EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is effective as of the 29th day of November,
2001 by and among Viskase Companies, Inc. ("VCI"), a Delaware corporation,
Viskase Corporation ("Viskase"), a Pennsylvania corporation, both with
principal offices at 000 Xxxxxxxxxxx Xxxxxx Xxxxxxx, Xxxxxxxxxxx, XX 00000
(VCI and Viskase shall be collectively referred to herein as the "Company")
and Xxxxxx X. Xxxxxxx, an individual ("Executive") (hereinafter together
referred to as "the parties").
WHEREAS, the Company wishes to provide incentive to Executive to remain
in the employ of the Company during the period of restructuring and
thereafter;
WHEREAS, Executive has served as Vice President, Chief Financial Officer
and Treasurer of VCI and Vice President, Chief Financial Officer and
Treasurer of Viskase; and
WHEREAS, the Company and Executive desire that Executive continue to
serve as Vice President, Chief Financial Officer and Treasurer of VCI and
Vice President, Chief Financial Officer and Treasurer of Viskase,
respectively, on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
of the parties contained herein, the parties agree as follows:
1. Employment Term. The Company shall employ Executive and Executive
agrees to be employed by the Company; pursuant to the terms and conditions
hereof; for the period (the "Employment Term") commencing on the date hereof
and ending on December 31, 2004; provided, however, that on January 1, 2003
and on each subsequent anniversary thereof, the Employment Term shall
automatically be extended for a period of one year unless either party shall
have given written notice to the other party not less than thirty days prior
to January 1, 2003 or any subsequent anniversary thereof that the Employment
Term shall not be so extended.
2. Duties. During the Employment Term, Executive shall serve as Vice
President, Chief Financial Officer and Treasurer of each of VCI and Viskase.
Executive shall perform such services and duties prescribed for such
positions by VCI's and Viskase's Bylaws and as are otherwise incident to such
positions and such other services and duties not inconsistent with such
positions as may be determined from time to time by the President of VCI and
Viskase or the Board of Directors of VCI ("VCI Board") or the Board of
Directors of Viskase (the "Board"). Subject to the terms and conditions of
this Agreement, Executive shall devote his full business time, attention and
skills, to the best of his abilities, to the performance of such services and
duties, and use his best efforts to promote the interests of the Company and
its subsidiaries. Nothing in this Agreement shall preclude Executive from
engaging in charitable and community affairs, from managing his personal
investments or, except as otherwise provided in Sections 8(b) and (c), from
serving as a member of the board of directors or a trustee of other
companies, associations or entities, provided, however, that such activities
do not interfere in any material respect with Executive's performance of his
obligations to the Company hereunder.
3. Compensation. In consideration of the performance by Executive of
his obligations hereunder, the Company shall pay Executive the amounts
hereinafter set forth.
(a) During the Employment Term, the Company shall pay Executive
(i) a salary (the "Base Salary") at an annual rate of not less than $178,728
payable in substantially equal installments in accordance with the normal
payroll practices of the Company then in effect for other officers of the
Company. Thereafter, Executive's Base Salary shall be increased by such
amount as shall be determined by the President of the Company in a manner
consistent with its most recent determination of increases in base salary of
other senior officers of the Company.
(b) During the Employment Term, Executive will be eligible to
participate in the Executive Auto Allowance Program, Viskase Companies, Inc.
Non-Qualified Parallel Plan, the Management Incentive Plan or any replacement
thereof, and the 1993 Stock Option Plan and any replacement thereof.
4. Benefits. During the Employment Term, Executive shall be entitled
to participate in any employee benefit plans (including, but not limited to,
any life insurance, disability, medical, dental, hospitalization, savings,
retirement and other benefit plans of the Company) then in effect for
executive officers of the Company and to receive any other fringe benefits
that the Company then provides to executive officers of the Company.
5. Vacations. During the Employment Term, Executive shall be entitled
to paid vacations of no less than five (5) weeks per year. In addition,
Executive's vacation entitlement shall increase in accordance with the
Company's general vacation policy.
6. Termination. Executive's employment hereunder may be terminated
under the following circumstances:
(a) Death. Executive's employment hereunder shall terminate
automatically upon Executive's death.
