Exhibit 10.12
EXECUTIVE EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is dated effective as of
January 27, 1999 (the "Effective Date"), between Repap Enterprises Inc., a
Canadian corporation (the "Company"), and F. Xxxxxx Xxxx (the "Executive").
W I T N E S S E T H
WHEREAS, Company desires to employ Executive as the Chairman of the Board
of Directors of the Company;
WHEREAS, Executive desires to serve in such capacity.
WHEREAS, the parties hereto desire to set forth in writing the terms and
conditions of their understandings and agreements.
NOW THEREFORE, in consideration of the foregoing, of the mutual promises
contained herein and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. EMPLOYMENT TERM. The Executive's term of employment under this Agreement
shall be for a term commencing on the Effective Date and, unless terminated
earlier as provided in Section 7, ending on the fifth anniversary thereof
("Initial Term"), which Initial Term shall automatically be extended and renewed
for additional successive two (2) year periods on the anniversary date of the
Effective Date unless terminated by the Company or the Executive by written
notice not less than ninety (90) days immediately prior to the expiration of the
Initial Term or any renewal thereof (the Initial Term and any such extension
being hereinafter collectively referred to as the "Employment Term").
2. POSITION/DUTIES.
(a) During the Employment Term, the Executive shall serve as the Chairman
of the Board of Directors of the Company (the "Board"). In this capacity the
Executive shall have such duties and responsibilities that are consistent with
the Executive's position as the senior executive officer, including the
performance of duties strategic in nature including the creating and
implementing of policies, addressing shareholder-related issues, developing
banking and financing relationships, directing and handling acquisitions,
recapitalizations and similar transactions, addressing financial and strategic
issues, reviewing management and personnel including, without limitation,
determining compensation and benefits for such persons and the employment and
tenure of executives, and retaining and approving professionals including,
without limitation, investment bankers, consultants, actuaries, attorneys,
accountants and experts. While the Executive has general oversight
responsibilities for all aspects of the Company, it is
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not intended that he perform duties relating to the day-to-day manufacturing
operations of the Company.
(b) During the Employment Term, the Executive shall devote
substantially all of his full business time (excluding periods of vacation and
sick leave), energy and skill in the performance of his duties with the Company,
provided the foregoing will not prevent the Executive from (i) participating in
charitable, civic, educational, professional, community or industry affairs or
serving on the board of directors of other noncompetitive companies and (ii)
managing his and his family's personal passive investments and acting as trustee
for trusts (where he currently is trustee or where he becomes trustee for other
trusts); provided that the activities described in (i) and (ii) do not
materially interfere with his duties and responsibilities under this Agreement.
3. BASE SALARY. The Company agrees to pay the Executive a base salary
("Base Salary") at an annual rate of not less than $420,000 , payable in
accordance with the regular payroll practices of the Company, but not less
frequently than monthly. The Executive's Base Salary shall be subject to annual
review by the Board and may be increased, but not decreased. No increase to Base
Salary shall be used to offset or otherwise reduce any obligations of the
Company to the Executive hereunder or otherwise. All dollar amounts set forth in
this Agreement shall be in U.S. dollars.
4. BONUS. During the Employment Term, the Executive shall be entitled to an
annual cash bonus based on increases in the Company's market capitalization as
described in Exhibit B attached hereto.
5. STOCK PLANS.
(a) SIGNING BONUS. The Company shall grant the Executive a signing
bonus of $1.25 million in shares (25 million Common Shares of the Company as of
the Effective Date) which may not be sold on the open market for twelve months
following the Effective Date.
(b) STOCK OPTION GRANT. As soon as practicable following the
Effective Date, Executive shall receive an option to purchase 75 million of the
Company's Common Shares (the "Option"), based on the fair market value on the
date of grant. The Option shall vest as follows: 50% on the first anniversary of
the date of grant and the remaining 50% on the second anniversary on the date of
grant. The Option shall have a ten (10) year term and shall be exercisable, in
whole or part, and at any time during the entire term without regard to the
Executive's termination and to the expiration of the term. It is intended that
the Option be designated as an "incentive stock option" ("ISO") under Section
422 of the Internal Revenue Code to the maximum amount allowable by law; to the
extent that the Option is not an ISO, it shall be treated as a nonqualified
stock option. To the extent that the Option is a nonqualified stock option, it
may be transferred subject to applicable regulatory compliance, if required, by
the Executive to: (i) the Executive's spouse, children, stepchildren,
grandchildren, great-grandchildren and later generations of issue, step-parents
or parents (the "Immediate Family
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Members"); (ii) a trust or trusts for the exclusive benefit of such Immediate
Family Members and/or the Executive; (iii) partnerships in which such Immediate
Family Members are the only partners; or (iv) a limited liability company in
which such Immediate Family Members are the only members.
