Exhibit 99.2
EXECUTION VERSION
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into as of October 1, 2005, between VERSO TECHNOLOGIES, INC., a Minnesota
corporation (the "Company"), and XXXXXXXXXX XXXXXXXXX ("Employee"), an
individual resident of the State of Florida.
1. TERM. The term (the "Term") of this Agreement shall begin on the date
hereof (the "Effective Date") and shall continue in effect until the termination
of the Employee's employment hereunder; provided, however, the obligations and
covenants of the Company and the Employee hereunder that are to be performed or
observed following such termination shall survive the expiration of the Term.
2. EMPLOYMENT AND DUTIES. The Employee shall serve as the Company's Chief
Executive Officer, reporting to the Company's Board of Directors (the "Board")
and shall have such powers and duties as may from time to time be prescribed by
the Board, provided that such duties are consistent with Employee's position as
the chief executive officer of the Company. The Company shall provide Employee
with a private office, secretarial and administrative assistance, office
equipment, supplies and other facilities and services suitable to Employee's
position.
3. COMPENSATION.
3.1 SALARY. For all services to be rendered by Employee pursuant to
this Agreement, the Company hereby agrees to pay Employee a base salary at an
annual rate per year of $325,000 (the "Base Salary"), payable in accordance with
the Company's payroll practices in effect from time to time. The Base Salary
shall be reviewed from time to time in the discretion of the compensation
committee of the Board. Any increase in Base Salary or other compensation
granted by the compensation committee of the Board shall in no way limit or
reduce any other obligation of the Company hereunder. Once established at an
increased specified rate, the Base Salary hereunder shall not thereafter be
reduced without the consent of Employee, and the term Base Salary used herein
shall refer to the Base Salary as so increased.
3.2 BONUS. In addition to his Base Salary, in the discretion of the
Board, Employee may be awarded for each calendar year during the Term an annual
bonus (an "Annual Bonus") either pursuant to a bonus or incentive plan of the
Company or otherwise on terms no less favorable than those awarded to other
executive officers of the Company.
4. OPTION. On January 2, 2006, the Company shall grant to Employee pursuant
to the Company's 1999 Stock Incentive Plan, as amended (the "Incentive Plan"), a
ten-year, non-qualified stock option (the "Option") to purchase 250,000 shares
of the Company's common stock, par value $0.01 per share (the "Common Stock"),
at an exercise price equal to the higher of $1.25 or the Fair Market Value (as
defined in the Incentive Plan) of the Common Stock on such date. The Option
shall vest and first become exercisable with
respect to 62,500 shares of the underlying Common Stock on each of August 1,
2006, August 1, 2007, August 1, 2008 and August 1, 2009.
5. BENEFITS. Employee shall be entitled to all benefits and conditions of
employment provided by the Company to its executive officers, including, without
limitation, insurance, participation in the Company's vacation policy, and
participation in any stock option or incentive compensation plans, pension,
profit sharing or other retirement plans, subject (in each case) to the terms of
such plans and any provisions, rules, regulations and laws applicable to such
plans.
6. REIMBURSEMENT FOR BUSINESS EXPENSES. Employee shall be reimbursed for
all reasonable out-of-pocket business expenses incurred by him in the direct
performance of his duties during his employment with the Company pursuant to the
terms of this Agreement and in accordance with the Company's policies in effect
from time to time. All requests for reimbursement shall be substantiated by
invoices and other pertinent data reasonably satisfactory to the Company.
7. PERFORMANCE. Employee shall devote all of his working time and efforts
to the business and affairs of the Company and to the diligent performance of
the duties and responsibilities assigned to him pursuant to this Agreement,
except for vacations, weekends and holidays. Notwithstanding the foregoing,
Employee may render charitable, civic and outside board services so long as such
services do not materially interfere with Employee's ability to discharge his
duties, including, without limitation, such outside services as Employee is
currently performing.
