EXHIBIT 10.3(a)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 30th day of May, 2003 by and among
Polaroid Holding Company and Polaroid Corporation, each a Delaware corporation,
and Xxxx Xxxxxxx Xxxxxx (the "Executive"). Although the obligations hereunder
are joint and several obligations of Polaroid Holding Company and Polaroid
Corporation, the term "Polaroid" shall refer to Polaroid Holding Company, except
where the context requires that it include both Polaroid Holding Company and
Polaroid Corporation.
AGREEMENT
In consideration of the mutual covenants and representations contained herein,
and for other good and valuable consideration, the receipt of which is mutually
acknowledged, Polaroid and the Executive (individually a "Party" and together
the "Parties") agree as follows:
1. TERM.
Polaroid will employ the Executive, and the Executive accepts such employment,
under the terms of this Agreement for a term of three (3) years (the "Term")
commencing March 1, 2003 (the "Effective Date") and ending at midnight on
February 28, 2006. Unless either Party hereto shall have given the other 180
days prior written notice of its or his intention not to renew this Agreement,
upon the expiration of the Term, and subject to such other agreements as
Polaroid and the Executive may then enter into, this Agreement shall renew, in
accordance with its terms, for an additional one (1) year, and, subject to that
same notice period, from year to year thereafter. Any such renewal shall be
considered to be part of the Term. Notwithstanding the foregoing, the
Executive's employment hereunder may be earlier terminated, as provided in
Section 4 or Section 5 below. The term "Employment Period" as used herein means
the period of time between the Effective Date and the earlier of the termination
of the Executive's employment hereunder or the expiration of the Term.
2. EMPLOYMENT.
(a) POSITION AND REPORTING. Polaroid hereby employs the Executive
for the Employment Period as its President and Chief Executive Officer on the
terms and conditions set forth in this Agreement. The Executive shall report
only to the Board of Directors of Polaroid (the "Board"), the Chairman of the
Board, or the Chairman of such committee(s) of the Board as the Board or the
Chairman of the Board shall designate.
(b) AUTHORITY AND DUTIES. The Executive shall exercise such
authority, perform such executive duties and functions and discharge such
responsibilities as are (i) reasonably associated with the Executive's position,
(ii) commensurate with the authority vested in the Executive's position pursuant
to this Agreement and (iii) consistent with the By-Laws of Polaroid. During the
Employment Period, the Executive shall devote his full business time, skill and
efforts during normal working hours to the business of Polaroid. Notwithstanding
the foregoing, the Executive may, without seeking or obtaining approval by the
Board, (i) make and
manage personal business investments of his choice (in the case of publicly-held
corporations, such investments are not to exceed one percent (1%) of the
outstanding voting stock), (ii) serve in any capacity with any civic,
educational or charitable organization, or any trade association, and (iii)
serve on the boards of directors of other corporations or entities, provided
that the activities and service described in this sentence do not materially
interfere with the performance of his duties hereunder. The Executive will,
however, provide the Board with reasonable notice of his intention to accept any
directorship that he does not hold on the date of this Agreement.
(c) DIRECTORSHIP. Prior to the date of this Agreement, the
Executive was appointed as a member of the Board, in accordance with Polaroid's
By-Laws.
3. COMPENSATION AND BENEFITS.
(a) SIGNING BONUS. Prior to the date of this Agreement, the
Executive has been paid by Polaroid a non-refundable signing bonus of $100,000
(less legally required tax and other withholdings).
(b) SALARY. During the Employment Period, Polaroid shall pay to the
Executive, as compensation for the performance of his duties and obligations
under this Agreement, a base salary at the rate of $600,000 per annum (the "Base
Salary"), payable in arrears not less frequently than monthly in accordance with
the normal payroll practices of Polaroid. The Base Salary shall be subject to
review each year for possible increase by the Board, and once increased shall in
no event be decreased from its then-existing level during the Employment Period.