(b) Disability. The Company or Executive may terminate
Executive's employment after having established Executive's Disability. For
purposes of this Agreement, "Disability" shall be established if Executive
shall be unable to perform fully his duties hereunder because of illness,
physical or mental disability or other incapacity, as confirmed by medical
evidence satisfactory to the Company, that is expected to prevent him from
returning to the full performance of his duties hereunder for six months or
longer.
(c) Cause. The Company may terminate Executive's employment for
"Cause." Cause shall mean a finding adopted in good faith by the Board that
Executive (i) willfully failed to substantially perform his services or
duties for the Company (other than a failure resulting from Executive's
Disability) and such failure continues for 30 days after the Board has given
written notice to Executive providing a reasonable description of the basis
for the determination that Executive has failed to perform his services or
duties, (ii) has been convicted of (or plead nolo contendere to) a felony or
to a misdemeanor involving moral turpitude or the use of a controlled
substance, (iii) has breached this Agreement in any material respect if such
breach is not cured or remedied within 30 days after the Board has given
written notice to Executive providing a reasonable description of the breach,
or (iv) engaged in embezzlement or misappropriation of the assets of the
Company or any of its subsidiaries or (v) engaged in conduct constituting
willful malfeasance in connection with his employment which is materially
injurious to the Company and its subsidiaries taken as a whole.
Notwithstanding anything contained in this Agreement to the contrary, no
failure to perform by Executive after Notice of Termination (as hereinafter
defined) is given by Executive shall constitute Cause for purposes of this
Agreement. No act, or failure to act, on Executive's part, shall be
considered "willful" for purposes of (i) or (v) above unless he has acted or
failed to act with an absence of good faith and without a reasonable belief
that his action or failure to act was in the best interests of the Company.
Any action of the Board to terminate Executive for cause under clause (i),
(iii), (iv) or (v) of the preceding sentence shall not be made until after
Executive and his legal advisors have been provided an opportunity to meet
with the Board, contest the basis for such termination and to demonstrate
that Executive's continued employment is in the best interests of the
Company.
(d) Good Reason. Executive may terminate his employment for "Good
Reason." For purposes of this Agreement, Good Reason shall mean the
occurrence of one of the following events within a period of twenty-four (24)
months following a Change of Control (as hereinafter defined) or
consolidation or elimination of the corporate office:
(i) a reduction in Executive's base compensation and
incentive bonus opportunity from that in effect on the day immediately before
the effective date of a Change of Control;
(ii) a reduction in Executive's principal responsibilities
from those in effect on the day immediately before the effective date of a
Change of Control;
(iii) any change in Executive's work location which is
different than that on the day immediately before the effective date of a
Change of Control by more than fifty (50) miles; and
(iv) a material breach of this Agreement by the Company which
is not cured within thirty (30) days written notice thereof.
As used in this Section 7(d), the term "Company" shall also
refer to its successor entity or any entity which has acquired control of VCI
or Viskase as a result of a Change of Control.
(e) Notice of Termination. Any purported termination of
Executive's employment hereunder shall be communicated by a written Notice of
Termination to the other. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which indicates the specific termination
provision in this Agreement relied upon as a basis for termination. For
purposes of this Agreement, no such purported termination of employment shall
be effective without such Notice of Termination.
(f) Termination Date. "Termination Date" shall mean in the case
of Executive's death, his date of death, or in all other cases, the date
specified in the Notice of Termination; provided, however, that if the
Company terminates Executive's employment other than for Cause, or Executive
terminates his employment for any reason other than Good Reason, the date
specified in the Notice of Termination shall be no less than 30 days from the
date the Notice of Termination is given to Executive.
7. Compensation Upon Termination. Upon termination of Executive's
employment during the Employment Term, Executive shall be entitled to the
following benefits:
(a) If Executive's employment is terminated by the Company for
Cause, or by Executive for any reason other than Good Reason, the Company
shall pay to Executive all amounts earned or accrued hereunder through the
Termination Date but not paid as of the Termination Date, including (i) Base
Salary, (ii) accrued but unpaid vacation pay, (iii) any earned or awarded and
vested, but unpaid bonus for any fiscal year of the Company ending prior to
the year in which such termination occurs and (iv) any previous compensation
which Executive has previously deferred (including any interest earned or
credited thereon) (collectively, "Accrued Compensation"). Executive's
entitlement to any other benefits shall be determined in accordance with the
Company's employee benefit plans and other applicable programs and practices
then in effect.