8. COVENANTS.
8.1. CONFIDENTIAL INFORMATION; TRADE SECRETS. As used in this
Agreement, the term "Confidential Information" shall mean valuable, non-public,
competitively sensitive data and information relating to the Company's business
or the business of any entity affiliated with the Company, other than: (i) Trade
Secrets (as hereinafter defined); (ii) information contained in any publicly
available press release, a regulatory filing or other public communication which
is otherwise in the public domain on the date of this Agreement; (iii)
information that hereafter enters the public domain through no action on the
part of Employee; (iv) information that is known by Employee or becomes
available to him from a source other than the Company or any of its affiliates,
provided that such information was not obtained as a result of a breach of any
confidentiality obligation by the source of such information; (v) information
that was already in the possession of Employee prior to the date hereof and
which was not acquired from the Company or any of its affiliates; or (vi)
information obtained from discovery in a legal proceeding, but only to the
extent such information is used in such a proceeding. "Confidential Information"
shall include, among other things, information specifically designated as a
Trade Secret that is, notwithstanding the designation, determined by a court of
competent jurisdiction not to be a "trade secret" under applicable law. As used
in this Agreement, the term "Trade Secrets" shall mean information or data of or
about the Company or any entity affiliated with the
2
Company, including, without limitation, technical or non-technical data,
formulas, patterns, compilations, programs, devices, methods, techniques,
drawings, processes, financial data, financial plans, product plans, or lists of
actual or potential customers or suppliers, that (A) derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from their disclosure or use; and (B) is subject of efforts that are reasonable
under the circumstances to maintain its secrecy. To the extent that the
foregoing definition is inconsistent with a definition of "trade secret" under
applicable law, the foregoing definition shall be deemed amended to the extent
necessary to render it consistent with applicable law.
8.2. NON-DISCLOSURE. Employee will be exposed to Trade Secrets and
Confidential Information as a result of his employment by the Company as
provided in this Agreement. Employee acknowledges and agrees that any
unauthorized disclosure or use of any of the Trade Secrets or Confidential
Information of the Company would be wrongful and would likely result in
immediate and irreparable injury to the Company. In consideration of Employee's
right to employment (or continued employment) under the terms of this Agreement,
except as appropriate in connection with the performance of his obligations
under this Agreement, Employee shall not, without the express prior written
consent of an executive officer of the Company other than Employee,
redistribute, market, publish, disclose or divulge to any other person or
entity, or use or modify for use, directly or indirectly, in any way for any
person or entity (i) any Confidential Information during the Term of this
Agreement and for a period of two (2) years immediately following any
termination of Employee's employment hereunder; and (ii) any Trade Secrets at
any time (during or after the Term of this Agreement) during which such
information or data shall continue to constitute a "trade secret" under
applicable law. Employee agrees to cooperate with any reasonable confidentiality
requirements of the Company. Employee shall immediately notify the Company of
any unauthorized disclosure or use of any Trade Secrets or Confidential
Information of which Employee becomes aware.
8.3. NON-COMPETITION. Employee shall not, either directly or
indirectly, alone or in partnership, manage, control, operate or own any
business that is substantially similar to the business of the Company in any
geographic area of the United States of America (a "Competing Business") during
the Term and, if Employee's employment with the Company shall be terminated
hereunder (other than termination pursuant to Section 12.2 or Section 12.4
hereof), during the one (1) year period immediately following such termination,
except that Employee may own up to three percent (3%) of the outstanding
securities of a Competing Business the securities of which are registered with
the Securities and Exchange Commission if such Competing Business is subject to
the periodic reporting requirements of the Securities Exchange Act of 1934, as
amended (the "1934 Act").
8.4. NON-SOLICITATION. For a period of one (1) year immediately
following any termination of Employee's employment hereunder (other than a
termination pursuant to Section 12.2 or Section 12.4 hereof), Employee will not
solicit, or participate in any solicitation of, the suppliers, employees or
representatives of the Company (or any of its
3
subsidiaries or affiliated companies) to breach any contract with the Company,
terminate any relationship with the Company or leave the Company.
8.5 NON-INTERFERENCE. For a period of one (1) year immediately
following any termination of Employee's employment hereunder (other than
termination pursuant to Section 12.2 or Section 12.4 hereof), Employee shall
not, directly of indirectly interfere with or impede the relationship of the
Company, its subsidiaries or affiliates with any Customer (as hereinafter
defined) or induce or encourage any customer to cease doing business with, or
materially reduce the business done with, the Company, its subsidiaries or
affiliates, as the case may be. For purposes of this Agreement, customers shall
be limited to actual customers or actively-sought prospective customers of the
Company or any subsidiary or affiliate of the Company with whom the Employee has
had substantial contact at any time during Employee's employment with the
Company.