(c) ANNUAL BONUS. During the Employment Period, the Executive shall
have the opportunity to earn an annual cash bonus (the "Annual Bonus"). The
target Annual Bonus shall be equal to 55% of the Executive's then-existing Base
Salary (the "Target Bonus"), contingent upon the achievement of certain
corporate and/or individual performance goals established by the Board in
accordance with the terms of Polaroid's incentive compensation plan for
executive officers of Polaroid, as in effect from time to time. The Annual Bonus
actually payable may be more or less than 55% of Base Salary depending on the
terms of the bonus plan as amended from time to time by the Board and the extent
to which that plan provides for payment when the goals established thereunder
have been partially satisfied or exceeded. The performance goals for each
calendar year shall be set by the Board after consultation with the Executive.
Those goals for 2003 shall be communicated to the Executive in writing as soon
as reasonably practicable after the Effective Date, but no later than June 1,
2003, and for each subsequent calendar year within the first 90 days of that
calendar year thereafter, beginning with 2004. The Annual Bonus payable for any
calendar year (or in the case of 2003 partial year) shall be paid within the
first 75 days of the following calendar year. The Annual Bonus payable for 2003
shall be calculated as though the Executive had been employed by Polaroid from
January 1, 2003 through December 31, 2003, and thus the Annual Bonus for 2003
shall not be pro rated in any way unless Section 5(a)(iii) applies.
(d) OTHER BENEFITS. During the Employment Period, the Executive
shall be entitled to participate in all of the compensation, incentive and
benefit plans, programs and arrangements in effect from time to time during the
Employment Period that are generally
2
available to senior executives of Polaroid, subject to and on a basis
consistent with the terms, conditions and overall administration of such
plans, programs and arrangements. With respect to long-term incentive
compensation plans, the Executive shall participate in all such plans
applicable to senior executive of Polaroid and commensurate with his position
as President and Chief Executive Officer of Polaroid, as such plans are
implemented and amended by Polaroid from time to time. In addition, during
the Employment Period, the Executive shall immediately be entitled to a
minimum 4-weeks paid vacation per calendar year, including 2003, and all
those fringe benefits and perquisite arrangements generally applicable to
senior executives of Polaroid, including, but not limited to, a $5,000 annual
financial counseling allowance.
(e) BUSINESS AND LEGAL EXPENSES. During the Employment Period,
Polaroid shall reimburse the Executive for all documented reasonable business
expenses incurred by the Executive in the performance of his duties under this
Agreement, in accordance with Polaroid's policies. In addition, Polaroid shall
promptly reimburse the Executive for the actual and reasonable legal expenses
incurred by him prior to or contemporaneously with the date of this Agreement,
in connection with the preparation, negotiation and signing of this Agreement,
to a maximum of $20,000.
(f) EQUITY COMPENSATION.
(i) The Executive has been granted the opportunity to purchase
70,734 restricted shares of Polaroid's common stock at a price of $0.01 per
share subject to the provisions of this Agreement and the provisions of
Polaroid's Restricted Stock Purchase Agreement, Polaroid's Amended and Restated
Securities Holders Agreement, and Polaroid's Amended and Restated Registration
Rights Agreement, copies of each of which are attached hereto as Exhibits X-0,
X-0 and A-3, respectively. Together, these three (3) agreements constitute
Polaroid's Restricted Stock Program. A summary of the material terms of
Polaroid's Restricted Stock Program is attached as Exhibit A-4. By accepting the
granted opportunity hereunder, the Executive acknowledges that he has reviewed,
with such assistance of counsel or other advisers as he deemed necessary, each
of the agreements listed above and agrees to be bound by them. For the
avoidance of doubt, the number of restricted shares, 70,734, was determined
before, and without regard to, the pending split of the Company's common
stock approved by the Board at its meeting on May 21, 2003.
(ii) Twenty-five percent (25%) of the restricted stock purchased
pursuant to Section (f)(i) above shall vest on July 31, 2003. The remaining 75%
shall vest in accordance with Polaroid's Restricted Stock Program at the rate of
12.5% beginning January 31, 2004 and at the end of every sixth month thereafter
provided the Executive is then employed by Polaroid. The effect of vesting on
the Executive's right in his restricted stock shall be governed by Polaroid's
Restricted Stock Program, as in effect from time to time.
