-1-
AGREEMENT
THIS AGREEMENT, entered into as of the 13th day of October,
1995, by and between XXXX X. XXXXXX (the "Employee") and AMERICAN
PRESIDENT COMPANIES, LTD., a Delaware corporation (the "Company"),
W I T N E S S E T H:
Whereas the Company is the parent corporation in a group of
affiliated corporations (the "Affiliated Group") which includes the
Company and all of its direct or indirect subsidiaries;
Whereas the Employee has been employed by the Company as
Chairman and Chief Executive Officer pursuant to an Employment
Agreement dated as of January 29, 1991, as amended by Amendment No. 1
dated July 28, 1992, and Amendment No. 2 dated January 26, 1993 (the
Agreement, as so amended, being hereinafter referred to as the
"Employment Agreement"), and has served as a member of the Board of
Directors of the Company; and
Whereas the parties wish to provide for the Employee's
resignation from such employment and Board of Directors on mutually
satisfactory terms effective October 13, 1995 (the "Termination Date");
N o w, t h e r e f o r e, in consideration of the mutual
covenants herein contained, the parties agree as follows:
1. Remaining Term of Employment.
(a) Resignation. Effective as of the Termination Date, the
Employee shall resign as an employee, officer and director of the
Company and as an officer and director of all other members of the
Affiliated Group. Employee's resignation is an "Involuntary
Termination Without Cause" by the Company under Section 8 of the
Employment Agreement. Employee hereby waives the notice requirement
set forth in Section 1 of the Employment Agreement.
(b) Termination of Agreement. This Agreement shall
terminate when all obligations of the parties hereunder have been
satisfied.
2. Benefits During Continuation Period.
(a) Continuation Period. Following his resignation, the
Employee shall be entitled to receive the benefits described in the
succeeding subsections of this Section 2. Except as otherwise
provided, such benefits shall continue for the period commencing on the
Termination Date and ending on the earlier of March 1, 1999 or the date
of the Employee's death (the "Continuation Period"). Except as
expressly provided herein, the Employee shall not be eligible to
participate in any of the Company's executive compensation programs or
employee benefit plans after the Termination Date.
(b) Compensation. From October 13, 1995, to the earlier of
(i) April 12, 1996, or (ii) the date of the Employee's death, the
Company shall pay the Employee in approximately equal biweekly
installments, compensation at the annual rate of $575,950. The
Employee shall be entitled to receive a bonus for fiscal year 1995,
payable no later than February 15, 1996, calculated on the basis of a
target bonus of 60 percent of base salary (or 60% of $575,950) and the
management bonus level approved by the Compensation Committee of the
Board of Directors of the Company for bonus-level employees of the
Company generally. From April 13, 1996, until the earlier of (i)
March 1, 1999, or (ii) the date of the Employee's death, the Company
shall pay the Employee, in approximately equal biweekly installments,
compensation at the annual rate of $921,520. The Employee shall not be
entitled to bonus payments for fiscal year 1996 or subsequent years.
(c) Insurance Coverage. During the Continuation Period, the
Employee (and, where applicable, his dependents) shall be entitled to
continue participation in all insurance or similar plans maintained by
the Company, including (without limitation) life, disability, health
and accident insurance programs, as if he were still an employee of the
Company. Where applicable, the Employee's salary for purposes of such
plans shall be deemed to be equal to $575,950. To the extent that the
Company finds it impossible to cover the Employee under its group
insurance policies during the Continuation Period, the Company (at its
own expense) shall provide the Employee with the same level of coverage
under individual policies. The period during which the Employee may
elect continued insurance coverage in accordance with the requirements
of the Consolidated Omnibus Budget Reconciliation Act shall not end
until sixty (60) days after the date the Employee's participation in
the Company's group insurance plans terminates.
(d) Incentive Programs. The Continuation Period shall be
counted as employment with the Company for purposes of determining the
expiration date of all options granted to the Employee under the
Company's stock option plans and for purposes of vesting under all
executive compensation programs in which the Employee participated,
including (without limitation) stock purchase, stock options,
restricted stock or phantom stock plans, incentive or other bonus plans
and similar programs, but not including any pension, thrift or profit-
sharing plan intended to qualify under section 401(a) of the Internal
Revenue Code of 1986, as amended. The occurrence of a Change in
Control (as defined in Section 7(a) of the Employment Agreement) during
the Continuation Period shall not result in the vesting of any options
granted to the Employee under the Company's stock option plans.
(e) Supplemental Benefit. The Employee and his surviving
spouse (if any) shall be entitled to receive an unfunded supplemental
retirement benefit (the "Supplemental Benefit"). The amount of the
Supplemental Benefit shall be determined under Subsection (f) below.