8.6 NON-DISPARAGEMENT. Employee agrees not to take any action or say
anything to any person during the Term or during the one (1) year period
immediately following any termination of Employee's employment hereunder that:
(i) criticizes or disparages the Company, any of its subsidiaries or affiliates
or their respective management teams, boards of directors, or practices,
services or products; (ii) disrupts or impairs the normal, ongoing business
operations of the Company or any of its subsidiaries or affiliates; or (ii)
xxxxx the Company's reputation with its employees, customers, suppliers,
investors or the public.
8.7 NON-INTERFERENCE WITH CORPORATE CONTROL. For a period of one (1)
year immediately following any termination of Employee's employment hereunder
(other than termination pursuant to Section 12.2 or Section 12.4 hereof),
Employee shall not take any action with respect to or in connection with, or
otherwise engage in, directly or indirectly, any efforts to: (i) acquire or
change control of the Company in any manner, including, without limitation,
through changes in the Company's security ownership, management or Board; (ii)
engage in any proxy contest or contest for control of the Company, whether
pursuant to Section 14 of the 1934 Act or otherwise; (iii) nominate for
election, appoint, elect or remove any member of the Board; (iv) acquire
beneficially ownership of more than five percent (5%) of the Company's
outstanding voting securities, with beneficial ownership determined in
accordance with Section 13(d) of the 1934 Act; or (v) otherwise assist or induce
any person or entity to do any of the foregoing.
8.8 COOPERATION. For a period of one (1) year immediately following
any termination of Employee's employment hereunder (other than termination
pursuant to Section 12.2 or Section 12.4 hereof) and consistent with Employee's
duties and obligations to any employer or business entity with which he is then
employed, associated, affiliated or involved, Employee agrees to make himself
available to the Company, at reasonable times and places, and subject to
non-interference with Employee's then employment or business activities, to
provide information to it concerning his direct knowledge of any aspect of any
litigation, arbitration, investigation, governmental proceeding or other
proceeding involving the Company in respect of work performed or services
rendered by Employee while he was
4
employed by the Company. In addition, the Company agrees to reimburse Employee
for all out-of-pocket expenses incurred by him, including reasonable travel
expenses.
8.9 RETURN OF COMPANY PROPERTY. Promptly upon any termination of
Employee's employment for any reason, and in no event later than three (3) days
thereafter, Employee will return to the Company any and all property of the
Company, its subsidiaries or affiliates which is in Employee's possession or
subject to Employee's control, including, without limitation, keys, credit and
identification cards, computers, files, personal items and equipment provided to
Employee for Employee's use, together with all written or recorded materials,
documents, computer discs, plans, records, notes or other papers relating to the
affairs of the Company, its subsidiaries or affiliates, but excluding any such
documents relating to Employee's compensation and benefits.
9. CERTAIN DEFINITIONS.
9.1. ACCRUED COMPENSATION. For purposes of this Agreement, "Accrued
Compensation" shall mean an amount which shall include all amounts earned or
accrued through the "Termination Date" (as hereinafter defined) but not paid as
of the Termination Date, including, without limitation: (i) Base Salary; (ii)
reimbursement for reasonable and necessary expenses incurred by Employee on
behalf of the Company during the period ending on the Termination Date; (iii)
vacation pay; (iv) bonuses, including, without limitation, any Annual Bonus, and
incentive compensation; and (v) all other amounts to which Employee is entitled
under any compensation plan of the Company at the times such payments are due.
9.2. BASE AMOUNT. For purposes of this Agreement, "Base Amount" shall
mean Employee's annual Base Salary at the highest rate in effect on, or at any
time during the ninety (90) day period prior to, the Termination Date and shall
include all amounts of Employee's Base Salary that are deferred under any
qualified and non-qualified employee benefit plans of the Company or any other
agreement or arrangement.