(b) Subject to Section 7(c), if Executive's employment is
terminated by the Company for any reason other than for Cause, death or
Disability, or by Executive for Good Reason, the Company shall pay to
Executive an amount equal to (i) all Accrued Compensation, plus (ii) 200% of
Executive's Base Salary, plus (iii) the bonus which would have been payable
to Executive under the Management Incentive Plan in respect of the year of
the Employment Term in which the Termination Date occurs and calculated as if
Executive were employed by the Company as of the end of such year (but, to
the extent the bonus is contingent on the achievement of performance targets,
based on whether such targets were actually achieved as of the Termination
Date) multiplied by a fraction, the numerator of which shall be the number of
days in such year which have elapsed prior to the Termination Date and the
denominator of which shall be the number of days in such year. The Company
shall also provide outplacement services consistent with outplacement
services provided to executive officers in the past; provided, however, no
payment shall be made to Executive in lieu of outplacement services. In
addition, Executive shall be entitled to coverage for twenty-four (24)
calendar months following the month on which the Termination Date occurs
under the life insurance, medical, dental and hospitalization benefits which
Executive would have been entitled to receive if he had continued his
employment with the Company for such period, on the terms and conditions
applicable to other executive officers of the Company as in effect from time
to time during such period. Executive's entitlement to any other benefits
shall be determined in accordance with the Company's employee benefit plans
and other programs and practices then in effect. All outstanding stock
options granted or issued pursuant to this Agreement shall become
exercisable, vested and nonforfeitable.
(c) If Executive's employment by the Company is terminated by the
Company following a Change of Control other than for Cause, death or
Disability, or by Executive for Good Reason, then Executive shall be entitled
to the amounts described in paragraph (b) above, except that in applying
clause (iii) thereof, it shall be assumed that the bonus to which the
Executive shall be entitled shall be equal to 40% of Base Salary irrespective
of the Company's performance or the date on which the termination occurs.
(d) For purposes of this Agreement, a "Change of Control" shall
mean any of the following events:
(1) any Person (an "Acquiring Person") becomes the
"beneficial owner" (as such term is defined in Rule 13d3 promulgated under
the Exchange Act, a "Beneficial Owner"), directly or indirectly, of
securities of VCI or Viskase representing 20% or more of the combined voting
power of VCI's or Viskase's then outstanding securities, other than
beneficial ownership by VCI or Viskase, any employee benefit plan of VCI or
Viskase or any person or entity organized, appointed or established pursuant
to the terms of any such benefit plan;
(2) VCI's or Viskase's stockholders approve an agreement to
merge or consolidate VCI or Viskase with another corporation, or an agreement
providing for the sale of substantially all of the assets of VCI or Viskase
to one or more corporations, in any case other than with or to a corporation
50% or more of which is controlled by or is under common control with, VCI or
Viskase;
(3) during any two-year period, individuals who at the date
on which the period commences constitute a majority of the VCI Board cease to
constitute a majority thereof for any reason; provided, however, that a
director who was not a director at the beginning of such period shall be
deemed to have satisfied the two-year requirement if such director was
elected by, or on the recommendation of, at least a majority of the directors
who were directors at the beginning of such period (either actually or by
prior operation of this provision), other than any director who is so
approved in connection with any actual or threatened contest for election to
positions on the VCI Board; or
(4) at any time, a majority of the members of the VCI Board
shall consist of individuals who were not nominated for election to the VCI
Board by VCI's Compensation and Nominating Committee or such other committee
of the VCI Board (including the VCI Board itself) as shall, from time to
time, be performing the function of proposing nominees for election to the
VCI Board.
(e) If Executive's employment by the Company is terminated by
reason of Executive's death, Executive's estate or designated beneficiaries
shall receive:
(i) all of Executive's Accrued Compensation; and
(ii) and any death benefits provided under the employee
benefits plans specified in Section 4 hereof; and
(f) If Executive's employment by the Company is terminated by the
Company or Executive by reason of Executive's Disability, Executive shall be
entitled to receive those amounts provided for under the Company's short-term
and long-term disability plans.
(g) The amounts (other than any life insurance and medical, dental
and hospitalization coverage) provided for in this Section 7 shall be paid
within five (5) business days after Executive's Termination Date. The
continuation of any life insurance, medical, dental or hospitalization
benefits pursuant to Section 7(b) or 7(c) shall be in satisfaction of the
Company's obligations under Section 4980B of the Internal Revenue Code of
1986, or any similar state law requiring continuation of such insurance or
benefits, with respect to the period of time during which such insurance or
benefits are continued hereunder.
