AGREEMENT
AGREEMENT
THIS AGREEMENT, dated as of _________, 2002 (this “Agreement”), is made by and between Constar International, Inc., having its principal offices at Xxx Xxxxx Xxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 (the
“Company”), and Mr. __________________ (the “Executive”).
WHEREAS, the Company considers it
essential to the best interests of its stockholders to xxxxxx the continued employment of key executive management personnel; and
WHEREAS, the Board of Directors of the Company (the “Board”) recognizes that the possibility of a Change in Control (as defined in Section 1.3 below) of the Company exists from time to time and that such possibility, and
the uncertainty, instability and questions that it may raise for and among key executive management personnel, may result in the premature departure or significant distraction of such management personnel to the material detriment of the Company and
its stockholders;
WHEREAS, the Board has determined that protection of the Executive’s earned benefits,
deferred compensation and severance payments are the most efficient means to eliminate any such conflict in regards to the Executive; and
WHEREAS, the Board has determined that appropriate steps should be taken to reinforce, focus and encourage the continued attention and dedication of key members of the executive management of the Company and its
subsidiaries, including (without limitation) the Executive, to their assigned duties without distraction in the face of potentially disturbing or unsettling circumstances arising from the possibility of a Change in Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the
Executive hereby agree as follows:
1. Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
1.1. “Annual Base
Salary” shall mean the Executive’s rate of regular base annual compensation (prior to any reduction under (i) a salary reduction agreement pursuant to section 401(k) or section 125 of the Internal Revenue Code of 1986, as amended from
time to time (the “Code”) or (ii) any plan or arrangement deferring any base salary or bonus payments), and shall not include (without limitation) cost of living allowances, fees, retainers, reimbursements, bonuses, incentive awards,
prizes or similar payments.
1.2. “Cause” shall mean (i) the Executive, in
carrying out his duties under this Agreement, engages in gross misconduct or gross negligence resulting in material injury to the Company, (ii) the Executive embezzles any amount of the Company’s assets, (iii) the Executive is indicted or
convicted (including a plea of guilty or nolo contendere) of a felony, or (iv) the Executive’s continued failure to follow the lawful instructions of the Company’s Board (consistent with Section 4 below).
1.3. “Change in Control” shall mean:
1.3.1. The acquisition, after the Commencement Date, by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14 (d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 25% of the
combined voting power of the voting securities of the Company entitled to vote generally in the election of directors (the “Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control:
(a) any acquisition, directly or indirectly, by Crown Cork & Seal Company, Inc. (“Crown”) or any subsidiary of Crown, by or from the Company or any subsidiary of the Company, or by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any subsidiary of the Company, (b) any acquisition by any underwriter in connection with any firm commitment underwriting of securities to be issued by the Company, or (c) any acquisition by any corporation if,
immediately following such acquisition, 70% or more of the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation (entitled to vote generally in the
election of directors), is beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who, immediately prior to such acquisition, were the beneficial owners of the Common Stock and the Voting Securities
in substantially the same proportions, respectively, as their ownership, immediately prior to such acquisition, of the Common Stock and Voting Securities; or
1.3.2. The occurrence of, a reorganization, merger or consolidation other than a reorganization, merger or consolidation with respect to which all or substantially all of the
individuals and entities who were the beneficial owners, immediately prior to such reorganization, merger or consolidation, of the Common Stock and Voting Securities beneficially own, directly or indirectly, immediately after such reorganization,
merger or consolidation 70% or more of the then outstanding common stock and voting securities (entitled to vote generally in the election of directors) of the corporation resulting from such reorganization, merger or consolidation in substantially
the same proportions as their respective ownership, immediately prior to such reorganization, merger or consolidation, of the Common Stock and the Voting Securities; or
1.3.3. The occurrence of, (i) a complete liquidation or substantial dissolution of the Company, or (ii) the sale or other disposition of all or
substantially all of the assets of the Company, other than to a subsidiary, wholly-owned, directly or indirectly, by the Company; or
1.3.4. During any period of twenty-four (24) consecutive months commencing upon the Commencement Date, the individuals at the beginning of any such period who constitute the Board and any new director
(other than a director designated by a person or entity who has entered into an agreement with the Company or other person or entity to effect a transaction described in Sections 1.3.1, 1.3.2 or 1.3.3 above) whose election by the Board or nomination
for election by the Company’s stockholders was approved by a vote of at least two-thirds ( 2/3) of the
directors then still in office who either were directors at the beginning of any such period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board.