(iii) Prior to the date of this Agreement, and in accordance
with the provisions of the Restricted Stock Program, the Executive made an
election to include in gross income on his 2003 federal income tax return,
the excess of the value of Polaroid's common stock purchased by the Executive
under Section 3(f)(i) above, determined at $1.00 per share, over the price
paid by the Executive, $0.01 per share, in accordance with Section 83(b) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder.
3
(g) TEMPORARY LIVING AND TRAVEL EXPENSES. Polaroid shall promptly
reimburse the Executive for expenses actually and reasonably incurred by the
Executive, including, without limitation, the cost of an apartment, use of a car
and reasonable travel expenses to visit his family for the period from the
Effective Date through the earlier of the date the Executive's family relocates
to the Boston, Massachusetts area or August 31, 2003. If the Executive and his
family do not relocate to the Boston area by August 31, 2003, the Executive and
Polaroid agree to discuss, in good faith, continuing such temporary living and
travel expense reimbursement beyond August 31, 2003.
(h) RELOCATION EXPENSES. The Executive shall be entitled to be paid
all reasonable and customary expenses of relocating his home and family from
Texas to the Boston, Massachusetts area in accordance with the terms of
Polaroid's relocation policy as currently in effect.
(i) GROSS UP PROVISIONS. Expense reimbursements or payments under
Sections 3(g) and 3(h) above shall be grossed up for applicable taxes to the
extent necessary to ensure that, after payment of all required taxes with
respect to such reimbursements or payments, the remaining amount of such
reimbursements or payments is sufficient to discharge the expenses the Executive
is entitled to have paid or reimbursed under Sections 3(g) and 3(h).
4. TERMINATION OF EMPLOYMENT.
(a) TERMINATION FOR CAUSE. Polaroid may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement and subject to
the Executive's opportunity to cure as provided in Section 4(c) below, Polaroid
shall have Cause to terminate the Executive's employment hereunder if such
termination shall be the result of:
(i) Willful fraud or willful dishonesty in connection with the
Executive's performance hereunder that results in material economic harm to
Polaroid; provided that no act will be considered "willful" unless it is done by
the Executive in bad faith and without reasonable belief that the Executive's
action was in the best interests of Polaroid;
(ii) Continued failure by the Executive (after written
notification from the Board is received by the Executive specifying such
failure) to substantially perform his duties hereunder that results in material
economic harm to Polaroid; or
(iii) Conviction for, or plea of NOLO CONTENDERE to a charge of
commission of, a felony (other than in connection with Limited Vicarious
Liability) involving moral turpitude or that can reasonably be expected to cause
material economic harm to Polaroid or material harm to its reputation or to
materially impair the Executive's ability to perform his duties hereunder.
"Limited Vicarious Liability" shall mean any liability which is (1) based on
acts of Polaroid for which the Executive is responsible solely as a result of
his office(s) with Polaroid and (2) provided that (A) he was not directly
involved in such acts and either had no prior knowledge of such intended actions
or promptly acted reasonably and in good faith to attempt to prevent the acts
causing such liability or (B) he did not have a reasonable basis to believe that
a law was being violated by such acts.
4
(b) TERMINATION FOR GOOD REASON. The Executive shall have the right
at any time during the Term to terminate his employment with Polaroid for Good
Reason. For purposes of this Agreement and subject to Polaroid's opportunity to
cure as provided in Section 4(c) below, the Executive shall have Good Reason to
terminate his employment hereunder if such termination shall be the result of
any of the following without the Executive's prior written consent:
(i) Reduction of the Executive's then-existing Base Salary or
reduction of the Executive's Target Bonus to less than 55% of his then-existing
Base Salary;
(ii) Failure to elect or to reelect the Executive as a member of
the Board;
(iii) Removal of the Executive as President and Chief Executive
Officer of Polaroid, or his involuntary removal as a member of the Board;
(iv) A material diminution in the Executive's duties or
responsibilities or the assignment to him of any duties or responsibilities
adversely inconsistent with the Executive's position and status as President and
Chief Executive Officer;
(v) A change in the Executive's reporting relationship such that
he no longer reports directly to the Board or Chairman of the Board or to the
properly authorized Board Committee Chairman;
(vi) The Executive being required to relocate to a principal
place of employment more than 30 miles from Waltham, Massachusetts;
(vii) Polaroid's failure to obtain a satisfactory agreement from
any successor to all or substantially all of Polaroid's assets or business to
assume and agree to perform this Agreement within 15 days after a merger,
consolidation, sale or similar transaction; or
(viii) Any material breach of this Agreement by Polaroid.
