest to, a felony; (ii)
breach of any material obligation to Wisconsin Tissue or the
Joint Venture or (iii) willful neglect of duties to Wisconsin
Tissue or the Joint Venture which is not corrected within thirty
days after written notice to the Employee or willful and material
misconduct in the performance of such duties.
4. Good Reason. For purposes of this Agreement, the term
"Good Reason" means (i) a material reduction in the Employee's
duties or responsibilities; (ii) the failure, by Wisconsin Tissue
or the Joint Venture, to permit the Employee to exercise such
responsibilities as are consistent with the Employee's position;
(iii) a requirement that the Employee relocate more than fifty
miles from the Employee's current place of employment (except a
requirement that the Employee relocate to the Atlanta, Georgia
metropolitan area); (iv) a material reduction in the Employee's
base salary or the payment to the Employee by the Joint Venture
of a base salary that is materially less than the base salary
payable to the Employee by Wisconsin Tissue as in effect
immediately before the Employee is employed by the Joint Venture
or (v) the failure, by the Joint Venture, to make a payment when
due to the Employee.
5. Confidentiality. During the period of his employment
with Wisconsin Tissue, the Company or both, the Employee has had
access to certain confidential, non-public information concerning
the Company (the "Information"). The Employee agrees to maintain
the Information as confidential and not disclose it to third
parties or use it in his employment with any direct or indirect
competitor of the Company. The Employee agrees that if this
confidentiality obligation is breached, the Company shall, in
addition to other available remedies, be entitled to injunctive
relief.
6. Covenant Not to Compete. The Employee agrees that he
will not take certain actions that would be damaging to the
competitive position of Wisconsin Tissue or the Joint Venture.
By making this commitment the Employee agrees that, if the
Employee's employment with Wisconsin Tissue or the Joint Venture
is terminated during the term of this Agreement, the Employee,
during the twelve months following the Employee's cessation of
employment, will not (a) accept any employment with, ownership
interest in, or engagement as a consultant, contractor or service
provider to any business engaged in the commercial and industrial
tissues segment of the paper industry or (b) on behalf of any
such business solicit any business that was a customer of
Wisconsin Tissue or the Joint Venture during the preceding twelve
months. The Employee 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 Employee 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.
7. 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. The Company may assign its rights
under paragraphs 5 and 6 of this Agreement.
8. 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 Employee 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. For purposes of this Agreement any reference to
Wisconsin Tissue or the Joint Venture include their respective
affiliates and successors. 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.
9. 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.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed on its behalf and the Employee has duly executed
this Agreement, all as of the date first above written.
Xxxxxxx X. Xxxxxx CHESAPEAKE CORPORATION
__________________________
By: Xxxxxx X. Xxxxx
__________________________
Xxxxxx X. Xxxxx
Title Vice President - Human
Resources