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Notwithstanding the above, a “Change-in-Control” shall not (i) be deemed to occur unless after any transaction or occurrence set forth
in Sections 1.3.1, 1.3.2, 1.3.3 or 1.3.4, Crown directly or indirectly owns less than 25% of the Voting Securities, or (ii) include any event, circumstance or transaction which results from the action of any entity or group which includes, is
affiliated with or is wholly or partially controlled by one or more executive offices of the Company and in which the Executive participates.
1.4. “Disability” shall mean the Executive’s inability to render, for a period of six consecutive months, services hereunder by reason of physical and
mental disability, as determined by the written medical opinion of an independent medical physician mutually acceptable to the Executive and the Company. If the Executive and the Company cannot agree as to such an independent medical physician, each
shall appoint one medical physician and those two physicians shall appoint a third physician who shall make such determination. In no event shall the Executive be considered disabled for the purposes of this Agreement unless the Executive is deemed
disabled pursuant to the Company’s long-term disability plan, if one is maintained by the Company.
1.5. “Employment Period” shall mean the period commencing on the date of a Change in Control until the earliest to occur of (i) the date which is two years from the date of such Change in
Control, (ii) the date of termination by the Executive of the Executive’s employment for Good Reason, or (iii) the termination by the Company of the Executive’s employment for any reason.
1.6. “Good Reason” shall mean and shall be deemed to exist if, without the prior express written
consent of the Executive, (i) the Executive suffers a material change in the title or position, as set forth and described in Section 3 of this Agreement; (ii) the Executive suffers a material change in the duties, responsibilities, reporting
objections or effective authority associated with his titles and positions; (iii) the Executive’s Annual Base Salary or the Executive’s benefits are decreased by the Company; (iv) the Company fails to pay the Executive’s compensation
or to provide for the Executive’s benefits when due; (v) the Company fails to obtain assumption of this Agreement by an acquiror; or (vi) the Executive’s office location is moved to a location more than 50 miles from _____________,
_____________.
1.7. “Person” shall have the meaning ascribed thereto in
Section 3(a)(9) of the Exchange Act, as modified, applied and used in Sections 13(d) and 14(d) thereof; provided, however, a Person shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its subsidiaries (in its capacity as such), (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same character and proportions as their ownership of stock of the Company.
1.8. “Retirement” shall mean and be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated
upon or after normal retirement age pursuant to the pension plan of the Company, not including any early retirement or so-called “window period” retirements, generally applicable to its officers, as in effect immediately prior to a Change
in Control.
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2. Term of this Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 2004; provided, that the term shall automatically be extended each January 1 unless either party to this Agreement delivers a notice of non-extension to the other party by June 30
of the preceding year. However, if a Change in Control shall have occurred during the term of this Agreement, this Agreement shall continue in effect for a period of twenty-four (24) months beyond the day in which such Change in Control occurred
(the “Term”). Notwithstanding the foregoing provisions of this Section 2, the Term shall terminate upon attainment of normal retirement age as defined in the pension plan of the Company.
3. The Executive’s Covenants.
3.1. Time and Attention. During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and to use the Executive’s reasonable best efforts to perform faithfully and efficiently the responsibilities and duties
assigned to the Executive hereunder. During the Employment Period it shall not be a violation of this Agreement for the Executive to serve on corporate, civic or charitable boards or committees. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the Executive prior to a Change in Control, the reinstatement or continued conduct of such activities (or the reinstatement or conduct of activities similar in nature and scope thereto)
subsequent to a Change in Control shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the Company and its subsidiaries.