(c) NOTICE AND OPPORTUNITY TO CURE. Notwithstanding the foregoing,
it shall be a condition precedent to Polaroid's right to terminate the
Executive's employment for Cause, and the Executive's right to terminate his
employment for Good Reason, that (1) the Party seeking the termination shall
first have given the other Party written notice stating with specificity the
reason for the termination ("breach"); (2) if the Executive is terminated for
Cause, Polaroid provides the Executive the written notice described in (1) at
least 10 days before the Board meeting called to make such determination and the
Executive and his counsel are given the opportunity to answer such grounds for
termination in writing, delivered to the Chairman of the Board, before a Board
vote on the existence of Cause; and (3) if such breach is susceptible of cure or
remedy, a period of 30 days from and after the giving of such notice shall have
elapsed without the breaching Party having effectively cured or remedied such
breach during such 30-day period, unless such breach cannot be cured or remedied
within 30 days, in which case the period for remedy or cure shall be extended
for a reasonable time (not to exceed an additional 30 days), provided the
breaching Party has made and continues to make a diligent effort to effect such
remedy or cure.
5
(d) TERMINATION UPON DEATH OR PERMANENT AND TOTAL DISABILITY. The
Employment Period shall be terminated by the death of the Executive. The
Employment Period may be terminated by Polaroid if (1) the Executive shall
become eligible for long-term disability benefits as such term is defined in
Polaroid's long-term disability insurance program, policy or contract as in
effect from time to time for the benefit of employees of Polaroid or (2) by
reason of a physical or mental impairment, the Executive is unable to
substantially perform his duties hereunder for a period of six (6) consecutive
months (either (1) or (2), a "Disability"). If the Employment Period is
terminated by reason of a Disability, Polaroid shall give 30 days' advance
written notice to that effect to the Executive. If the existence of a Disability
hereunder is in dispute, it shall be resolved by two (2) licensed physicians,
one appointed by the Executive and one appointed by Polaroid. If the two (2)
physicians so selected cannot agree as to whether or not the Executive has a
Disability, the two (2) physicians so selected shall designate a third physician
and a majority of the three (3) physicians so selected shall determine whether
or not the Executive has a Disability.
(e) VOLUNTARY TERMINATION. The Executive may voluntarily terminate
his employment without Good Reason (other than due to death or Disability), and
such termination shall not be deemed to be a breach of this Agreement.
5. CONSEQUENCES OF TERMINATION.
(a) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. In the event of
termination of the Executive's employment hereunder by Polaroid without Cause
(other than upon death, Disability or the expiration of the Term of this
Agreement) or by the Executive for Good Reason, the Executive shall be entitled
to the following severance pay and benefits described below. The term "Severance
Period" as used herein shall mean the period of 24 months beginning on the date
the Executive's employment is terminated hereunder under circumstances that
entitle the Executive to severance pay under this Section 5.
(i) CASH SEVERANCE PAY - severance payments, payable in cash,
determined as follows:
(A) If the Executive's employment is terminated under this
Section 5(a) prior to the first anniversary of the Effective Date, the Executive
shall be entitled to be paid an amount equal to 200% of the Executive's
then-existing Base Salary and 200% of the Executive's then-existing Target Bonus
(without taking into account any reduction that would be deemed to be Good
Reason under Section 4(b)(i) above), in both cases for the year of termination,
payable in two (2) equal installments, one at the time of termination of
employment and one on the first anniversary of that termination date; or
(B) If the Executive's employment is terminated under this
Section 5(a) after the first anniversary of the Effective Date, the Executive
shall be entitled to be paid an amount equal to 200% of the Executive's Base
Salary (without taking into account any reduction that would be deemed to be
Good Reason under Section 4(b)(i) above) for the year of termination, payable in
two (2) equal installments, one at the time of termination of employment and one
on the first anniversary of that termination date.