6. EMPLOYEE BENEFITS
(a) BENEFIT PLANS AND PERQUISITES. The Executive shall be entitled
to participate in all executive-level benefit plans, compensation arrangements
and fringe benefits including, without limitation, pension benefits,
supplementary pension, bonus, health and welfare benefits, and accounting and
tax preparation fees and expenses up to $10,000. The Company shall provide to
the Executive, at the Company's cost, all perquisites to which other senior
executives of the Company (including the Company's President) are entitled to
receive and such other perquisites which are suitable to the character of the
Executive's position with the Company and adequate for the performance of his
duties hereunder but not less than the level being provided to the Executive on
the Effective Date. To the extent legally permissible, the Company shall not
treat such amounts as income to the Executive.
(b) AUTOMOBILE. During the Employment Term, the Company shall pay
the expenses to purchase or lease an automobile of the Executive's choice
consistent with the Executive's position as Chairman. The Company shall pay for
all expenses associated with the use, operation and enjoyment of the automobile
(including insurance coverage but exclusive of gasoline expense unless in
connection with reasonable and necessary business expense).
(c) VACATIONS. The Executive shall be entitled to an annual paid
vacation in accordance with the Company's policy applicable to senior
executives, but in no event less than six (6) weeks per calendar year (as
prorated for partial years and accrued, but not used, with respect to prior
years), which vacation may be taken at such times as the Executive elects with
due regard to the needs of the Company.
(d) EXECUTIVE PENSION. During the Employment Term, the Executive
shall be eligible to participate in the Company's supplementary pension plan. On
Effective Date, the Executive shall be immediately credited with eight (8) years
of pension credit for benefit accrual purposes and shall be fully vested in any
pension accrued thereunder.
(e) LIFE INSURANCE. During the Employment Term, the Company shall
provide Executive with life insurance (such as whole life, split dollar or other
insurance product mutually agreed to between the Company and the Executive which
creates cash surrender value) equal to two and one-half (2 1/2) times base
salary payable to his beneficiary. Upon any termination (other than Executive's
termination for cause), the Executive shall have the right to convert such life
insurance into an individual life insurance policy at no cost to the Executive
and where the Executive becomes owner of such policy.
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(f) DISABILITY. During the Employment Term, the Company shall
provide Executive with long term disability insurance coverage equal to at least
one times base salary. Upon any termination (other than Executive's termination
for cause), the Executive shall have the right to convert such long term
disability policy into an individual long term disability policy. Disability
benefits due under applicable plans and programs of the Company shall be
determined under the provisions of such plans and programs. For purposes of this
Agreement, "Disability" shall be defined as the inability of the Executive to
perform his material duties hereunder due to a physical or mental injury,
infirmity or incapacity for 180 consecutive days or an aggregate period of more
than 210 days in any twelve (12) consecutive month period. The existence or
nonexistence of a Disability shall be determined by a physician agreed in good
faith to by the Executive and the Company.
7. TERMINATION EVENTS. The Executive's employment and the Employment Term
shall terminate on the first of the following to occur:
(a) upon thirty (30) days written notice by the Company to the
Executive of termination due to Disability.
(b) automatically on the date of death of the Executive.