3.2. Non-interference; Confidential Information; Non-Competition
3.2.1. Non-Solicitation. If the Executive’s employment with the Company terminates for any reason, the Executive, for a period
of six months after any such termination, shall not (except on the Company’s behalf), directly or indirectly, on his own behalf or on behalf of any other person, firm, partnership, corporation or other entity, (A) solicit or service the
business of any of the Company’s clients, any of the Company’s former clients which were clients within twelve months prior to the termination of his employment or any of the prospective clients which were being actively solicited by the
Company at the time of the termination of his employment or (B) attempt to cause or induce any employee of the Company to leave the Company.
3.2.2. Confidentiality. The Executive shall not, during the Term of Employment and at any time thereafter, without the prior express written consent of the
Board, directly or indirectly, divulge, disclose or make available or accessible any Confidential Information (as defined below) to any person, firm, partnership, corporation, trust or any other entity or third party (other than when required to do
so in good faith to perform the Executive’s duties and responsibilities under this Agreement or when (i) required to do so by a lawful order of a court of competent jurisdiction, any governmental authority or agency, or any recognized subpoena
power, or (ii) necessary to prosecute the Executive’s rights against the Company or to defend himself against any allegations). In addition, the Executive shall not create any derivative work or other product based on or resulting from any
Confidential Information (except in the good faith performance of his duties under this Agreement). The Executive shall also proffer to the
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Board’s designee, no later than the effective date of any termination of his employment with the Corporation for any reason, and without
retaining any copies, notes or excerpts thereof, all memoranda, computer disks or other media, computer programs, diaries, notes, records, data, customer or client lists, marketing plans and strategies, and any other documents consisting of or
containing Confidential Information that are in the Executive’s actual or constructive possession or which are subject to his control at such time. For purposes of this Agreement, “Confidential Information” shall mean all information
respecting the business and activities of the Company, or any Affiliate of the Company, including, without limitation, the terms and provisions of this Agreement, the clients, customers, suppliers, employees, consultants, computer or other files,
projects, products, computer disks or other media, computer hardware or computer software programs, marketing plans, financial information, methodologies, know-how, processes, practices, approaches, projections, forecasts, formats, systems, data
gathering methods and/or strategies of the Corporation. Notwithstanding the immediately preceding sentence, Confidential Information shall not include any information that is, or becomes, generally available to the public (unless such availability
occurs as a result of the Executive’s breach of any portion of this Section 3.2.2).
3.2.3. Non-Competition. If the Executive’s employment with the Company terminates for any reason, the Executive, for a period of six months after any such termination, shall not, directly
or indirectly, within or with respect to the United States of America engage, without the consent of the Company, in any business or activity, whether as an employee, consultant, partner, principal, agent, representative, stockholder or in any other
capacity, or render any services or provide any advice to any business, activity, person or entity which competes in any manner with the business for the Company; provided, however, that the Executive’s ownership of not more than 5% of
the stock of any publicly-traded corporation shall not be a violation of this Section 3.2.3. By agreeing to this contractual modification prospectively at this time, the parties intend to make this provision enforceable under the
law(s) of all applicable states so that the entire agreement not to compete and/or this Agreement as prospectively modified shall remain in full force and effect and shall not be rendered
void or illegal. Such modifications shall not affect the payments made to the Executive under this Agreement. The Executive acknowledges that his skills are such that he can be gainfully employed in noncompetitive employment and that the agreement
not to compete will in no way prevent him from earning a living. The Executive understands and agrees that the rights and obligations set forth in this Section 3.2.3 shall extend beyond the Term.
3.2.4. Injunctive Relief. The Executive acknowledges and agrees that the Company will have no adequate remedy at law, and
would be irreparably harmed, if the Executive breaches or threatens to breach any of the provisions of this Section 3.2 of this Agreement. The Executive agrees that the Company shall be entitled to equitable and/or injunctive relief to prevent any
breach or threatened breach of this Section 3.2, and to specific performance of each of the terms of such Section in addition to any other legal or equitable remedies that the Company may have. The Executive further agrees that he shall not, in any
equity proceeding relating to the enforcement of the terms of this Section 3.2, raise the defense that the Company has an adequate remedy at law.
