EXHIBIT 10.5
THIS AGREEMENT between CHAMPION INTERNATIONAL CORPORATION, a New York
corporation (the "Company"), and XXXXXX X. XXXXXXX (the "Executive"), effective
May 28, 1999 (the "Agreement").
W I T N E S S E T H:
WHEREAS, the Executive is now in the employ of the Company; and
WHEREAS, the Executive was elected an Executive Vice President of the
Company on April 16, 1998; and
WHEREAS, the Company wishes to provide additional incentive for the
Executive to continue in the employ of the Company;
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Termination
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In the event of a termination, as defined in subparagraph 1(b) below, the
following provisions of this paragraph 1 shall apply.
(a) Termination Payments
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(i) Monthly Payments. Subject to compliance with the applicable
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provisions of paragraph 3 below, the Company shall pay the Executive or, in the
event of his death, the beneficiary or beneficiaries or his estate, as the case
may be, as severance pay or liquidated damages, or both, a monthly sum equal to
the highest total monthly compensation (highest total of annual salary plus
annual bonus for any calendar year of employment, divided by twelve) paid to the
Executive. Such payments shall commence on the last day of the month next
following the termination of employment of the Executive and shall continue
until the last day of the twenty-fourth full calendar month following the
termination of employment of the Executive, provided, however, that such
payments shall not continue beyond the earlier of (A) the last day of the month
next preceding his normal retirement date under the Company's pension plan, and
(B) the last day of the month next preceding the month in which he shall, with
his written consent, commence receiving his retirement allowance under the
Company's pension plan.
(ii) Lump Sum Payment upon Termination following a Change in Control.
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Anything in subparagraph 1(a)(i) above or elsewhere in this Agreement to the
contrary notwithstanding, if termination of the Executive occurs within three
years following a Change in Control: (x) the total of the monthly payments
provided for in subparagraph 1(a)(i) above shall be accelerated and paid in a
lump sum as soon as practicable after such termination if termination occurs
before the last day of the month next preceding the Executive's normal
retirement date under the Company's pension plan; if termination
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occurs on or after such last day, no payment pursuant to subparagraph 1(a)(i) or
(ii) shall be made to the Executive; (y) the benefits required to be provided
thereafter to the Executive, his spouse and family, set forth in attached
Exhibit A, shall be valued at the cost of acquiring insurance policies which
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would provide such benefit coverage over the period of time involved in
subparagraph 1(a)(i) above, and such cost shall be paid in a lump sum as soon as
practicable after termination; and (z) the Executive shall be paid the amount
payable, if any, pursuant to subparagraph 1(a)(iii) and the amount payable, if
any, pursuant to subparagraph 1(a)(iv).
(iii) Cash-Out of Options and Contingently Credited Shares. In the event
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that the Executive shall, at the time of termination of his employment within
three years following a Change in Control, (A) hold an outstanding and
unexercised (whether or not exercisable at the time) option or options
theretofore granted by the Company to him prior to the Change in Control, (B)
have shares contingently credited to him prior to the Change in Control under
the Company's Contingent Compensation Plan or 1986 Contingent Compensation Plan
or a successor plan, or both hold such option and have such shares contingently
credited to him, unless the Executive shall have given the Company written
notice to the contrary within thirty (30) days following such termination of
employment, the Company shall pay him, in a lump sum, an amount equal to the
excess above the option price, of each such option that is not an Incentive
Stock Option as defined in Section 422 of the Internal Revenue Code of 1986 as
amended (the "Code"), of the Fair Market Value of Common Shares of the Company
at the time of termination, and the Fair Market Value at the time of termination
of the shares, if any, so contingently credited. Solely for the purpose of this
subparagraph 1(a)(iii), Fair Market Value at the time of termination shall mean
the higher of (i) the average of the reported closing prices of the Common
Shares of the Company, as reported in "New York Stock Exchange Composite
Transactions" of the Eastern Edition of The Wall Street Journal, for the last
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trading day prior to the termination and for each trading day of the preceding
sixty calendar days, and (ii) in the event that a Change in Control of the
Company, as defined in subparagraph 1(d) below, shall have taken place prior to
termination as the result of a tender or exchange offer, and such Change in
Control was consummated within three years of termination, an amount equal to
the highest consideration paid for Common Shares of the Company in the course of
such tender or exchange offer.