(c) upon written notice by the Company of a termination with or
without Cause. "Cause" shall mean (i) the willful and continuing failure by the
Executive to perform his material obligations with the Company that has a
material adverse effect on the Company or to follow the written, legal and
ethical instructions of the Board (other than any such failure resulting from
his incapacity due to Disability) that has a material adverse effect on the
Company, unless any such failure is corrected within thirty (30) days following
written notice by the Company specifying the details thereof; (ii) the
commission of any act of gross negligence, willful misconduct, fraud or theft by
the Executive (other than good faith expense account disputes) that has a
material adverse affect on the Company; (iii) the conviction of the Executive of
(or the pleading by the Executive of nolo contendere to) any felony that has a
material adverse effect on the Company; or (iv) any willful material breach by
the Executive of the terms of this Agreement, unless any such breach is
corrected within thirty (30) days following written notice by the Company
specifying the details thereof. No act or failure to act on the Executive's part
shall be deemed "willful" unless done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that the Executive's action or
omission was in the best interest of the Company. The Executive shall not be
deemed to have been terminated for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-fourths of the entire membership of the
Board, exclusive of the Executive, at a meeting of the Board called and held for
such purpose (after reasonable written notice to the Executive and an
opportunity for the Executive, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, the Executive was
guilty of the conduct described in (i), (ii), (iii) or (iv) above that has a
material adverse effect on the Company (after giving the Executive the ability
to correct such conduct as described above) and specifying the particulars
thereof in detail.
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(d) upon written notice by the Executive to the Company of a
termination with or without Good Reason. "Good Reason" shall mean, without the
express written consent of the Executive, the occurrence of any of the following
events unless such events are fully corrected in all material respects by the
Company within thirty (30) days following written notification by the Executive
to the Company that he intends to terminate his employment hereunder for one of
the reasons set forth below:
(i) any reduction or diminution (except temporarily
during any period of Disability) in the Executive's titles, positions,
authorities, duties or responsibilities or reporting requirements
(including removal from the Board or reporting to anyone other than the
Board) with the Company as the Executive determines in good faith in
his sole discretion;
(ii) a material breach by the Company of any provisions
of this Agreement as the Executive determines in good faith in his
sole discretion, including, but not limited to, any reduction in
the Executive's Base Salary;
(iii) the failure of the Company to obtain and deliver to
the Executive a satisfactory written agreement from any
successor to the Company to assume and agree to perform this Agreement.
8. CONSEQUENCES OF TERMINATION.
(a) DISABILITY. Upon such termination, the Company shall pay or
provide the Executive (i) any unpaid Base Salary through the date of termination
and any accrued vacation; (ii) any pro rata portion of unpaid bonus accrued
(including the market capitalization bonus) with respect to the fiscal year
ending on or preceding the date of termination; (iii) reimbursement for any
unreimbursed expenses incurred through the date of termination; and (iv) all
other payments, benefits or fringe benefits to which the Executive may be
entitled under the terms of any applicable compensation arrangement or benefit,
equity or fringe benefit plan or program or grant (collectively, "Accrued
Benefits").
(b) DEATH. In the event the Employment Term ends on account of the
Executive's death, the Executive's beneficiary will receive: (i) the Accrued
Benefits; (ii) a lump sum payment equal to (a) Base Salary and bonus (other than
the market capitalization bonus) for remainder of the calendar year in which the
Executive dies plus (b) two (2) times base salary plus two (2) times the highest
bonus (other than the market capitalization bonus) payable in the three years
prior to termination; (iii) continued health and welfare benefits for
twenty-four (24) months after termination date; and (iv) the market
capitalization bonus, in calculation of which the date of death is the
measurement date, as provided in Exhibit B.
(c) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If the Executive's
employment by the Company is terminated (x) by the Company other than for Cause
or (y) by the Executive for Good Reason, the Company shall pay or provide the
Executive
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with: (i) Accrued Benefits; (ii) on or within five (5) days following the date
of termination, a lump sum payment equal to the greater of (A) the Executive's
Base Salary and bonus (other than the market capitalization bonus) for the
remainder of this Agreement's Employment Term or (B) two (2) times Base Salary
plus two (2) times the highest bonus (other than the market capitalization
bonus) for the three (3) years prior to termination; (iii) medical and dental
benefits for the Executive (and eligible dependents) upon the same terms and
conditions in effect on the date of termination for the twenty-four (24) month
period following the date of termination (and COBRA commences at the end of that
period); (iv) life insurance and long-term disability insurance coverage upon
the same terms and conditions in effect on the date of termination for the
twenty-four (24) month period following the date of termination; (v) full
vesting for any stock options; (vi) additional past service credit of eight (8)
years under the supplementary pension plan described in Section 6(d) and an
immediate lump sum payment of the benefit under such supplementary pension plan;
and (vii) the market capitalization bonus, in calculation of which the date of
termination is the measurement date, as provided in Exhibit B.