3.2.5. Special Severability. The terms and provisions of this Section 3.2 are intended to be separate and divisible provisions and if, for any reason, any one
or more of them
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is held to be invalid or unenforceable, neither the validity nor the enforceability of any other provision of this Agreement shall thereby be
affected. It is the intention of the parties to this Agreement that the potential restrictions on the Executive’s future employment imposed by this Section 3.2 be reasonable in both duration and geographic scope and in all other respects. If
for any reason any court of competent jurisdiction shall find any provisions of this Section 3.2 unreasonable in duration or geographic scope or otherwise, the Executive and the Company agree that the restrictions and prohibitions contained herein
shall be effective to the fullest extent allowed under applicable law in such jurisdiction.
4. Severance
Payments.
4.1. Severance. The Company shall pay the Executive the
payments and benefits described in Section 4.1.1 through 4.1.4 (the “Severance Payments”) upon the termination of the Executive’s employment with the Company following a Change in Control and during the Term, and upon execution of a
general release in favor of and in form and substance satisfactory to the Company, unless such termination is (i) by the Company for Cause, (ii) by reason of Retirement, (iii) by the Executive without Good Reason, (iv) due to death, or (v) due to
Disability. In addition, the Executive’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason (a) if the Executive reasonably demonstrates that the
Executive’s employment was terminated prior to a Change in Control without Cause (1) at the request of a Person who has entered into an agreement with the Company the consummation of which will constitute a Change in Control (or who has taken
other steps reasonably calculated to effect a Change in Control) or (2) otherwise in connection with, as a result of or in anticipation of a Change in Control, or (b) if the Executive terminates his employment for Good Reason prior to a Change in
Control and the Executive reasonably demonstrates that the circumstance(s) or event(s) which constitute such Good Reason occurred (1) at the request of such Person or (2) otherwise in connection with, as a result of or in anticipation of a Change in
Control. The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. In the event of Disability or death of the Executive after the Date of Termination in respect of any termination without
Cause or any termination for Good Reason, payments and benefits shall be made to the Executive, or the Executive’s beneficiaries or legal representative, as the case may be.
4.1.1. a lump sum payment equal to one times the Executive’s Annual Base Salary plus one times the Executive’s target Bonus amount for the
year in which any such termination occurs.
4.1.2. For a twelve (12) month period after the
Date of Termination, or if sooner, until the Executive reaches the age of sixty-five (65) years, the Company shall arrange to provide the Executive with health insurance benefits substantially similar (and at the same cost) to those that the
Executive is receiving immediately prior to a Change in Control or the receipt of the Notice of Termination; provided, however, that the continued coverage period hereunder shall be deemed to constitute a portion of the
Executive’s entitlement to COBRA benefits as a result of his termination of employment. Benefits otherwise receivable by the Executive pursuant to this
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Section 4.1.2 shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during
such period following the Executive’s termination of employment (and any such benefits actually received by the Executive shall be reported to the Company by the Executive).
4.1.3. Immediate payment of all of Executive’s deferred compensation.
4.1.4. Immediate cash-out, vesting or exercisability of all outstanding equity based or performance based awards.
4.2. Excise Tax Limitation. Notwithstanding any other provisions of this Agreement to the
contrary, in the event that any payments or benefits received or to be received by the Executive in connection with the Executive’s employment with the Company (or termination thereof) would subject the Executive to the excise tax imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Excise Tax”), and if the net-after tax amount (taking into account all applicable taxes payable by the Executive, including any Excise Tax) that the Executive would
receive with respect to such payments or benefits does not exceed the net-after tax amount the Executive would receive if the amount of such payment and benefits were reduced to the maximum amount which could otherwise be payable to the Executive
without the imposition of the Excise Tax, then, to the extent necessary to eliminate the imposition of the Excise Tax, (i) such cash payments and benefits shall first be reduced (if necessary, to zero) and (ii) all other non-cash payments and
benefits shall next be reduced.
5. Termination Procedures and Compensation During Dispute.
5.1. Notice of Termination. After a Change in Control and during the Term, any
purported termination of the Executive’s employment with the Company (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 8 hereof. For
purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment with the Company under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of a
simple majority of the entire membership of the Board at a meeting of the Board, which was called and held for the purpose of considering such termination (which meeting may be a regular meeting of the Board where prior notice of consideration of
such termination is given to members of the Board) finding that, in the good faith opinion of the Board, (i) the Executive engaged in conduct set forth in the definition of Cause herein, and specifying the particulars thereof in detail. For purposes
of this Agreement, any purported termination not effected in accordance with this Section 5.1 shall not be considered effective.