(f) Amount of Supplemental Benefit. The amount of the
Supplemental Benefit shall be equal to the difference between:
(i) The amount of the pension benefits actually paid to
the Employee or to his surviving spouse, as the case may be,
under the American President Companies, Ltd. Retirement Plan
(the "Retirement Plan"), the Excess Benefit Plan of American
President Companies, Ltd. and the Supplemental Executive
Retirement Plan of American President Companies, Ltd.
(collectively, the "Retirement Program"), which represent all
of the qualified and non-qualified defined benefit pension
plans of the Company in which the Employee participates; and
(ii) The amount of the hypothetical pension benefit
that commences as of the date when the actual pension benefits
commence under Paragraph (i) above, and is determined as
follows: Such hypothetical pension benefit shall be equal to
40 percent of the Employee's Average Annual Compensation minus
40 percent of his Primary Social Security Benefit. The terms
"Average Annual Compensation" and "Primary Social Security
Benefit" shall have the meanings given to such terms in the
Retirement Plan; provided that for purposes of calculating
Average Annual Compensation, the following assumptions shall be
made:
(a) The projected Continuation Period,
determined without regard to the Employee's death, is
counted as employment with the Company; and
(B) The projected annual compensation to be
received by the Employee during the Continuation Period
is deemed to be $921,520, and is counted as
compensation.
For purposes of the Company's Retirement Program, the Company and the
Employee agree that the Employee's Retirement Date will be March 1, 1999.
The Supplemental Pension payments shall be made in monthly installments,
commencing with the month for which the first pension payment is made to the
Employee or his surviving spouse under the Retirement Plan and ending with
the month for which the last pension payment is made to the Employee or his
surviving spouse under the Retirement Plan. The Supplemental Benefit shall
be payable in the same form as the pension benefit under the Retirement Plan,
unless such pension benefit is paid in the form of a single lump sum. In that
event, the Supplemental Benefit shall be payable in the normal form of
benefit provided under the Retirement Plan and shall be computed and
paid as if the pension benefits actually paid under the Retirement Plan
were also payable in the normal form. The amount of the Supplemental
Benefit shall be recalculated each year in accordance with any
provisions of the Retirement Program which are applicable to the
Employee and which provide for the adjustment of pension benefits to reflect
changes in the cost of living.
(g) Equivalency Subsections (e) and (f) above shall be
construed to the greatest extent possible, so as to place the Employee
in a position which is at least equivalent to the position in which he
would have been if his active participation in the Retirement Program
had continued during the Continuation Period. However, any incremental
tax costs or benefits associated with the Supplemental Benefit shall be
disregarded for this purpose.
(h) No Mitigation The Employee shall not be required to
mitigate the amount of any payment or benefit contemplated by this
Section 2, nor shall any such payment or benefit be reduced by any
earnings or benefits that the Employee may receive from any other
source.
3. Other Benefits and Payments.
(a) Retention of Rights. The Employee shall retain his
rights to benefits under the Company's Retirement Program, SMART Plan
and Deferred Compensation Plans in accordance with the terms and
conditions of such plans and consistent with the termination of his
employment effective as of the Termination Date.
(b) Automobile. The Employee may purchase his Company
automobile for the residual lease value plus tax and license by making
payment in such amount to the Company on or before December 31, 1995.
4. Nondisclosure of Confidential Information.
(a) Confidential Agreement. The parties agree that the
terms and conditions of this Agreement shall be treated as confidential
and shall not be disclosed during the term of this Agreement or at any
time thereafter, except to the extent required by law in the reasonable
opinion of its internal or external legal counsel. The Employee has
had an opportunity to review and comment upon the press release to be
issued by the Company with respect to his resignation (the "Release").
Any written communications by the Company or the Employee regarding the
subject of this Agreement which contains statements inconsistent with
those set forth in the Release shall be subject to the prior written
approval of the other party. No representative of the Company, other
than the Chief Executive Officer, the General Counsel or Mr. F. Xxxxxx
Xxxxxxx may, in response to questions from the media, securities
analysts or representatives of trade journals, answer questions about
or comment concerning the subject matter of this Agreement or the
Employee's resignation prior to February 28, 1996.
(b) Return of Documents. The Employee further agrees that
all files, records, documents, computer disks, drawings,
specifications, equipment and similar items relating to the business of
members of the Affiliated Group, whether prepared by the Employee or
others, are and shall remain exclusively the property of the members of
the Affiliated Group and shall be returned to the Affiliated Group upon
the termination of his employment hereunder.
(c) Public Information. The provisions of Subsection (b) of
this Section 4 shall not apply to information or documents which the
Employee can show were previously furnished to the Company's
stockholders, available for public inspection through a government
agency without making a special request or otherwise made available to
the general public by the Company or were matters of public or general
knowledge in the industry.
5. Successors.
(a) Company's Successors. The Company shall require any
successor (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company's business and/or assets, by an
agreement in substance and form satisfactory to the Employee, to assume
this Agreement and to agree expressly to perform this Agreement in the
same manner and to the same extent as the Company would be required to
perform it in the absence of a succession. For all purposes under this
Agreement, the term "Company" shall include any successor to the
Company's business and/or assets which executes and delivers the
assumption agreement described in this Subsection (a) or which becomes
bound by this Agreement by operation of law.