(d) TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If the Executive's
employment should be terminated (x) by the Company for Cause, or (y) by the
Executive without Good Reason, the Company shall pay to the Executive, unpaid
salary, unpaid accrued vacation and out-of-pocket business expenses incurred
prior to the termination date.
(e) CHANGE OF CONTROL. If the Executive's employment should
terminate within two years following a Change of Control or within six (6)
months prior to a Change of Control (whether by the Executive with or without
Good Reason or by the Company without Cause), the Company shall pay to the
Executive: (i) a lump sum payment equal to the greater of (a) Base Salary and
bonus (other than the market capitalization bonus) payable to the Executive for
the remainder of the Agreement's Employment Term or (b) three (3) times Base
Salary plus three (3) times the highest bonus (other than the market
capitalization bonus) earned during the three (3) years preceding the Change of
Control; (ii) continued health and welfare benefits for thirty-six (36) months
after termination (and COBRA commences at the end of that period); (iii) the
transfer of car ownership; (iv) additional eleven (11) years of past credit
service under the supplementary pension plan described in Section 6(d) and an
immediate lump sum payment of the benefit under such supplementary pension plan;
and (v) the market capitalization bonus, in calculation of which the Change of
Control date is the measurement date, as provided in Exhibit B. Upon a Change of
Control or if the Executive's employment terminates within six (6) months prior
to a Change of Control (whether by the Executive with or without Good Reason or
by the Company without Cause), the Executive's stock options will become fully
vested on such date.
9. INTEREST ON LATE PAYMENTS. Nothing herein shall be construed as
permitting or authorizing delayed payment of any obligation hereunder. However,
in the event that any required payments to the Executive are not paid when due,
the Company shall pay interest from the due date to the date of payment of such
amount at a rate of nine percent (9%) per annum.
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10. NO ASSIGNMENTS. This Agreement is personal to each of the parties
hereto. No party may assign or delegate any rights or obligations hereunder
without first obtaining the written consent of the other party hereto. However,
in the event of the death of the Executive, all rights to receive payments
hereunder shall become rights of the Executive's estate.
(a) The Company shall use its best efforts to require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company 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 had taken place. As used in this Agreement, "Company" shall mean the
Company and any successor to its business and/or assets, which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive and his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would still be payable to him hereunder
had he continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there is no such designee, to his estate.
11. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the Executive, at X.X. Xxx 0000, Xxxxxxxxxxx, XX 00000, and to the
Company at Repap Enterprises Inc.; 000-000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx
00000; Attention: Secretary of the Company (provided that all notices to the
Company shall also be directed to the attention of the Board), with a copy (in
the case of notices to either the Executive or the Company) to Xxxxxx X.
Xxxxxxx, Esq., Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, XX 00000 or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
12. (a) CONFIDENTIALITY. The Executive acknowledges that during the
Employment Term, he has occupied and will continue to occupy a position of trust
and confidence. The Executive shall not, except as may be required to perform
his duties hereunder, to defend his own rights or as required by applicable law,
without limitation in time or until such information shall have become public or
known in the Company's industry other than by the Executive's unauthorized
disclosure, disclose to others or use, whether directly or indirectly, any
Confidential Information regarding the Company. "Confidential Information" shall
mean information about the Company and its clients and customers that is not
disclosed by the Company for financial reporting purposes and that was learned
by the Executive in the course of his employment by the Company, including
(without limitation) any proprietary knowledge, trade secrets, data, formulae,
information and client and customer lists and all papers, resumes, and records
(including computer records) of the documents containing such Confidential
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Information. The Executive acknowledges that such Confidential Information is
specialized, unique in nature and of great value to the Company, and that such
information gives the Company a competitive advantage. The Executive agrees to
deliver or return to the Company, at the Company's request at any time or upon
termination or expiration of his employment or as soon thereafter as possible,
all documents, computer tapes and disks, records, lists, data, drawings, prints,
notes and written information (and all copies thereof) furnished by the Company
or prepared by the Executive during the term of his employment by the Company.
Notwithstanding the foregoing, the Executive may retain his rolodex and similar
phone directories.