(iv) Payment of Value of Supplemental Retirement Income Plan Payments.
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Anything in this Agreement to the contrary notwithstanding, in the event of a
termination of the Executive's employment within three years following a Change
in Control, the Executive shall be entitled to a monthly retirement allowance
for life, payable on a straight life annuity basis, equal to the benefit
payable, if any, under the Company's Supplemental Retirement Income Plan or a
successor plan or plans, utilizing the monthly payments set forth in
subparagraph 1(a)(i) above for purposes of the pension calculation for the
termination period set forth in such subparagraph 1(a)(i). For the purposes of
this clause (iv), the Supplemental Retirement Income Plan or successor plan or
plans payments shall include the pension enhancement resulting from service
credit for pension benefit during the termination period set forth in
subparagraph 1(a)(i) above. Such retirement allowance shall be valued and
discounted in the manner set forth in subparagraph 3(g) below
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relating to default in payments or benefits and shall be paid in a lump sum as
soon as practicable after such termination.
(v) Participation in Benefit Plans. The Executive shall be eligible to
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receive, during any period that he shall be entitled to receive payments from
the Company under subparagraph 1(a)(i) above (whether or not any such period
shall be accelerated), as if the Executive had continued to be employed by the
Company during such period, any benefits and emoluments for which key executives
are eligible under any hospitalization, health care or dental care plan, life or
other insurance or death benefit plan, travel and accident insurance, executive
or contingent compensation plan, restricted stock or stock purchase plan,
retirement income or pension plan, vacation plan, or other present or future
employee benefit plans or programs of the Company for which key executives are
eligible, in accordance with the provisions of any such plan or program,
provided, however, that during the period that the Executive is so entitled to
receive payments under subparagraph 1(a)(i) above, he shall not be eligible to
participate in the Company's Savings Plan for Salaried Employees or Nonqualified
Supplemental Savings Plan or to receive option grants under any stock option
plan of the Company. Nothing in this Agreement shall preclude the Company from
terminating or amending any such employee benefit plan or program so as to
eliminate, reduce or otherwise change any benefit payable thereunder. To the
extent that such benefits or service credits for benefits shall not be payable
or provided under such plans or programs by reason of the Executive no longer
being an employee of the Company, the Company shall itself pay or provide for
payment of such benefits and service credit for benefits.
(b) Definition of Termination
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The term "termination" for purposes of this Agreement shall mean:
(i) The termination by the Company of the Executive's full-time
employment with the Company for any reason other than Cause; or
(ii) Any (A) failure to elect or re-elect the Executive to an office
and position at least equal to the office and position he held immediately prior
to such failure, or removal of the Executive from such office or position, (B)
material change by the Company of the Executive's functions, duties or
responsibilities without his express written consent as a result of which change
the Executive's position with the Company shall be or become of less dignity,
responsibility, importance or scope than the position he held at the time of
such material change, and any such material change shall be deemed a continuing
breach of this Agreement, (C) reduction in the monthly base salary of the
Executive below the highest monthly base salary paid from and after May 28,
1999, (D) liquidation, dissolution, consolidation or merger of the Company, or
transfer of all or substantially all of its assets, other than in compliance
with the provisions of paragraph 8 below, or (E) breach of this Agreement by the
Company, or breach of the Agreement Relating to Legal Expenses between the
Company and the Executive dated May 28, 1999 (the "Legal Expense Agreement");
provided that in any such event the Executive elects to terminate his employment
under this Agreement upon not less than sixty days' advance written
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notice given within a reasonable period of time not to exceed, except in case of
a continuing breach, four calendar months after the event giving rise to the
election.
(c) Definition of Cause
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For the purpose of any provision of this Agreement, the termination of the
Executive's employment shall be deemed to have been for Cause only if
termination of his employment shall have been the result of an act or acts of
dishonesty on the part of the Executive constituting a felony and resulting or
intended to result directly or indirectly in gain or personal enrichment at the
expense of the Company; provided that there shall have been delivered to the
Executive a certified copy of a resolution of the Board of Directors of the
Company adopted by the affirmative vote of not less than three-fourths of the
entire membership of the Board of Directors at a meeting called and held for
that purpose and at which the Executive was given an opportunity to be heard,
finding that the Executive was guilty of such conduct, specifying the
particulars thereof in detail.