9.3. CAUSE. For purposes of this Agreement, a termination of
employment is for "Cause" if Employee has been convicted of a felony or if the
termination is evidenced by a resolution adopted in good faith by two-thirds
(2/3) of the Board that Employee: (i) intentionally and continually failed
substantially to perform his reasonably assigned duties with the Company (other
than a failure resulting from Employee's incapacity due to physical or mental
illness or from Employee's assignment of duties that would constitute "Good
Reason" (as hereinafter defined) following a "Change in Control" (as hereinafter
defined)) which failure continued for a period of at least thirty (30) days
after a written notice of demand for substantial performance has been delivered
to Employee specifying the manner in which Employee has failed substantially to
perform, or (ii) intentionally engaged in illegal conduct or gross misconduct
which results in material economic harm to the Company; provided, however, that
(A) where Employee has been terminated for Cause because a felony prosecution
has been brought against him and no conviction or plea of guilty or plea of nolo
contendere or its equivalent results therefrom, then said termination shall no
longer be
5
deemed to have been for Cause and Employee shall be entitled to all the benefits
provided by Section 10.1(ii) hereof from and after the date on which the
prosecution of Employee has been dismissed or a judgement of acquittal has been
entered, whichever shall first occur; and (B) no termination of Employee's
employment shall be for Cause as set forth in clause (ii) above until (x) there
shall have been delivered to Employee a copy of a written notice setting forth
that Employee was guilty of the conduct set forth in clause (ii) and specifying
the particulars thereof in detail, and (y) Employee shall have been provided an
opportunity to be heard in person by the Board (with the assistance of
Employee's counsel if Employee so desires). No act, or failure to act, on
Employee's part shall be considered "intentional" unless Employee has acted or
failed to act with a lack of good faith and with a lack of reasonable belief
that Employee's action or failure to act was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of any senior
officer of the Company or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by Employee in good
faith and in the best interests of the Company. Any termination of Employee's
employment by the Company hereunder shall be deemed to be a termination other
than for Cause unless it meets all requirements of this Section 9.3.
9.4. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall have occurred if:
(i) a majority of the directors of the Company shall be persons
other than persons: (A) for whose election proxies shall have been solicited by
the Board, or (B) who are then serving as directors appointed by the Board to
fill vacancies on the Board caused by death or resignation (but not by removal)
or to fill newly-created directorships;
(ii) a majority of the outstanding voting power of the Company
shall have been acquired or beneficially owned (as defined in Rule 13d-3 under
the 1934 Act or any successor rule thereto) by any person (other than the
Company, a subsidiary of the Company or Employee) or Group (as defined below),
which Group does not include Employee; or
(iii) there shall have occurred:
(A) a merger or consolidation of the Company with or into
another corporation (other than (1) a merger or consolidation with a subsidiary
of the Company or (2) a merger or consolidation in which (a) the holders of
voting stock of the Company immediately prior to the merger as a class continue
to hold immediately after the merger at least a majority of all outstanding
voting power of the surviving or resulting corporation or its parent and (b) all
holders of each outstanding class or series of voting stock of the Company
immediately prior to the merger or consolidation have the right to receive
substantially the same cash, securities or other property in exchange for their
voting stock of the Company as all other holders of such class or series);
6
(B) a statutory exchange of shares of one or more classes or
series of outstanding voting stock of the Company for cash, securities or other
property;
(C) the sale or other disposition of all or substantially
all of the assets of the Company (in one transaction or a series of
transactions); or
(D) the liquidation or dissolution of the Company;
unless more than twenty-five percent (25%) of the voting stock (or the voting
equity interest) of the surviving corporation or the corporation or other entity
acquiring all or substantially all of the assets of the Company (in the case of
a merger, consolidation or disposition of assets) or of the Company or its
resulting parent corporation (in the case of a statutory share exchange) is
beneficially owned by Employee or a Group that includes Employee.
9.5. GROUP. For purposes of this Agreement, "Group" shall mean any two
or more persons acting as a partnership, limited partnership, syndicate, or
other group acting in concert for the purpose of acquiring, holding or disposing
of voting stock of the Company.
9.6. DISABILITY. For purposes of this Agreement, "Disability" shall
mean a physical or mental infirmity which impairs Employee's ability to
substantially perform his duties with the Company for a period of one hundred
eighty (180) consecutive days and Employee has not returned to his full time
employment prior to the Termination Date as stated in the "Notice of
Termination" (as hereinafter defined).