6
(ii) BENEFITS CONTINUATION - continuation for the Severance
Period of coverage under the group medical care, disability and life insurance
benefit plans or arrangements in which the Executive is participating at the
time of termination of the Executive's employment on the terms and conditions
then prevailing, or, to the extent such amendments are generally applicable to
senior executives of Polaroid, as such plans or arrangements may be amended from
time to time thereafter; PROVIDED, HOWEVER, that Polaroid's obligation to
provide such coverages shall be terminated if the Executive obtains
substantially comparable coverage (on a benefit-by-benefit basis) from another
employer at any time during the Severance Period. The Executive shall be
entitled, at the expiration of the Severance Period, to elect continued medical
coverage in accordance with Section 4980B of the Code (or any successor
provision thereto);
(iii) BONUS PAYMENT - a pro rata portion of the Annual Bonus that
would otherwise have been paid to the Executive for the year of his termination,
based upon the degree to which the performance targets under Section 3(c) above
were satisfied for that year. The pro rata portion will be determined by
multiplying the otherwise payable Annual Bonus by a fraction, the numerator of
which is the number of days that the Executive was employed by Polaroid during
the year of the Executive's termination of employment (or in the case of 2003
the number of days from January 1, 2003 through the date of the Executive's
termination of employment) and the denominator of which is 365. The pro rata
Annual Bonus, if any, so payable, will be paid when that Annual Bonus would
otherwise have been paid had the Executive remained employed; and
(iv) OUTPLACEMENT - Polaroid will provide outplacement services
to the Executive, such services to be provided by a mutually agreeable
outplacement services provider, expert in the field of executive outplacement,
to a maximum of $35,000.
(b) OTHER TERMINATIONS. In the event of termination of the
Executive's employment hereunder for any reason other than those specified in
Section 5(a) above, the Executive shall not be entitled to any bonus,
severance pay or benefits contemplated by the foregoing, except as may
otherwise be provided under any applicable benefit plans or award agreements
relating to the Executive, provided that, if the Executive's employment is
terminated on account of death or Disability, the Executive, or the
Executive's estate, shall be entitled to be paid, in addition to the Accrued
Rights described in Section 5(c) below, a pro rata portion of the Annual
Bonus that would otherwise have been paid to the Executive for the year of
his termination, based upon the degree to which the performance targets under
Section 3(c) above were satisfied for that year. The pro rata portion will be
determined by multiplying the otherwise payable Annual Bonus by a fraction,
the numerator of which is the number of days that the Executive was employed
by Polaroid during the year of the Executive's termination of employment (or
in the case of 2003 the number of days from January 1, 2003 through the date
of the Executive's termination of employment) and the denominator of which is
365. The pro rata Annual Bonus, if any, so payable, will be paid when that
Annual Bonus would otherwise have been paid had the Executive remained
employed.
(c) ACCRUED RIGHTS. Notwithstanding the foregoing provisions of
this Section 5, in the event of termination of the Executive's employment
hereunder for any reason, the Executive shall be entitled to (i) payment of any
unpaid portion of his Base Salary through the date of his termination of
employment, (ii) payment of any earned but unpaid Annual Bonus (unless such
termination is for Cause), (iii) payment or reimbursement due and owing by
7
Polaroid in accordance with Sections 3(e), 3(f), 3(g) and 3(h) above, and
(iv) payment of or entitlement to any other accrued and vested but unpaid
compensation, benefits or rights solely in accordance with the terms of any
incentive compensation or employee benefit plan, program, policy or
arrangement of Polaroid.
(d) SURVIVAL. Polaroid's obligation to pay amounts under this
Section 5 on account of a termination of the Executive's employment before the
end of the Term shall survive the termination of this Agreement.