Anything in this subparagraph 1(c) or elsewhere in this Agreement to the
contrary notwithstanding, the employment of the Executive shall in no event be
considered to have been terminated by the Company for Cause if termination of
his employment took place (A) as the result of bad judgment or negligence on the
part of the Executive, or (B) as the result of an act or omission without intent
of gaining therefrom directly or indirectly a profit to which the Executive was
not legally entitled, or (C) because of an act or omission believed by the
Executive in good faith to have been in or not opposed to the interests of the
Company, or (D) for any act or omission in respect of which a determination
could properly be made that the Executive met the applicable standard of conduct
prescribed for indemnification or reimbursement or payment of expenses under (I)
the Restated Certificate of Incorporation or By-Laws of the Company, or (II) the
laws of the State of New York, or (III) the directors' and officer's liability
insurance of the Company, in each case either as in effect at the time of this
Agreement or in effect at the time of such act or omission, or (E) as the result
of an act or omission which occurred more than twelve calendar months prior to
the Executive having been given notice of the termination of his employment for
such act or omission unless the commission of such act or such omission could
not at the time of such commission or omission have been known to a member of
the Board of Directors of the Company (other than the Executive, if he is then a
member of the Board of Directors), in which case more than twelve calendar
months from the date that the commission of such act or such omission was or
could reasonably have been so known, or (F) as the result of a continuing course
of action which commenced and was or could reasonably have been known to a
member of the Board of Directors of the Company (other than the Executive, if he
is then a member of the Board of Directors) more than twelve calendar months
prior to notice having been given to the Executive of the termination of his
employment.
(d) Definition of Change in Control
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For the purpose of this Agreement, a Change in Control of the Company
shall be deemed to have occurred if
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(i) any "person" (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the combined voting power of the
Company's then outstanding securities;
(ii) during any period within two (2) consecutive years there shall
cease to be a majority of the Board of Directors comprised as follows:
individuals who at the beginning of such period constitute the Board of
Directors and any new director(s) whose election by the Board of Directors or
nomination for election by the Company's shareholders 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 the period or whose election or nomination for
election was previously so approved; or
(iii) the shareholders of the Company approve (A) a plan of complete
liquidation of the Company or (B) the sale or other disposition of all or
substantially all the Company's assets.
2. Termination During Month
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In the event that the employment of the Executive shall terminate prior to
the end of a calendar month as a result of a termination described in paragraph
1 above, the Company shall pay the Executive, in addition to any other amounts
payable by the Company hereunder, a lump cash sum which shall in no event be
less than the salary plus any bonus to which the Executive would have been
entitled had he remained in full-time employment until the end of the month in
which his employment shall so terminate.
3. Post-termination Obligations of Executive; Default by Company
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All payments and benefits to the Executive under this Agreement after his
full-time employment with the Company shall have terminated shall be subject to
compliance with the following provisions, which compliance shall be subject to
the proviso in subparagraph 3(f) below. Anything in this paragraph 3 or
elsewhere in this Agreement to the contrary notwithstanding, the Executive may
continue to serve as a director, after his full-time employment with the Company
shall have terminated, of any corporation which he has served as a director for
the last six months of his full-time employment with the Company.
(a) Assistance In Litigation
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The Executive shall, upon reasonable notice, furnish such information and
proper assistance to the Company as may reasonably be required by the Company in
connection with any litigation in which it or any of its subsidiaries or
affiliates is or may become a party.
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(b) Detrimental Conduct
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The Executive shall not to the material detriment of the Company knowingly
disclose or reveal to any unauthorized person any manufacturing or trade secret
or other confidential information relating to the Company, its subsidiaries or
affiliates, or to any of the businesses operated by them, and confirms that such
information constitutes the exclusive property of the Company. The Executive
shall not otherwise knowingly act or conduct himself to the material detriment
of the Company, its subsidiaries or affiliates, or in a manner which is
materially inimical or contrary to their interests. The Executive recognizes
that the restrictions on his activities contained in this Agreement are required
for the reasonable protection of the Company and its investments.