9.7. GOOD REASON.
9.7.1. For purposes of this Agreement, "Good Reason" shall mean a
good faith determination by Employee, in Employee's sole and absolute judgment,
that any one or more of the following events has occurred, without Employee's
express written consent:
(i) the assignment to Employee of any duties inconsistent
with Employee's position (including, without limitation, status, titles and
reporting requirements), authority, duties or responsibilities as in effect
immediately prior to the date of such assignment, or any other action by the
Company that results in a material diminution in such position, authority,
duties or responsibilities, excluding for this purpose isolated and inadvertent
action not taken in bad faith and remedied by the Company promptly after receipt
of notice thereof given by Employee;
(ii) a reduction by the Company in Employee's Base Salary,
as the same may be increased from time to time, without Employee's consent or a
change in the eligibility requirements or performance criteria under any bonus,
incentive or compensation plan, program or arrangement under which Employee is
covered immediately prior to the Termination Date which adversely affects
Employee;
7
(iii) any failure to pay Employee any compensation or
benefits to which he is entitled within five (5) days of the date due after
notice of the failure to so pay is given by Employee;
(iv) the Company's requiring Employee to be based anywhere
other than within fifty (50) miles of Employee's job location as of the date
hereof, except for reasonably required travel on the Company's business which is
not greater than such travel requirements prior to the date hereof;
(v) the taking of any action by the Company that would
materially adversely affect the physical conditions existing in or under which
Employee performs his employment duties;
(vi) the insolvency or the filing (by any party, including
the Company) of a petition for bankruptcy by the Company;
(vii) any purported termination of Employee's employment for
Cause by the Company which does not comply with the terms of Section 9.3 hereof;
or
(viii) any breach by the Company of any provision of this
Agreement.
9.7.2. Employee's right to terminate his employment pursuant to
this Section 9 shall not be affected by his incapacity due to physical or mental
illness.
9.8. NOTICE OF TERMINATION. For purposes of this Agreement, "Notice of
Termination" shall mean a written notice of termination from the Company of
Employee's employment which indicates the specific termination provision in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee's
employment under the provision so indicated.
9.9. TERMINATION DATE. For purposes of this Agreement, "Termination
Date" shall mean, in the case of Employee's death, his date of death, in the
case of Employee's voluntary termination, the last day of employment, and in all
other cases (other than in the case of a successor or an assignee, which is
provided for in Section 13.1 hereof), the date specified in the Notice of
Termination; provided, however, that if Employee's employment is terminated by
the Company for Cause or due to Disability, the date specified in the Notice of
Termination shall be at least thirty (30) days from the date the Notice of
Termination is given to Employee; and provided further that in the case of
Disability Employee shall not have returned to the full-time performance of his
duties during such period of at least thirty (30) days.
8
10. BENEFITS AND PAYMENTS UPON TERMINATION OF EMPLOYMENT.
10.1. COMPENSATION AND BENEFITS. If Employee's employment with the
Company shall be terminated hereunder, Employee shall be entitled to the
following compensation and benefits in the following circumstances, and subject
to Section 10.3 below:
(i) If Employee's employment with the Company shall be terminated
(A) by the Company for Cause or Disability; (B) by reason of Employee's death;
or (C) by Employee pursuant to Section 12.3 hereof, then the Company shall pay
to Employee all Accrued Compensation.
(ii) If Employee's employment with the Company shall be
terminated (A) by the Company pursuant to Section 12.2 hereof or (B) by Employee
pursuant to Section 12.4 hereof, then Employee shall be entitled to the
following:
(1) the Company shall pay Employee all Accrued Compensation;
(2) the Company shall pay Employee as severance pay and in
lieu of any further compensation for periods subsequent to the Termination Date
an amount in cash equal to:
(A) two (2) times the Base Amount, if Employee's
employment with the Company is terminated by Employee
pursuant to Section 12.4 hereof, or
(B) the Base Amount, if Employee's employment with the
Company is terminated by the Company pursuant to Section
12.2 hereof before a Change of Control; or
(C) two (2) times the Base Amount, if Employee's
employment with the Company is terminated by the Company
pursuant to Section 12.2 hereof after a Change of Control.