(h) The Company shall use its best efforts to ensure that shares
of the Company's common stock obtained by Executive from the Company by
reason of the exercise of stock options shall be covered by an effective
registration statement on Form S-8 (or similar or successor form) with the
intention that Executive may sell such shares in compliance with the
Securities Act of 1933 (whether or not he is employed by the Company at the
time of the sale).
8. Nondisclosure of Confidential Information; Non-Competition.
(a) Executive shall not, without the prior written consent of the
Company, divulge, disclose or make accessible to any other person, firm,
partnership, corporation or other entity any Confidential Information
pertaining to the business of the Company, except (i) while employed by the
Company, in the business of and for the benefit of the Company, or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by
any administrative body or legislative body (including a committee thereof)
with purported or apparent jurisdiction to order Executive to divulge,
disclose or make accessible such information. When Executive shall cease to
be employed by the Company, the Executive shall surrender to the Company all
Confidential Information obtained by him or entrusted to him during the
course of his employment hereunder (together with all copies thereof) which
pertain specifically to any of the businesses covered by the covenants in
this paragraph or which were paid for by the Company or any of its
subsidiary; provided, however, that the Executive may retain copies of such
documents as necessary for the Executive's personal records for federal
income tax purposes. For purposes of this Section 9(a), "Confidential
Information" shall mean nonpublic information concerning the financial data
of the Company or any subsidiary, strategic business plans, product
development, bidding information (or other proprietary product data),
customer lists, marketing plans and other proprietary and confidential
information of the Company or any of its subsidiaries, in each case which is
not otherwise available to the public.
(b) During the Employment Term and for a period of two years
thereafter, except with the prior written consent of the Board, the
Executive:
(1) shall not engage in any activities whether as employer,
proprietor, partner, stockholder (other than the holder of less than 5% of
the stock of a corporation the securities of which are traded on a national
securities exchange or in the over-the-counter market), director, officer,
employee or otherwise, in competition with (1) the businesses conducted at
the date hereof by the Company or any of its subsidiaries or affiliates over
which he shall have exercised, directly or indirectly, any supervisory,
management, fiscal or operating control during the Employment Term (the
"Managed Companies"), or (2) any business in which the Managed Companies are
substantially engaged at any time during the Employment Period;
(2) shall not solicit, in competition with the Company, any
person who is a customer of the businesses conducted by the Managed Companies
at the date hereof or of any business in which the Managed Companies are
substantially engaged at any time during the Employment Period; and
(3) shall not induce or attempt to persuade any employee of
the Managed Companies to terminate his employment relationship in order to
enter into competitive employment.
(c) For purposes of Section 8(b) hereof, a business shall be
deemed to be in competition with the Company if it is significantly involved
in the sale of any product or the rendering of any service significantly sold
or rendered by the Company or its subsidiaries. Nothing in this Section 8
shall be construed so as to preclude Executive from investing in any publicly
held company, provided Executive's beneficial ownership of any class of such
company's securities does not exceed 5% of the outstanding securities of such
class.
(d) The following provisions shall apply to the covenants of the
Executive contained in Sections 8.01 and 8.02
(1) the covenants contained in paragraphs (A) and (B) of
Section 8(1)(b).01 shall apply within all territories in which any of the
Managed Companies are actively engaged in the conduct of business during the
Employment Term, including, without limitation, the territories in which
customers are then being solicited;
(2) without limiting the right of the Company to pursue all
other legal and equitable remedies available for violation by the Executive
of the covenants contained in Sections 8(a) and 8(b), it is expressly agreed
by the Executive and the Company that such other remedies cannot fully
compensate the Company for any such violation and that the Company shall be
entitled to injunctive relief to prevent any such violation or any continuing
violation thereof;
(3) each party intends and agrees that if in any action
before any court or agency legally empowered to enforce the covenants
contained in Sections 8(a) and 8(b) any term, restriction, covenant or
promise contained therein is found to be unreasonable and accordingly
unenforceable, then such term, restriction, covenant or promise shall be
deemed modified to the extent necessary to make it enforceable by such court
or agency; and
(4) the covenants contained in Sections 8(a) and 8(b) shall
survive the conclusion of Executive's Employment by the Company.