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5.2. Date of Termination. “Date of
Termination” with respect to any termination during the Term, shall mean (i) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have
returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the
case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than thirty (30) days nor more than sixty (60) days,
respectively, after the date such Notice of Termination is given).
6. Successors; Binding Agreement.
6.1. Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and its respective successors and assigns. The Company shall require any successor to all or substantially all of its business and/or assets, whether direct or indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such
succession had taken place.
6.2. Binding Agreement. This Agreement is
personal to the Executive and, without the prior express written consent of the Company, shall not be assignable by the Executive, except as provided in this Section 6.2. If the Executive shall die while any amount would still be payable to the
Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the beneficiary (or beneficiaries) designated by the Executive from time to time in accordance with the procedures for notice set out in Section 8; provided, however, that if there shall be no effective designation of beneficiary
by the Executive, such amounts shall be paid to the executors, personal representatives or administrators of the Executive’s estate. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
7. Miscellaneous.
7.1. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, applied without reference to principles of conflict of laws. Both
the Executive and the Company agree to appear before and submit exclusively to the jurisdiction of the state and federal courts located within Philadelphia, Pennsylvania with respect to any controversy, dispute, or claim arising out of or relating
to this Agreement. The Executive further agrees that the Company may serve you with judicial process via registered or certified mail and that the General Counsel of the Company shall at all times be the Executive’s agent for service of
judicial process, and the Executive hereby appoints the General Counsel of the Company as the Executive’s agent for that and any other related purpose.
7.2. Amendments. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
7.3 Mutual Intent. Both parties
participated in the drafting of the Agreement, and the language used in this Agreement is the language chosen by the Executive and the Company to express their mutual intent. Both the Executive and the Company agree that in the event that any
language, section, clause, phrase or word used in the Agreement is determined to be ambiguous, no presumption shall arise against or in favor of either party and that no rule of strict construction shall be applied against either party with respect
to such ambiguity.
7.4. Notices. All notices and other communications
hereunder shall be in writing and shall be given by hand-delivery to the other parties or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
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| To the Executive: |
Mr. | |
| [Address] | ||
| To the Company: |
Mr. __________ | |
| [Title] | ||
| [Address] | ||
| with a copy to: |
Xxxxxxx X. Xxxxxxxxxx, Esq. | |
| Dechert | ||
| 00 Xxxxxxxxxxx Xxxxx | ||
| Xxx Xxxx, Xxx Xxxx 00000 |
or to such other address as any party shall have furnished to the others in writing in
accordance herewith. Notices and communications shall be effective when actually received by the addressee.
7.5. Withholding. The Company may withhold from any amounts payable under this Agreement such federal, state or local income taxes to the extent the same required to be withheld pursuant to
any applicable law or regulation.
7.6. Severability. The invalidity or
unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
7.7. Captions. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.
7.8. Counterparts. This Agreement may be executed in one or more counterparts each of which shall
be deemed an original instrument, but all of which together shall constitute but one and the same Agreement.
7.9. Beneficiaries/References. The Executive shall be entitled to select (and change) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following the
Executive’s death, and may change such election, in either case by giving the Company written notice thereof. In the event of the Executive’s death or a judicial determination of his incompetence, reference in this Agreement to the
Executive shall be deemed, where appropriate, to refer to his beneficiary(ies), estate or other legal representative(s).
7.10. Entire Agreement. This Agreement contains the entire agreement between the parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the parties with respect thereto.
7.10.1. Representations. The Company represents and warrants that it is fully authorized and empowered to enter into this Agreement.
7.11. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement
or the Executive’s Term of employment hereunder for
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any reason to the extent necessary to the intended provision of such rights and the intended performance of such obligations.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and the Company has caused this Agreement
to be executed in its name on its behalf, all as of the day and year first above written.
| CONSTAR INTERNATIONAL INC. | ||
| By: [Name of Executive] |
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