(b) NON-SOLICITATION OF CUSTOMERS AND SUPPLIERS. During the
Employment Term and for the one year period thereafter, the Executive shall not,
directly or indirectly, influence or attempt to influence customers or suppliers
of the Company or any of its subsidiaries or affiliates, to divert their
business to any Competitor of the Company.
(c) NON-SOLICITATION OF EMPLOYEES. The Executive recognizes that he
possesses and will possess confidential information about other employees of the
Company relating to their education, experience, skills, abilities, compensation
and benefits, and inter-personal relationships with customers of the Company.
The Executive recognizes that the information he possesses and will possess
about these other employees is not generally known, is of substantial value to
the Company in developing its business and in securing and retaining customers,
and has been and will be acquired by him because of his business position with
the Company. The Executive agrees that, during the Employment Term and for the
one year period thereafter, he will not, directly or indirectly, solicit or
recruit any non-administrative or non- clerical employee of the Company for the
purpose of being employed by him or by any Competitor of the Company on whose
behalf he is acting as an agent, representative or employee and that he will not
convey any such confidential information or trade secrets about other employees
of the Company to any other person.
(d) SURVIVAL OF PROVISIONS. The obligations contained in this
Section 11 shall survive the termination or expiration of the Executive's
employment with the Company and shall be fully enforceable thereafter. If it is
determined by a court of competent jurisdiction in any state that any
restriction in this Section 11 is excessive in duration or scope or is
unreasonable or unenforceable under the laws of that state, it is the intention
of the parties that such restriction may be modified or amended by the court to
render it enforceable to the maximum extent permitted by the law of that state.
13. GROSS-UP PAYMENT. (a) In the event any payment that is either
received by the Executive or paid by the Company on his behalf or any property,
or any other benefit provided to him under this Agreement or under any other
plan, arrangement or agreement with the Company or any other person whose
payments or benefits are treated as contingent on a change of ownership or
control of the Company (or in the ownership of a substantial portion of the
assets of the Company) or any person affiliated with the Company or such person
(but only if such payment or other benefit is in connection with the Executive's
employment by the
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Company) (collectively, the "Total Value") will be subject to the excise tax
(the "Excise Tax") imposed by Code Section 4999 (or any successor provision),
the Company shall, subject to the limitations and requirements specified in
subsection (b) of this Section 13, pay to the Executive an additional amount
(the "Gross-Up Payment") such that the net amount retained by the Executive,
after deduction (i) of any Excise Tax imposed on the Total Value and (ii) of any
Excise Tax, federal, state, or local income, payroll, and/or other taxes imposed
on the Gross-up Payment, shall be equal to the Total Value.
(b) If the Executive determines that he is liable for the Excise Tax
with respect to a payment or other benefit described in subparagraph (a), the
Executive must promptly so notify the Company in writing; provided, however,
that no delay on the part of the Executive in notifying the Company shall
relieve the Company from any obligation hereunder. Upon receipt of such notice
from the Executive, the Company must, within twenty (20) days thereafter, either
(i) notify the Executive, in writing, that the Company agrees with the
Executive's determination of Excise Tax liability, in which case the Company
shall become obligated to immediately pay to the Executive the Gross-Up Payment,
or (ii) submit to the Executive an opinion, prepared by counsel of the Company's
choice which counsel is reasonably satisfactory to the Executive, that the
Executive is not liable for the Excise Tax (the "Tax Opinion"). If the Tax
Opinion is provided to the Executive and the Executive nevertheless chooses not
to contest the assertion of the Excise Tax, the Company shall be relieved of its
obligation to make the Gross-Up Payment specified in subsection (a) of this
Section 13. If the Executive chooses to contest the assertion of the Excise Tax
after receipt of the Tax Opinion, he may do so with counsel of his choice that
is reasonably satisfactory to the Company, and the reasonable legal fees and
expenses of such contest shall be paid by the Company on a monthly basis,
subject to the Company's receipt of proper documentation therefor. If the Excise
Tax is so contested, then the Company shall pay to the Executive the Gross-Up
Payment upon the earlier of ten (10) days after (A) the entry of a final
judgment, decree, or other order by a court of competent jurisdiction that the
Executive is liable for the Excise Tax or (B) a mutual determination of the
Executive and the Company not to proceed further with the contest. The Company
also shall reimburse the Executive at that time for any penalties and interest
attributable to any delay in payment of the Excise Tax that results from a
decision by the Executive not to pay the Excise Tax liability based upon the Tax
Opinion. If, pursuant to this subsection (b), the Company is required to
reimburse the Executive for legal fees and expenses and/or for penalties and
interest incurred by the Executive ("Reimbursement Payments"), then the Company
also shall be required to pay to the Executive an additional gross-up amount
such that the net amount retained by the Executive, after deduction of any
Excise Tax, federal, state, or local income, payroll, and/or other taxes imposed
on the Reimbursement Payments and gross-up amount, shall be equal to the amount
of the Reimbursement Payments.