(c) Discoveries and Inventions
--------------------------
If, while employed by the Company or during a period of one year after
termination of such employment, the Executive shall have made, either solely or
jointly with others, any discovery, improvement or invention which would pertain
or relate in any way to the business, products, publications or processes of the
Company, its subsidiaries or affiliates at the time of termination of his
employment, such discovery, improvement or invention (whether or not of a
patentable nature) shall be the exclusive property of the Company. The Executive
shall execute and deliver to the Company without further compensation any
documents which the Company may deem necessary or appropriate to prepare or
prosecute applications for patents upon such discovery, improvement or
invention, to assign and transfer to the Company his entire right, title and
interest in and to such discovery, improvement or invention, and patents
therefor, or otherwise more fully and perfectly to evidence the Company's
ownership thereof.
(d) Reimbursement of Expenses
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The Company shall pay or reimburse the Executive for all reasonable travel
and other expenses incurred by the Executive in performing his obligations under
this paragraph 3.
(e) Competition
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The Executive shall not engage in competition with any of the businesses in
which the Company, its subsidiaries or affiliates may be engaged at the time of
termination of his employment if such competition should be materially
detrimental to the Company, its subsidiaries or affiliates.
(f) Failure to Comply
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If the Executive, for any reason other than death or disability, shall,
without the written consent of the Company, fail to comply with any provision of
this paragraph 3, his rights to any future payments or other benefits hereunder
shall terminate, and the
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Company's obligations to make such payments and provide such benefits shall
cease; provided, however, that no failure to comply with any provision of this
paragraph 3 shall be deemed to have occurred unless and until the Executive
shall have received written notice on behalf of the Board of Directors of the
Company, specifying the conduct alleged to constitute such failure, and has
thereafter continued to engage in such conduct after a reasonable opportunity
and a reasonable period, but in no event more than sixty days after receipt of
such notice, to refrain from such conduct. In no event shall the Executive be
under any obligation to repay to the Company any amounts theretofore paid to
him.
(g) Post-termination Default in Payments or Benefits
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If, after the Executive ceases to be an employee of the Company, the
Company should (i) default in payment of all or any part of the payments
required to be made hereunder or under the Legal Expense Agreement, or (ii) fail
to pay for or provide any benefits required to be provided hereunder, and if the
Company should not remedy such default or failure within thirty (30) days after
having received notice of such default or failure from the Executive, his
spouse, or such other person or entity who or which is entitled thereto, the
applicable payments or benefits set forth in Exhibit B shall, at the sole
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election of the Executive, his spouse, or such other person or entity then
entitled thereto, exercised in writing signed by the Executive, his spouse or
such other person or entity, and delivered to the Company within 90 days after
the expiration of such thirty-day period, be accelerated and become immediately
due and payable in a lump sum equal to the total of (x) the severance payment
set forth in Exhibit B, if applicable, and (y) the cost of acquiring insurance
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policies which would provide the disability, medical and dental coverages set
forth in Exhibit B, if applicable, and (z) all amounts, if any, payable under
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the Supplemental Retirement Income Plan or successor plan or plans set forth in
Exhibit B in an actuarially equivalent lump sum calculated by utilizing the 1983
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GAM Table (or such other pensioner annuity mortality table as the Company with
the Executive's written consent or, following his death, his spouse's or other
Beneficiary's consent, shall determine) and discounted to a present value amount
by applying a discount rate, equal to the arithmetic average of (i.e., one-
twelfth of the sum of) the single employer interest rates for immediate
annuities promulgated by the Pension Benefit Guaranty Corporation each month
during the calendar year immediately preceding the date of payment as set forth
in Appendix B to Part 4044 of 29 Code of Federal Regulations or such successor
to such Appendix B as may be in effect during such calendar year, to all such
retirement payments which otherwise would become due thereafter. In the event
the election referred to in the preceding sentence has been made, then the total
amount due and payable from the Company pursuant to this subparagraph shall be
the sum of all accelerated amounts, together with any expenses incurred in
enforcing payment thereof (including all reasonable legal fees). In making the
foregoing retirement payment calculations, the intent is to compute a lump sum
amount which will provide the Executive and his spouse or other Beneficiary, as
the case may be, with the same amount, after deduction of all federal, state and
municipal income taxes, as he and his spouse or other Beneficiary, as the case
may be, would have retained, after all such income taxes, had payments and
benefits been made
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and provided as originally scheduled and without acceleration. It is understood
and agreed that this subparagraph 3(g) shall not apply to any default or failure
to pay, as described in the first sentence of this subparagraph 3(g), which
occurs during the Executive's period of employment; upon any such default or
failure to pay, the Executive shall be entitled to such payments as may be
applicable pursuant to subparagraph 1(a).