(e) MITIGATION AND OFFSETS. Following termination of the
Executive's employment hereunder, the Executive shall have no duty to mitigate
Polaroid's obligation, when applicable, to pay severance pay or provide benefits
following such termination, and those amounts payable by Polaroid shall be
subject to termination or offset only as specified in Section 5(a)(ii) above or
in connection with a breach by the Executive of his obligations under Sections
6, 7, 8 and 9 below.
6. CONFIDENTIALITY AND INVENTIONS.
The Executive agrees that he will not at any time during the Term or at any time
thereafter for any reason, in any fashion, form or manner, either directly or
indirectly, divulge, disclose or communicate to any person, firm, corporation or
other business entity, in any manner whatsoever, any confidential information or
trade secrets concerning the business of Polaroid, including, without limiting
the generality of the foregoing, the techniques, methods or systems of its
operation or management, any information regarding its financial matters, or any
other material information concerning the business of Polaroid, its manner of
operation, its plan or other material data. The provisions of this Section 6
shall not apply to (i) information that is public knowledge other than as a
result of disclosure by the Executive in breach of this Section 6; (ii)
information disseminated by Polaroid to third parties in the ordinary course of
business; (iii) information lawfully received by the Executive from a third
party who, after such inquiry by the Executive as is reasonable under the
circumstances, is not known by the Executive to be bound by a confidential
relationship to Polaroid, or (iv) information disclosed under a requirement of
law or as directed by applicable legal authority having jurisdiction over the
Executive.
7. NON-COMPETITION.
The Executive agrees that he shall not during the Employment Period and for the
longer of one (1) year thereafter, or, if applicable, the Severance Period,
without the approval of the Board, directly or indirectly, alone or as partner,
joint venturer, officer, director, employee, consultant, agent, independent
contractor or stockholder (other than as provided below) of any company or
business, engage in any "Competitive Business" within the United States. For
purposes of the foregoing, the term "Competitive Business" shall mean any of
Xxxxxxx Kodak Company, Fuji Photo Film Co., Ltd., Agfa-Gevaert Group, or any of
their subsidiaries, joint venturers or direct business partners. Notwithstanding
the foregoing, the Executive shall not be prohibited during the non-competition
period applicable above from acting as a passive investor where he owns not more
than one percent (1%) of the issued and outstanding capital stock of any
publicly-held company.
8
8. NON-SOLICITATION.
The Executive agrees that he shall not during the Employment Period and for the
longer of one (1) year thereafter, or, if applicable, the Severance Period,
without the prior written consent of Polaroid, directly or indirectly solicit,
attempt to solicit, induce, or otherwise cause (i) any employee of Polaroid or
any Polaroid affiliate (other than the Executive's personal administrative
assistant) to terminate his or her employment in order to become an employee,
consultant or independent contractor to or for any other employer by which the
Executive is then employed or in which the Executive has a material interest. A
general advertisement of employment opportunities with any such other employer
shall not be considered direct or indirect solicitation hereunder.
9. NON-DISPARAGEMENT.
The Executive and Polaroid agree that during the Employment Period and for the
longer of one (1) year thereafter, or, if applicable, the Severance Period,
neither Party, including in Polaroid's case its directors, officers, management
employees and One Equity Partners, LLC and all of its members, officers and
management employees shall, except as may be compelled by law, regulation or
legal process, make statements or representations or otherwise communicate,
directly or indirectly, in writing or orally, nor otherwise take any action
which may, directly or indirectly, disparage or be damaging to the business or
reputation of the other Party, his or its affiliates or its present or former
directors, shareholders, management or employees.
10. BREACH OF RESTRICTIVE COVENANTS.
The Parties agree that a breach or violation of Sections 6 through 9 above will
result in immediate and irreparable injury and harm to Polaroid, and that
Polaroid shall have, in addition to immediate forfeiture of any right to
continuing severance pay, if any, and any and all remedies of law and other
consequences under this Agreement, the right to seek an injunction, specific
performance or other equitable relief to prevent the violation of the obligation
hereunder.