(c) If the IRS notifies the Executive in writing that the Excise Tax
will or may be assessed against the Executive, if the Company provides the
Executive with the Tax Opinion specified in subsection (b), and if the Executive
chooses to contest the assertion of the Excise Tax, then the Company shall
obtain and deliver to the Executive an irrevocable standby letter of credit (the
"Letter of Credit") issued by a bank acceptable to the Executive and the Company
in
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an amount equal to the amount of the Company's potential payment obligation
under subsection (b), computed as if the Excise Tax were paid to the IRS on the
date the Letter of Credit was obtained. Immediately upon the earlier of (i) a
determination (within the meaning of Code Section 1313) that the Executive is
not liable for the Excise Tax, or (ii) the Company's payment to the Executive of
the full amount of its obligation under subsection (b), the Executive shall xxxx
the Letter of Credit "canceled" and return it to the Company. In lieu of such a
Letter of Credit, the Company may choose, under the circumstances described in
the first sentence of this subsection (c), to secure its obligations under
subsection (b) by establishing an appropriate escrow account with terms
reasonably satisfactory to the Executive, and by depositing therein the same
amount as would be required for the Letter of Credit.
(d) The obligations contained in this Section 13 shall survive the
termination or expiration of the Executive's employment with the Company and
shall be fully enforceable thereafter.
14. ATTORNEY'S FEES. If the Executive incurs legal or other fees and
expenses in an effort to establish entitlement to compensation and benefits
under this Agreement or otherwise enforce the terms of this Agreement, the
Company shall advance amounts to the Executive for such fees and expenses
subject to and within ten (10) days of the receipt by the Company or proper
documentation therefor and shall reimburse the Executive for any additional
amount of legal or other fees and expenses.
15. SECTION HEADINGS. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
16. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity of unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
17. COUNTERPARTS. This Agreement may be executed in several counter
parts, each of which shall be deemed to be an original but all of which together
will constitute one and the same instruments.
18. INDEMNIFICATION. The Company hereby covenants and agrees to
indemnify the Executive and hold him harmless to the fullest extent permitted by
law and under the By-laws of the Company against and in respect to any and all
actions, suits, proceedings, claims, demands, judgments, costs, expenses
(including attorney's fees), losses, and damages resulting from the Executive's
good faith performance of his duties and obligations hereunder. The Company,
within ten (10) days of presentation of invoices, shall advance to the Executive
reimbursement of all legal fees and disbursements incurred by the Executive in
connection with any potentially indemnifiable matter. The Company will cover the
Executive under directors' and officers' liability insurance both during and,
while potential liability exists (but no less than
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six (6) years), after the Employment Term in the same amount and to the same
extent as the Company covers its other officers and directors.
19. 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 the Executive and such officer as may be
specifically designated by the Board. 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 or similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Connecticut without
regard to its conflicts of law principles. All references to sections of the
Exchange Act shall be deemed also to refer to any successor provisions to
sections.
20. FULL SETTLEMENT. Except as set forth in this Agreement, the
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
circumstances, including without limitation, set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obliged to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, nor shall the
amount of any payment thereunder be reduced, by any compensation earned by the
Executive as a result of employment by another employer.
21. REPRESENTATION. The Executive represents and warrants to the
Company that he has the legal right to enter into this Agreement and to perform
all of the obligations on his part to be performed hereunder in accordance with
its terms and that he is not a party to any agreement or understanding, written
or oral, which could prevent him form entering into this Agreement or performing
all of his obligations hereunder. In the event of a breach of such
representation or warranty or if there is any other legal impediment that
prevents the Executive from entering into this Agreement or performing all of
his obligations hereunder, the Company shall have the right to terminate this
Agreement immediately and shall have no further obligation to the Executive
hereunder.