(3) for a period of (A) twenty-four (24) months immediately
following the Date of Termination, if Employee's employment with the Company is
terminated by Employee pursuant to Section 12.4 hereof, (B) twelve (12) months
immediately following the Date of Termination, if Employee's employment with the
Company is terminated by Employee pursuant to Section 12.2 hereof prior to a
Change of Control, (C) twenty-four (24) months immediately following the Date of
Termination, if Employee's employment with the Company is terminated by Employee
pursuant to Section 12.2 hereof after a Change of Control , or (D) such longer
period as may be provided by the terms of the appropriate program, practice or
policy, the Company shall, at its expense, continue on behalf of Employee and
his dependents and beneficiaries the life insurance,
9
disability, medical, dental and hospitalization benefits generally made
available to the Company's executive officers at any time during the 90-day
period prior to the Termination Date or at any time thereafter, provided that
(i) the Company's obligation hereunder with respect to the foregoing benefits
shall be limited to the extent that Employee obtains any such benefits pursuant
to a subsequent employer's benefit plans, in which case the Company may reduce
the coverage of any benefits it is required to provide Employee hereunder as
long as the aggregate coverages and benefits of the combined benefit plans are
no less favorable to Employee than the coverages and benefits required to be
provided hereunder, and (ii) this clause (3) shall not be interpreted so as to
limit any benefits to which Employee or his dependents or beneficiaries may be
entitled under any of the Company's employee benefit plans, programs or
practices following Employee's termination of employment, including, without
limitation, retiree medical and life insurance benefits; and
(4) if Employee's employment with the Company terminates
following a Change of Control (pursuant to either Section 12.2 or Section 12.4),
the restrictions on any outstanding incentive awards (including, without
limitation, restricted stock and granted performance shares or units) under any
incentive plan or arrangement shall lapse and such incentive award shall become
100% vested, all stock options (including, without limitation, the Option),
warrants and stock appreciation rights granted to Employee on or prior to the
date of this Agreement (the "Incentive Awards") shall become immediately
exercisable and 100% vested and, notwithstanding anything to the contrary
contained in the plan, agreement or other instrument relating to such stock
option, warrant or stock appreciation rights with regard to the period of time
within which such Incentive Awards must be exercised following Employee's
termination of employment or provision of services to the Company, all such
Incentive Awards may be exercised at any time and from time to time until the
one (1) year anniversary of the Termination Date.
(5) Notwithstanding anything herein to the contrary, if
Employee's employment with the Company is terminated by the Company pursuant to
Section 12.2 hereof before a Change of Control and Employee can reasonably
demonstrate that such termination was (i) at the request of a third party who
has indicated an intention, or has taken steps reasonably calculated, to effect
a Change of Control or (ii) otherwise arose in connection with, or in
anticipation of, a Change of Control, which actually occurs, then such
termination shall be deemed for all purposes of this Agreement to have occurred
after such Change of Control.
(iii) The amounts provided for in Section 10.1(i) shall be
payable to Employee in a lump-sum on the Termination Date, and the amounts
provided for in Section 10.1(ii) shall be payable to Employee in substantially
equal semi-monthly installments during (A) a twenty-four (24) month period
commencing on the Termination Date, if Employee's employment with the Company is
terminated by Employee pursuant to Section 12.4 hereof, (B) a twelve (12) month
period commencing on the Termination Date, if Employee's employment with the
Company is terminated by the Company pursuant to Section 12.2 hereof prior to a
Change of Control, or (C) a twenty-four (24) month period commencing on the
Termination Date, if Employee's employment with the Company is
10
terminated by the Company pursuant to Section 12.2 hereof after a Change of
Control, and otherwise in accordance with the Company's payroll practices in
effect from time to time.
(iv) Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
and no such payment shall be offset or reduced by the amount of any compensation
or benefits provided to Employee in any subsequent employment, except as
provided in Section 10.1(ii)(3).
10.2. NO SEVERANCE. The severance pay and benefits provided for in
this Section 10 shall be in lieu of any other severance or termination pay to
which Employee may be entitled under any Company severance or termination plan,
program, practice or arrangement.
10.3. OTHER COMPENSATION AND BENEFITS. Employee's entitlement to any
other compensation or benefits shall be determined in accordance with the
Company's employee benefit plans and other applicable programs, policies and
practices then in effect.
10.4 TERMINATION OF COMPANY'S OBLIGATIONS UNDER SECTION 10. Without
intending to limit the remedies available to the Company for a breach by
Employee of the provisions of Section 8 hereof, in the event that Employee
breaches any of the provisions of Section 8 hereof, then the Company shall give
written notice thereof to Employee in accordance with Section 15 hereof, and if
such breach is capable of being cured and Employee fails to cure such breach
within five (5) days after his receipt of such notice, then: (i) the Company
shall be relieved of its obligation to make any payments or provide any benefits
to Employee pursuant to this Section 10.1 hereof; and (ii) the Incentive Awards
(to the extent vested and not exercised) shall immediately terminate.