(b) Employee's Successors. Except as expressly provided
herein, this Agreement and all rights of the Employee hereunder shall
inure to the benefit of, and be enforceable by, the Employee's personal
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
6. Notice.
Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by U.S. registered mail,
return receipt requested and postage prepaid. In the case of the
Employee, mailed notices shall be addressed to him at the home address
which he most recently communicated to the Company in writing. In the
case of the Company, mailed notices shall be addressed to its corporate
headquarters, and all notices shall be directed to the attention of its
General Counsel.
7. Release.
(a) The Employee hereby releases and forever discharges the
Company and all other members of the Affiliated Group, and each of
their stockholders, directors, officers and employees from any and all
demands, claims, causes of action or damages of whatever kind or
nature, known or unknown, at law or in equity, which he ever had, now
has or may hereafter claim to have had and which arise, directly or
indirectly, under the Employment Agreement or from the termination of
his employment with the Company or any other member of the Affiliated
Group; provided, however, that the Employee is not in any way hereby
releasing the Company from its obligations under this Agreement. The
Employee recognizes and agrees that such claims include, but are not
limited to, claims under Title VII of the Civil Rights Act of 1964, as
amended, Section 1981 of Title 42 of the United States Code, the Age
Discrimination in Employment Act, as amended, and all other employment
laws, whether federal, state or local.
(b) Nothing herein constitutes an admission of liability by
the Company.
(c) The Employee reserves any statutory or other rights to
legal representation and indemnification by the Company against any
loss, cost, damage or expense that he, as a former director, officer
and employee of the Company, has under applicable law, applicable
insurance policies, the Company's by-laws or certificate of
incorporation or indemnity agreement with the Company, in connection
with any demands, claims or actions hereafter made or brought, which
rights shall continue after the date hereof and for so long as provided
in such documents. Until December 31, 2000, the Employee shall
continue to be named as an insured for his acts while a director or
officer under any Directors' and Officers' insurance policy maintained
by the Company for its directors and officers generally.
8. Miscellaneous Provisions.
(a) Waiver. No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by the Employee and by the
Company's General Counsel. No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by
the other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.
(b) Whole Agreement. This Agreement supersedes the
Employment Agreement and settles all rights of the parties thereunder.
No agreements, representations or understandings (whether oral or
written and whether express or implied) which are not expressly set
forth in this Agreement have been made or entered into by either party
with respect to the subject matter hereof.
(c) Presumption. The Company shall make a payment or
transfer described in this Agreement at the time specified herein upon
receiving written notice from the Employee describing such payment or
transfer, referring to the provisions of this Agreement under which
such payment or transfer is claimed and certifying that all conditions
for such payment or transfer, as set forth in this Agreement, have been
satisfied. The information so furnished to the Company
by the Employee shall be presumed to be correct, subject to rebuttal by
the Company after making the payment or transfer claimed by the
Employee. The Company may seek a refund of such payment or transfer in
accordance with subsection (g) below.
(d) No Setoff. There shall be no right of setoff or
counterclaim, with respect to any claim, debt or obligation, against
payments to the Employee under this Agreement.
(e) Choice of Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the
laws of the State of California.
(f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity
or enforceability of any other provision hereof, which shall remain in
full force and effect.
(g) Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled
exclusively by arbitration in Oakland, California, in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association, and judgment on the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. All fees and
expenses of the arbitrator and such Association shall be paid by the
Company.
(h) No Assignment. The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by
operation of law, including (without limitation) bankruptcy,
garnishment, attachment or other creditor's process, and any action in
violation of this subsection (h) shall be void.
(i) Option Exercises and Sales of Securities. After March
1, 1996, the Employee shall not be subject to the Company's "window
period" restrictions with respect to exercises of Company options or
sales of Company securities. However, the Employee acknowledges that,
under Section 10(b) of the Securities Exchange Act of 1934, he may not
buy or sell securities of the Company at any time prior to or after
March 1, 1996 if he possesses material information about the Company
which has not been disclosed to the public.
(j) Further Assurances. The Company hereby agrees that it
will provide to the Employee documentation regarding his compensation
and benefit plans participation upon his reasonable request, including
schedules confirming the nature and extent of his participation in such
benefit plans and related tax information.
(k) Execution of Agreement. The Employee acknowledges that
he has consulted with an attorney prior to executing this Agreement,
that he has read and understands the terms of this Agreement and that
these terms are fully and voluntarily accepted by him.
IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized director,
as of the date first above written.
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
AMERICAN PRESIDENT COMPANIES, LTD.
By /s/ F. Xxxxxx Xxxxxxx
F. Xxxxxx Xxxxxxx
Chairman, Compensation Committee
Board of Directors
MC951012Cemp-0100jf-Xxxxxx