4. Determination of Benefits
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Whenever under this Agreement it is necessary to determine whether one
benefit is less than, equal to or larger than another, whether or not such
benefits are provided under this Agreement, such determination shall be made by
the Company's independent consulting actuary, using mortality, interest and any
other assumptions normally used at the time by such actuary in determining
actuarial equivalents for the purpose of employee benefit plans of the Company.
5. (a) Time of Payment
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Anything in this Agreement to the contrary notwithstanding, the Company
may, for its own administrative convenience or for any other reason deemed by it
sufficient, accelerate payment to the Executive of any sums due under this
Agreement following termination of his employment; provided, however, that
payments by the Company under this Agreement in any one calendar year shall not,
as a result of such acceleration, together with any payments required to be made
under the pension plan of the Company, exceed an amount equal to (i) 80 percent
of his monthly rate of salary paid for the last full calendar month of his
employment, multiplied by (ii) the number 12.
(b) Withholding of Taxes
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The Company may withhold from any benefits payable under this Agreement all
federal, state, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
6. Decisions by Company
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Except as otherwise expressly provided in this Agreement, any decision or
action by the Company relating to this Agreement, its operation or its
termination, shall be made by the Board of Directors. Any decision or action of
such Board shall, to the extent permitted by law, be by the affirmative vote of
not less than three-fourths of the members of the Board of Directors then in
office; provided, however, that in the event of any dispute as to any benefit
payable under this Agreement, the Executive shall have the same rights as a
Participant under the Company's pension plan in effect at the time with respect
to the method of determining such dispute and enforcing his rights with respect
thereto.
7. Prior Agreements
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This Agreement shall supersede any prior employment and severance agreement
between the Company or any predecessor of the Company and the Executive, but
this Agreement shall not affect or operate to reduce any benefit or compensation
of any kind not expressly provided for in this Agreement, including, without
limitation, any employee stock option or stock appreciation right, any grant of
restricted shares or share units and any grant of performance shares or share
units.
8. Consolidation or Merger
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Nothing in this Agreement shall preclude the Company from consolidating or
merging into or with, or transferring all or substantially all of its assets to,
another corporation which assumes this Agreement and all obligations of the
Company hereunder. Upon such a consolidation, merger or transfer of assets and
assumption, the term, "Company", shall refer to such other corporation and this
Agreement shall continue in full force and effect.
9. (a) Non-assignability
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Neither this Agreement nor any right or interest hereunder shall be
assignable by the Executive or the beneficiaries of the Executive or by his
legal representatives without the Company's prior written consent; provided,
however, that nothing in this subparagraph 9(a) shall preclude (i) the Executive
from designating a beneficiary to receive any benefit payable on his death, and
(ii) the legal representatives of the estate of the Executive from assigning any
rights hereunder to the person or persons entitled thereto under his will or, in
the case of intestacy, to the person or persons entitled thereto under the laws
of intestacy applicable to his estate.
(b) No Attachment
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Except as otherwise required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
(c) Binding Agreement
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This Agreement shall be binding upon and inure to the benefit of the
Company, its successors and assigns.
(d) Unfunded Obligations; Trust Agreement
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(i) All payments to be made hereunder shall be made from the general
funds of the Company. To the extent that any person or entity acquires a right
to receive any payment hereunder, such right shall be no greater than the right
of an unsecured general creditor of the Company except to the extent otherwise
provided by law. No
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person who is entitled to payments hereunder shall have any right, title or
interest in or to any assets or investments which may be acquired or made by the
Company to aid it in meeting its obligations hereunder.