11. INDEMNIFICATION.
During the Employment Period and thereafter, Polaroid shall indemnify the
Executive and hold him harmless, to the fullest extent permitted by, and
subject to the limitations of, the Delaware General Corporation Law, for all
claims against him by third parties by reason of his employment with
Polaroid, including without limitation, all costs, charges and expenses
(including attorneys' fees) whatsoever incurred or sustained by the Executive
in connection with any action, suit or proceeding (other than any action,
suit or proceeding brought by or in the name of Polaroid against the
Executive) to which he may be made a party by reason of being or having been
a director, officer or employee of Polaroid or his serving or having served
any other enterprise as a director, officer or employee at the request of
Polaroid. In addition, Polaroid shall maintain officers' and directors'
liability insurance for the benefit of the directors and officers of
Polaroid, which insurance shall cover the Executive with respect to all such
costs, charges and expenses. Notwithstanding any contrary provision of the
Restricted Stock Program, if federal income taxes are assessed against the
Executive by reason of a determination by the Internal Revenue Service (the
"IRS") that the fair market value of
9
Polaroid's common stock was greater than $1.00 per share when that common stock
was purchased by the Executive, Polaroid shall indemnify, and hold harmless, the
Executive from and against (i) the excess of the taxes so assessed over the
taxes that would have been payable by the Executive had the IRS accepted the
value reported on the Executive's Section 83(b) election filed in accordance
with Section 3(f)(iii) above and (ii) any interest or penalties assessed against
the Executive on account of that increased value. Any indemnification payments
hereunder shall be grossed up for taxes to the extent required to ensure that
after payment of such additional taxes, interest and penalties the Executive
will be in the same economic position as he would have been if his timely
Section 83(b) election had been honored in accordance with its terms. As a
condition of indemnification hereunder, the Executive shall notify Polaroid
promptly, but in any case within 10 business days, of any assertion by the IRS
that the value of Polaroid common stock was greater, at the time of such
election, than was reported on the Executive's election under Section 83(b) of
the Code. Polaroid shall have the right with respect to the determination of an
increase in federal income taxes to require the Executive to appeal the
assertion of any such increase, provided that Polaroid shall promptly reimburse
the Executive for all expenses, including counsel and accounting fees, incurred
in connection with any such proceeding. Alternatively, Polaroid may undertake
any such proceeding, but only with respect to the value of Polaroid common stock
and its tax effect on the Executive, and the Executive shall cooperate with
Polaroid in any such proceeding.
12. NOTICES.
For the purposes of this Agreement, notices, demands 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 (unless otherwise specified)
mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to Polaroid, to:
Chief Legal Officer
Polaroid Corporation
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
(b) If to the Executive, to:
Xx. Xxxx Xxxxxxx Xxxxxx
President and Chief Executive Officer
Polaroid Corporation
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
10
With a copy to:
Xxxxxxx Xxxxxxx, Esq.
Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or to such other address as a Party hereto shall designate to the other Party by
like notice, provided that notice of a change of address shall be effective only
upon receipt thereof.
13. ARBITRATION: LEGAL FEES.
(a) Except as provided in Section 10 above, any dispute or
controversy arising under or in connection with this Agreement or the employment
relationship between Polaroid and the Executive shall be settled exclusively by
arbitration in Massachusetts in accordance with the rules of the American
Arbitration Association then in effect, provided that the arbitrator shall be
chosen by mutual agreement between the Executive and Polaroid, unless Polaroid
and the Executive are unable to agree on an arbitrator, in which case each of
Polaroid and the Executive shall select an arbitrator and the two (2) selected
arbitrators shall select a third arbitrator who will adjudicate and resolve the
dispute. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. Polaroid shall reimburse the Executive for all reasonable legal
fees and costs and other fees and expenses that the Executive may incur in
respect of any dispute or controversy against Polaroid arising under or in
connection with this Agreement; PROVIDED, HOWEVER, that Polaroid shall not
reimburse any such fees, costs and expenses if (i) the arbitrator determines
that an action brought by the Executive was substantially without merit or (ii)
the Executive is otherwise unsuccessful on all issues arbitrated in such action.