11. GROSS-UP PAYMENTS.
11.1. ADDITIONAL PAYMENTS. Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company to or for the benefit
of Employee (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 11) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by Employee with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Employee shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by Employee of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, Employee retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 11.1, if it shall be determined that Employee is
11
entitled to a Gross-Up Payment, but that the Payments do not exceed 110% of the
greatest amount (the "Reduced Amount") that could be paid to Employee such that
the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to Employee and the Payments, in the aggregate, shall be
reduced to the Reduced Amount.
11.2 DETERMINATION. Subject to the provisions of Section 11.3, all
determinations required to be made under this Section 11, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by a nationally-recognized accounting firm selected by the Company and
reasonably acceptable to Employee (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and Employee within fifteen
(15) business days of the receipt of notice from Employee that there has been a
Payment, or such earlier times as is requested by the Company. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 11, shall be paid by
the Company to Employee within five (5) days of the receipt of the Accounting
Firm's determination. Any determination by the accounting Firm shall be binding
upon the Company and Employee. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 11.3 and Employee thereafter
is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Employee.
11.3 INTERNAL REVENUE SERVICE CLAIM. Employee 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 the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than ten (10)
business days after Employee 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. Employee shall not pay such claim prior to the
expiration of the 30-day period following the date on which Employee 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
Employee in writing prior to the expiration of such period that it desires to
contest such claim, Employee shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) 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 to such claim by
an attorney reasonably selected by the Company;
12
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, without limitation, additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold Employee
harmless, on an after-tax basis, for any Excise Tax or income tax (including,
without limitation, interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 11.3, the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct Employee to pay the tax claimed and xxx
for a refund or contest the claim in any permissible manner, and Employee agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs Employee
to pay such claim and xxx for a refund, the Company shall advance the amount of
such payment to Employee on an interest-free basis and shall indemnify and hold
Employee harmless, on an after-tax basis, from any Excise Tax or income tax
(including, without limitation, interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of Employee
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Employee shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
11.4 REFUNDS. If, after the receipt by Employee of an amount advanced
by the Company pursuant to Section 11.3, Employee becomes entitled to receive
any refund with respect to such claim, then Employee shall (subject to the
Company's complying with the requirements of Section 11.3) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by Employee of an
amount advanced by the Company pursuant to Section 11.3, a determination is made
that Employee shall not be entitled to any refund with respect to such claim and
the Company does not notify Employee in writing of its intent to contest such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
12. TERMINATION. Employee's employment hereunder may be terminated without
any breach of this Agreement only in accordance with this Section 12.
13
12.1. TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
Employee's employment with the Company at any time for Cause by providing to
Employee a Notice of Termination, whereupon Employee shall be entitled to all of
the benefits and payments provided for under Section 10 hereof.
12.2. TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may
terminate Employee's employment with the Company at any time (before or after a
Change of Control) without Cause by providing to Employee a Notice of
Termination, whereupon Employee shall be entitled to all of the benefits and
payments provided for under Section 10 hereof.
12.3. TERMINATION BY EMPLOYEE. Employee's employment with the Company
may be terminated by Employee at any time by providing the Company with notice
of such termination and specifying in the notice the effective date of such
termination, which shall not be less than one hundred twenty (120) days after
giving such notice, whereupon Employee's employment with the Company shall
terminate on the date specified in such notice and Employee shall be entitled to
all of the benefits and payments provided for under Section 10 hereof; provided,
however, that following receipt of such notice, the Company may specify, in its
discretion, the date on which Employee's employment shall terminate so long as
the date so specified is not more than one hundred twenty (120) days after the
date on which Employee shall have given notice, in which case Employee's
employment shall terminate on the date so specified by the Company.
12.4. TERMINATION BY EMPLOYEE FOR GOOD REASON FOLLOWING A CHANGE OF
CONTROL. For a one (1) year-period following a Change of Control, Employee's
employment with the Company may be terminated by Employee for Good Reason at any
such time during such one (1) year-period by providing the Company with a notice
of such termination and specifying in the notice the effective date of such
termination, whereupon Employee's employment shall terminate on the date
specified in such notice and Employee shall be entitled to all of the benefits
and payments provided for under Section 10 hereof.