(ii) Anything in this subparagraph 9(d) or elsewhere in this Agreement
to the contrary notwithstanding, the Company may provide the Executive with
collateral security, in the form of a bank letter of credit, an interest in a
trust or otherwise, to secure a portion of any or all of the Company's
obligations to the Executive under this Agreement and any other agreement. In
this connection, the Company has entered into a Trust Agreement, as amended, in
the form attached hereto as Exhibit C and, under the circumstances and upon the
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terms and conditions set forth therein, the Executive will be a beneficiary
under the Trust therein established, this Agreement and the Legal Expense
Agreement (and its related memorandum) will be listed on Exhibit I of such Trust
Agreement, the amounts to be deposited with the trustee under the Trust
Agreement shall be those set forth on the Schedule of Amounts to be Deposited in
Trust Upon a Potential Change in Control, a copy of which is attached hereto as
Exhibit D, and any other benefits which the Company, in its sole discretion,
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shall agree to secure by the Trust Agreement.
(iii) If a Potential Change in Control should take place while the
Executive is in the employ of the Company, the value of the benefits set forth
in Exhibit D to be delivered by the Company to the trustee under such Trust
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Agreement shall be equal to the total of (x) the severance, options,
contingently credited shares and legal expenses payments set forth in Exhibit D,
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(y) the cost of acquiring insurance policies which would provide the disability,
medical and dental coverages set forth in Exhibit D, and (z) all amounts, if
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any, payable under the Supplemental Retirement Income Plan or a successor plan
or plans (as described in subparagraph 1(a)(iv) above) set forth in Exhibit D.
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(iv) The value of the payments under the Supplemental Retirement Income
Plan or a successor plan or plans shall be an actuarially equivalent amount
calculated by utilizing the 1983 GAM Table (or such other pensioner annuity
mortality table as the Company with the Executive's written consent, or
following his death, his spouse's or other Beneficiary's consent, shall
determine) and discounted to a present value amount by applying a discount rate,
equal to the arithmetic average of (i.e., one-twelfth of the sum of) the single
employer interest rates for immediate annuities promulgated by the Pension
Benefit Guaranty Corporation each month during the calendar year immediately
preceding the date of payment as set forth in Appendix B to Part 4044 of 29 Code
of Federal Regulations or such successor to such Appendix B as may be in effect
during such calendar year, to all such retirement benefits which otherwise would
become due thereafter. In making the foregoing retirement payment calculations,
the intent is to compute a lump sum payment which will provide the Executive
with the same amount of benefit, after deduction of all federal, state and
municipal income taxes, as he would have retained, after all such income taxes,
had payments been made as originally scheduled and without acceleration.
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(v) Anything in this subparagraph 9(d) or elsewhere in this Agreement
to the contrary notwithstanding, the amount to be paid by the Company to the
trustee pursuant to the preceding provisions of this subparagraph 9(d) shall be
reduced by the amount, if any, that the Board of Directors of the Company
expressly determines, in its sole discretion on the advice of the Company's
independent public accountants or its tax counsel or other experts selected by
the Board of Directors, as a result of the application of the provisions of
paragraph 14 below, is not expected to be paid by the trustee to the Executive
and his beneficiary or beneficiaries.
(vi) The Company shall continue to be liable to make all payments and
provide all benefits required to be made and provided hereunder to the extent
such payments have not been made or such benefits have not been provided through
the above-mentioned trust.
(vii) For purposes of this Agreement, a "Potential Change in Control"
shall be deemed to have occurred if
(A) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control of the Company;
(B) any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Company;
(C) any person, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, is or becomes
the beneficial owner, directly or indirectly, of securities of the
Company representing ten percent (10%) or more of the combined voting
power of the Company's then outstanding securities; or
(D) the Board of Directors adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control of the
Company has occurred.
10. (a) Amendment of Agreement
----------------------
No amendment or modification of this Agreement shall be deemed effective
unless and until executed in writing.
(b) No Waiver
---------
No term or condition of this Agreement shall be deemed to have been waived,
nor shall there be any estoppel to enforce any provision of this Agreement,
except by written instrument of the party charged with such waiver or estoppel.
Any written waiver shall not be deemed a continuing waiver unless specifically
stated, shall operate only as
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to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
11. Severability
------------
If for any reason any provision of this Agreement shall be held invalid,
such invalidity shall not affect any other provision of this Agreement not so
held invalid, and all other such provisions shall to the full extent consistent
with law continue in full force and effect. If any such provision shall be held
invalid in part, such invalidity shall in no way affect the rest of such
provision not so held invalid, and the rest of such provision, together with all
other provisions of this Agreement, shall likewise to the full extent consistent
with law continue in full force and effect.