(b) Polaroid and the Executive agree that they will attempt, and
they intend that they will and the arbitrator should use their best efforts in
that attempt, to conclude the arbitration proceeding and have a final decision
from the arbitrator within 120 days from the date of selection of the
arbitrator; PROVIDED, HOWEVER, that the arbitrator shall be entitled to extend
such l20-day period for an additional 120-day period. The arbitrator shall
immediately deliver a written award with respect to the dispute to each of the
parties, who shall promptly act in accordance therewith.
(c) Unless Polaroid has also instituted an action to obtain
specific performance or similar equitable relief under Section 10 above, in an
arbitration involving the existence of either Cause or Good Reason, the benefits
to which the Executive is otherwise entitled under Section 5(a) shall continue
so long as the Executive and his counsel are in reasonable compliance with
Section 13(b) above, subject to the Executive's obligation to repay any
severance pay, bonus or outplacement payments received upon a determination by
the arbitrator that Polaroid has Cause for the Executive's termination or that
the Executive did not have Good Reason for his termination.
11
14. WAIVER OF BREACH.
Any waiver of any breach of the Agreement shall not be construed to be a
continuing waiver or consent to any subsequent breach on the part of either the
Executive or Polaroid.
15. NON-ASSIGNMENT: SUCCESSORS.
Neither Party hereto may assign his or its rights or delegate his or its duties
under this Agreement without the prior written consent of the other Party;
PROVIDED, HOWEVER, that (i) this Agreement shall inure to the benefit of and be
binding upon the successors and assigns of Polaroid upon any sale of all or
substantially all of the assets of Polaroid, or upon any merger, consolidation
or reorganization of Polaroid with or into any other corporation, all as though
such successors and assigns of Polaroid and their respective successors and
assigns were Polaroid; and (ii) this Agreement shall inure to the benefit of and
be binding upon the heirs, assigns or designees of the Executive to the extent
of any payments due to the Executive hereunder. As used in this Agreement, the
term "Polaroid" shall be deemed to refer to any such successor or assign of
Polaroid referred to in the preceding sentence.
16. WITHHOLDING OF TAXES.
All payments required to be made by Polaroid to the Executive under this
Agreement shall be subject to the withholding of such amounts, if any, relating
to tax, and other payroll deductions as Polaroid may reasonably determine it
should withhold pursuant to any applicable law or regulation.
17. SEVERABILITY.
To the extent any provision of this Agreement or portion thereof shall be
invalid or unenforceable, it shall be considered deleted therefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect.
18. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and
the same instrument.
19. GOVERNING LAW.
This Agreement shall be construed, interpreted and enforced in accordance with
the laws of the Commonwealth of Massachusetts, without regard to the conflict of
laws principles thereof.
20. ENTIRE AGREEMENT.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement by Polaroid and the Executive with respect to the subject matter
hereof and supersedes any and all prior agreements or understandings between the
Executive and Polaroid with respect to the subject matter hereof, whether
written or oral. This Agreement may be amended or modified
12
only by a written instrument executed by the Party against whom any such
amendment or modification is to be enforced.
(b) CONTROLLING PROVISIONS. In the event of a conflict between any
provision of this Agreement and a provision of any other document, the
provisions of this Agreement shall control, except that, with the exception of
the vesting provisions set out in Section 3(f)(ii) and the indemnification
provisions set out in Section 11, this Agreement will not be construed to alter
or otherwise affect the terms of Polaroid's Restricted Stock Program, which
shall be administered in accordance with its terms.
21. REPRESENTATIONS.
Polaroid represents and warrants that it is fully authorized and empowered to
enter into this Agreement and that the performance of its obligations under this
Agreement will not violate any agreement between it and any other person, firm
or organization. The Executive represents and warrants that no agreement exists
between him and any other person, firm or organization that would be violated by
the performance of his obligations under this Agreement.
22. HEADINGS.
The headings of the sections contained in this Agreement are for convenience
only and shall not be deemed to control or affect the meaning or construction of
any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of May 30,
2003.
Polaroid Holding Company
By: /s/ X. Xxxxxx
------------------------------
Title:
Polaroid Corporation
By: President/CEO
------------------------------
Title:
/s/ Xxxx Xxxxxxx Xxxxxx
---------------------------------
Xxxx Xxxxxxx Xxxxxx
13