12.5. TERMINATION UPON DISABILITY. The Company may terminate
Employee's employment upon the Disability of Employee by providing to Employee a
Notice of Termination, whereupon Employee shall be entitled to all of the
benefits and payments provided for under Section 10 hereof.
12.6. DEATH. In the event of Employee's death during his employment
hereunder, Employee's employment shall be automatically terminated, whereupon
Employee shall be entitled to all of the benefits and payments provided for
under Section 10 hereof.
13. SUCCESSORS AND ASSIGNS.
13.1. ASSUMPTION AND AGREEMENT. This Agreement shall be binding upon
and shall inure to the benefit of the Company, its successors and assigns, and
the Company
14
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) or assign, by agreement in form and substance
satisfactory to Employee, 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 or assignment had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession or assignment shall be a breach of this
Agreement and shall entitle Employee to compensation from the Company in the
same amount and on the same terms as he would be entitled to hereunder if his
employment with the Company had been terminated pursuant to Section 12.2 hereof,
except that for purposes of implementing the foregoing, the date on which any
such succession or assignment becomes effective shall be deemed the Termination
Date hereunder. As used in the Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor or assign that executes and delivers the
agreement provided for in this Section 13.1 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
13.2. RIGHTS OF EMPLOYEE. This Agreement and all rights of Employee
hereunder shall inure to the benefit of and be enforceable by Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devises and legatees. If Employee should die while any amounts
would still be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Employee's devise, legatee or other designee or, if
there be no such designee, to Employee's estate.
14. INJUNCTIVE RELIEF. The Company and Employee agree that damages are an
inadequate remedy for, and that the Company or any successor to the business of
the Company would be irreparably harmed by, any breach of Section 8 of this
Agreement, and that the Company, any successor to the business of the Company or
any permitted assignee of the Company shall be entitled to equitable relief in
the form of a preliminary or permanent injunction upon any breach of Section 8
hereof.
15. NOTICES. For the purpose of this Agreement, notices and all other
communications to either party hereunder provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when delivered in person
or mailed by first-class mail or airmail, postage prepaid, addressed:
If to Employee:
Xx. Xxxxxxxxxx Xxxxxxxxx
________________________
________________________
15
If to the Company:
Verso Technologies, Inc.
000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
or to such other address(es) as either party may have furnished to the other
party in writing in accordance with this Section.
16. MISCELLANEOUS. No provision of this Agreement may be amended, modified
or waived unless such amendment, modification or waiver (i) is agreed to in
writing and is signed by Employee and a representative of the Company, its
successor or permitted assignee and (ii) has been approved by the Board, its
successor or any permitted assignee of the Company. No waiver by either party to
this Agreement at any time of breach by the other party of, or compliance by the
other party with, any condition or provision of this Agreement to be performed
by the other party shall be deemed to be a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time. No
agreements or representations, oral or otherwise, expressed or implied, with
respect to the subject matter of this Agreement have been made by either party
that are not expressly set forth in this Agreement.
17. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which other provisions shall remain in
full force and effect, nor shall the invalidity or unenforceability of a portion
of any provision of this Agreement affect the validity or enforceability of the
balance of such provision.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute a single agreement.
19. HEADINGS. The headings of the paragraphs contained in this Agreement
are for reference purposes only and shall not, in any way, affect the meaning or
interpretation of any provision of this Agreement.
20. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal substantive laws, and not the choice of law rules,
of the State of Georgia.
21. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement or the breach thereof, other than the provisions of Section 8
hereof, shall, on the written request of one party served upon the other, be
settled by binding arbitration in Xxxxxx County, Georgia in accordance with the
commercial arbitration rules then recognized by the
16
American Arbitration Association, and judgment upon the award rendered may be
entered and enforced in any court having jurisdiction thereof.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements (if any),
understandings and arrangements (oral or written) between the parties hereto.
[SIGNATURE PAGE FOLLOWS]
17
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and delivered by its duly authorized officer, and Employee has executed and
delivered this Agreement, all as of the date first written above.
VERSO TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Its: Executive Vice President and
Chief Financial Officer
/s/ Xxxxxxxxxx Xxxxxxxxx
----------------------------------------
XXXXXXXXXX XXXXXXXXX
18