12. Headings
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The headings of paragraphs are included solely for convenience of reference
and shall not control the meaning or interpretation of any of the provisions of
this Agreement.
13. Governing Law
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The validity, interpretation, construction, performance and enforcement of
this Agreement shall be governed by the laws of the State of New York without
giving effect to the principles of conflict of laws thereof.
14. Parachute Tax
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(a) Except in the specific circumstance hereinafter described in this
paragraph 14, the Company shall pay to the Executive the full amount to which he
is entitled under this Agreement.
(b)
(i) If any payments or benefits received or to be received by the
Executive under this Agreement, or any other payments or benefits received
or to be received by the Executive from the Company or any other person,
constitute "parachute payments" within the meaning of Section 280G(b)(2)
or any successor provision of the Code (such payments or benefits being
hereinafter referred to as the "Parachute Payments"), and
(ii) if the aggregate present value of the Parachute Payments from
all sources, minus (A) any excise tax imposed under Section 4999 of the
Code (or any similar tax that may hereafter be imposed) (the "Excise Tax")
and (B) the net amount of federal, state and local income tax on such
aggregate present value, would be less than the maximum amount of
Parachute Payments from all sources that can be paid without triggering
the Excise Tax, after deduction of the net amount of federal, state and
local income tax on such maximum amount, then
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(iii) the Parachute Payments to be paid by the Company to the
Executive under this Agreement shall be reduced to a lump sum amount (if
any) such that the aggregate present value of the Parachute Payments from
all sources is equal to the maximum amount of Parachute Payments that can
be paid without triggering the Excise Tax.
Anything in this subparagraph 14(b) to the contrary notwithstanding,
it is understood and agreed that the amount to be paid by the Company to
the Executive pursuant to this subparagraph 14(b) in the specific
circumstance described herein may be less, but never more, than the amount
to which he would otherwise be entitled under this Agreement.
(c) All matters to be determined pursuant to subparagraph 14(b) including,
without limitation, the existence or absence of any Parachute Payments, the
aggregate present value of any Parachute Payments, the amount of the Excise Tax
(if any), the net amount of federal, state and local income tax (assuming the
highest applicable marginal rate in each case), the maximum amount of Parachute
Payments that can be paid without triggering the Excise Tax, the amount of any
reduction in the Parachute Payments to be paid by the Company to the Executive
under this Agreement and the item or items (if any) to be reduced, shall be
determined by the Executive or, following his death, his beneficiary or
beneficiaries. The specifics of such determination shall be delivered in writing
to the Company and to the trustee of the Trust referred to in subparagraph
9(d)(ii) above at the time of the Executive's termination within three years
after a Change in Control, or as soon as practicable thereafter, by the
Executive or, following his death, his beneficiary or beneficiaries. The
reasonable fees and expenses of such tax counsel and financial advisor as may
reasonably be called upon to assist the Executive or his beneficiary or
beneficiaries in the foregoing determinations shall be paid by the Company.
Without limiting the generality of the immediately preceding sentence, the
Executive or his beneficiary or beneficiaries may select as such financial
advisor Xxxxxx Associates or such other person or firm as may be serving at the
time as the Company's independent consulting actuary.
15. Notices
-------
All notices, requests, demands and other communications provided for by
this Agreement shall be in writing and shall be sufficiently given if and when
mailed in the continental United States by registered or certified mail, return
receipt requested, or personally delivered to the party entitled thereto at the
address stated below, which address shall be such address as the addressee may
have given most recently by a similar notice. Any such notice shall be deemed
to have been received on the date of delivery.
To the Company: Champion International Corporation
Xxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
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Attention: Corporate Secretary
To the Executive: Xx. Xxxxxx X. Xxxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
16. Arbitration
-----------
Any dispute between the Executive and the Company as to the interpretation
or application of any of the provisions of this Agreement may, at the
Executive's election, be determined by binding arbitration within the greater
New York City metropolitan area or the State of Connecticut in accordance with
the rules of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrator's award in any court of competent jurisdiction.