22. SUCCESSORS. This Agreement is binding on any and all
successors of the Company.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
REPAP ENTERPRISES INC.
By: ______________________________________
Xxxxxxx X. Xxxxxxxx
Chairman of the Compensation Committee
of the Board of Directors
By: ______________________________________
Xxxxxxxx X. Xxxxxxx
Vice President, Finance
F. XXXXXX XXXX
__________________________________________
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EXHIBIT A
"Change of Control" means the occurrence of any of the following
events: (i) any sale, acquisition, transfer or other conveyance (other than to
the Company or a wholly owned subsidiary of the Company), whether direct or
indirect, by any person or group who become the beneficial owner of ten percent
(10%) or more of the total Voting Stock; (ii) reduction in share ownership by
Third Avenue Fund to less than ten percent (10%), other than a reduction caused
solely by the conversion of any of the Company's outstanding debt as of the
Effective Date into securities of the Company; (iii) during any period of
twenty-four (24) consecutive months, individuals who at the beginning of such
period constituted the Board (together with any new directors whose election by
such Board or whose nomination of election by the shareholders of the Company
was approved by a vote of a majority of the directors then still in the office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved), cease for any reason to
constitute a majority of the Board then in office; (iv) any merger,
consolidation, amalgamation or sale of assets of the Company under circumstances
where the beneficial owners of ten percent (10%) or more of the equity
securities of the surviving entity of such transaction were not holders of
Voting Stock immediately prior to the consummation of the transaction; or (v) a
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
For purposes of this definition, (i) the terms "person" and "group"
shall have the meanings used for purposes of Rules 13d and 13d-5 of the Exchange
Act, whether or not applicable; and (ii) the term "beneficial owner" shall have
the meaning used in Rules 13d-3 and 13d-5 under the Exchange Act, whether or not
applicable, except that a person shall be deemed to have "beneficial ownership"
of all shares that any such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time or upon the
occurrence of certain events.
"Voting Stock" means shares of the Company having generally the right
to vote in the election of directors of the Company.
EXHIBIT B
Market Capitalization Bonus
---------------------------
The Company will pay Executive an annual market appreciation bonus
o 6% of that portion of the Company's market capitalization in excess of
$38,000,000, but equal to or less than $48,000,000.
o 10% of the portion of the Company's market capitalization in excess of
$48,000,000, but equal to or less than $96,000,000.
o 12% of the portion of the Company's market capitalization in excess of
$96,000,000, but equal to or less than $144,000,000.
o 16% of the portion of the Company's market capitalization in excess of
$144,000,000, but equal to or less than $192,000,000.
o 20% of the portion of the Company's market capitalization in excess
of $192,000,000.
1. Except in the case of a Change of Control, each year's bonus will be
reduced by the prior year's bonus. Market capitalization to be determined
by multiplying the relevant Average Share Value (the average closing price
of the Company's Common Shares for over a 20 consecutive trading day period
prior to each "applicable measurement date", as defined below, except in a
Change of Control the Average Share Value shall equal the value of the
consideration paid to purchase the Company's Common Shares in connection
with such Change of Control, if greater) by total number of Common Shares
issued and outstanding on the applicable measurement date (i.e., the last
business day of each fiscal year), except that issuances of Common Shares
at or below the fair market value of such shares after the Effective Date
by the Company in exchange for the outstanding debt of the Company as of
the Effective Date or issuances of Common Shares after the Effective Date
upon the conversion of convertible preferred shares received in exchange
for the outstanding debt of the Company as of the Effective Date, provided
that such conversion is at or below fair market value, shall not count as
issued and outstanding for purposes of this calculation.
2. Bonus paid in cash. Executive may defer bonus in accordance with applicable
tax rules.
3. The "applicable measurement date" will be the last business day of each
fiscal year, except that if Executive dies, becomes disabled, terminates
without Cause or terminates with or without Good Reason, the termination
date will be the applicable measurement date. In the event of a Change of
Control, the applicable measurement date will be the date of Change of
Control.