9. Conditional Adjustments in Compensation.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the
Company or its affiliated companies to or for the benefit of Executive
(whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise ("Total Compensation")), would be
subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax") and if it is determined that the amount of Total Compensation remaining
after payment of the Excise Tax is less than the maximum amount of Total
Compensation that could be paid without becoming subject to such Excise Tax,
the Total Compensation shall be reduced to such maximum amount.
(b) All determinations required to be made under this Section 9,
and the assumptions to be utilized in arriving at such determination, shall
be made by the Company's public accounting firm (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and
Executive within 15 business days of a request therefor by either Executive
or the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting a Change
of Control, Executive shall appoint another nationally recognized public
accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder).
All fees and expenses of the Accounting Firm shall be borne solely by the
Company. If the Accounting Firm determines that no Excise Tax is payable by
Executive, it shall furnish Executive with a written opinion that failure to
report the Excise tax on Executive's applicable federal income tax return
would not result in the imposition of a negligence or similar penalty. Any
determination by the Accounting Firm shall be binding upon the Company and
Executive.
10. Withholding. Anything to the contrary herein notwithstanding, all
payments required to be made by the Company hereunder to Executive, or his
estate or beneficiaries, shall be subject to the withholding of such amounts
as the Company may reasonably determine it should withhold pursuant to any
applicable tax law or regulation.
11. Joint and Several Obligation. The obligations of VCI and Viskase
hereunder shall be joint and several.
12. General Release. In order to receive any payment hereunder (other
than Accrued Compensation), Executive shall be required to execute a General
Release, in such form as determined by the Company, which releases the
Company and its subsidiaries, shareholders, directors, officers, employees,
successors and assigns from any existing and future claims except as such
claims relate directly to the payment of any amount under this Agreement.
13. Beneficiaries; References. Executive shall be entitled but shall
not be required to select (and change, to the extent permitted under any
applicable law) a beneficiary of beneficiaries to receive any compensation or
benefit payable hereunder following Executive's death, and may change such
election, in either case by giving the Company written notice thereof. In
the event of Executive's death or a judicial determination of his
incompetence, reference in this Agreement to Executive shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal
representative.
14. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns, and the Company shall
require any successor or assign 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 if no such succession or assignment had taken place. The
term "the Company" as used herein shall include such successors and assigns.
The term "successors and assigns" as used herein shall mean a corporation or
other entity acquiring all or substantially all of the assets and business of
the Company (including this Agreement) whether by operation of law or
otherwise.
(b) Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by
Executive's legal personal representative.
15. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail return receipt requested,
postage prepaid, addressed to the respective address last given by each party
to the other, provided that all notices to the Company shall be directed to
the attention of the Board with a copy to the Secretary of the Company. All
notices and communications shall be deemed to have been received on the date
of delivery thereof or on the third business day after the mailing thereof,
except that notice of change of address shall be effective only upon receipt.
16. Non-Exclusivity of Rights. Nothing in this Agreement shall limit
or reduce such rights as Executive may have under any other agreements with
the Company or any of its subsidiaries concerning any subject matter other
than that which is addressed herein; provided, however, that the payments and
benefits provided under Section 8 shall be in lieu of any other termination
benefits (including severance, notice and pay and salary continuation) to
which Executive may otherwise be entitled, and executive hereby waives any
and all rights to such other termination benefits. Amounts which are vested
benefits or which Executive is otherwise entitled to receive under any plan
or program of the Company or any of its subsidiaries shall be payable in
accordance with such plan or program, except as explicitly modified by this
Agreement.
17. Miscellaneous. 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 Executive and 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
agreement or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement.
18. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Illinois, without
giving effect to the conflict of law principles thereof.
19. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
20. 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
with respect to the subject matter hereof.
21. Attorneys' Fees and Costs. The Company agrees to pay all costs and
expenses, including attorneys' fees, which may be incurred by Executive in
enforcing this Agreement against the Company or in connection with any
contest of the validity or enforceability of this Agreement by the Company or
any third party, including without limitation any rejection of this Agreement
in any bankruptcy or similar procedure.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and Executive has executed this Agreement as
of the day and year first above written.
VISKASE COMPANIES, INC.
By: ------------------------
Title: ------------------------
VISKASE CORPORATION
By: ------------------------
Title: ------------------------
-------------------------------
Xxxxxx X. Xxxxxxx
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