All fees and expenses of such arbitration shall be paid by the Company subject
to repayment by the Executive if and to the extent that a judgment should be
rendered against him beyond appeal and such fees and expenses were not incurred
by him while acting in good faith.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereto, and the Executive has signed this Agreement,
all as of May 28, 1999.
CHAMPION INTERNATIONAL CORPORATION
By /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Chairman of the Board of Directors
Attest:
/s/ Xxxxxxxx X. Xxx
--------------------------
Secretary
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
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Exhibit A to Agreement between Champion International
Corporation and Xxxxxx X. Xxxxxxx dated as of May 28, 1999
----------------------------------------------------------
Exhibit A
---------
[subparagraph 1(a)(ii)(y)]
Schedule of Certain Benefit Coverages during the
Severance Payment Period under Subparagraph 1(a)(i)
after a Termination following a Change in Control
---------------------------------------------------
~ Disability: Same as for active employees.
~ Medical: Same as for active employees less retiree
medical benefit, if any.
~ Dental: Same as for active employees.
For other benefit coverages after termination following a Change in
Control, see subparagraphs 1(a)(ii)(x) and (z).
o0o
15
Exhibit B to Agreement between Champion International
Corporation and Xxxxxx X. Xxxxxxx dated as of May 28, 1999
----------------------------------------------------------
Exhibit B
---------
[subparagraph 3(g)]
Schedule of Payments and Benefits upon
a Breach after Cessation of Employment
--------------------------------------
~ Severance: 2 years termination payments (or the unpaid balance
thereof); however, payments not to cover the period, if
any, after the last day of the month next preceding the
Executive's normal retirement date under the Company's
pension plan. Payments are based on highest total of salary
and annual bonus for any calendar year of employment.
~ Retirement: All unpaid amounts, if any, payable under the Supplemental
Retirement Income Plan or successor plan or plans of the
Company.
~ Disability: Same as for active employees, during the 2 year termination
payment period or balance thereof.
~ Medical: Same as for active employees less retiree medical benefit,
if any, during the 2 year termination payment period or
balance thereof.
~ Dental: Same as for active employees, during the 2 year termination
payment period or balance thereof.
16
Exhibit C to Agreement between Champion International
Corporation and Xxxxxx X. Xxxxxxx dated as of May 28, 1999
----------------------------------------------------------
Exhibit C
---------
[subparagraph 9(d)]
FORM OF TRUST AGREEMENT
17
Exhibit D to Agreement between Champion International
Corporation and Xxxxxx X. Xxxxxxx dated as of May 28, 1999
----------------------------------------------------------
Exhibit D
---------
[subparagraph 9(d)]
Schedule of Amounts to be Deposited in Trust
Upon a Potential Change in Control*
--------------------------------------------
~ Severance: 2 years termination payments; however, payments not to cover the
period, if any, after the last day of the month next preceding
the Executive's normal retirement date under the Company's
pension plan. Payments are based on highest total of salary and
annual bonus for any calendar year of employment.
~ Retirement: All amounts, if any, payable under the Supplemental Retirement
Income Plan or successor plan or plans of the Company.
~ Disability: Same as for active employees, for the 2 year termination payment
period (or balance thereof).
~ Medical: Same as for active employees less retiree medical benefit, if
any, for the 2 year termination payment period (or balance
thereof).
~ Dental: Same as for active employees, for the 2 year termination payment
period (or balance thereof).
~ Options: Fund for those options referred to in subparagraph 1(a)(iii)
hereof. "Spread" to be calculated on the basis of the closing
price of Common Shares of the Company as reported in "New York
Stock Exchange Composite Transactions" of the Eastern Edition of
The Wall Street Journal for the trading day immediately after the
-----------------------
Potential Change in Control.
_________________
* This Exhibit D does not reflect the possible reduction provided for in
subparagraph 9(d)(v) hereof.
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~ Contingently
Credited Shares: Fund for those contingently credited shares referred to in
subparagraph 1(a)(iii) hereof in an amount per share equal
to the closing price of Common Shares of the Company as
reported in "New York Stock Exchange Composite
Transactions" of the Eastern Edition of The Wall Street
---------------
Journal for the trading day immediately after the Potential
-------
Change in Control.
~ Legal Expenses: An amount equal to twelve times the monthly base salary
paid at time of deposit into trust.
o0o
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