Exhibit 10.8
Execution Copy
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered as of the
5th day of January, 1998, by and among U.S. Timberlands Services Company,
L.L.C., a Delaware limited liability company (the "Company"), and Xxxx X.
XxXxxxxx ("Executive").
Recitals:
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A. The Company desires to employ Executive as its Vice President--Finance
and Controller, and Executive desires to accept such employment, on the terms
and conditions set forth in this Agreement.
B. The Company serves as both the general partner of U.S. Timberlands
Company, L.P., a Delaware limited partnership ("UST"), and the managing member
of U.S. Timberlands Klamath Falls, L.L.C., a Delaware limited liability company
("USTK," and together with UST and any subsidiary entities of USTK and UST, the
"UST Group").
Agreements:
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NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
Section 1. Employment.
The Company hereby employs Executive, and Executive hereby accepts
employment with the Company, on the terms and conditions set forth in this
Agreement.
Section 2. Term.
Subject to the provisions of Section 6, Executive's employment by the
Company under this Agreement shall be for a term (the "Term") commencing on
January 5, 1998 and expiring on December 31, 2002.
Section 3. Executive's Duties.
3.1 Duties. Executive shall hold the position of the Company's Vice
President--Finance and Controller. Subject to the control of the board of
directors or other governing body of the Company (the "Board") and the Chairman,
and any limitations set forth in the operating agreement of the Company (the
"Company Agreement") and in the agreements of limited partnership, operating
agreements or charter and bylaws of the entities within the UST Group, Executive
shall, in general, assist the President and Chief Financial Officer of the
Company in the supervision and control of all the day-to-day financial and
accounting affairs of the Company and the UST Group.
3.2 Performance of Duties. Executive shall perform Executive's duties and
responsibilities during the Company's normal business hours and at all other
times reasonably necessary to comply with the terms and conditions of this
Agreement. Executive shall devote the time and attention required to the
performance of Executive's duties and responsibilities for and on behalf of the
Company on the terms set forth in this Section 3.2. In addition, Executive may
from time to time serve as a consultant to and/or as a member of the board of
directors of other entities, provided that the Board in good faith determines
that such activities do not unreasonably interfere with the business of the
Company and the UST Group and the performance of Executive's duties hereunder.
The parties acknowledge that Executive currently serves as a board member or
advisory member of various civic and charitable organizations and may continue
to participate in these activities, subject to the limitations set forth in the
first two sentences of this Section 3.2; provided, however, that such continued
participation shall in no event be deemed a violation of the limitations of the
first two sentences of this Section 3.2 unless and until Executive shall have
been notified in writing thereof and afforded a reasonable opportunity to cure
the violation.
3.3 Principal Place of Employment. Executive's principal place of
employment shall be at the Company's principal executive offices from time to
time. The Company shall provide Executive, at such location, with a private
office, secretarial services and such other facilities and support services as
are appropriate to the positions of Vice President--Finance and Controller and
necessary or appropriate in the performance of Executive's assigned duties.
Section 4. Compensation and Other Benefits.
Executive shall be entitled to receive from the Company the following
compensation and benefits for the services to be rendered by Executive
hereunder:
4.1 Salary and Bonuses. During the Term, the Company shall pay Executive an
annual base salary of $145,000, payable in equal installments during the year in
accordance with the Company's customary practices for senior executives ("Base
Salary"). The amount of Executive's Base Salary may be increased from time to
time by the Board, and, once increased, such higher amount shall become the Base
Salary for all purposes of this Agreement and may not thereafter be reduced. The
Company shall also pay to Executive, to the extent earned, an annual cash bonus,
not to exceed 100% of Base Salary, which shall be based on the performance of
Executive and the UST Group's business as determined annually by the
Compensation Committee of the Board in its discretion; provided that for each of
1998 and 1999 such cash bonus shall be a minimum of 50% of Base Salary. The
Company shall have the right to deduct and withhold from Executive's
compensation all taxes and charges that are currently or that hereafter may be
required by law to be so deducted and withheld.
The Company shall establish a program whereby Executive may, at his option,
defer receipt of any or all of the Base Salary and bonuses otherwise payable to
him under this Agreement. Any amounts so deferred shall be placed in a "rabbi"
trust, with a bank or other financial institution reasonably satisfactory to
Executive as trustee providing the maximum security to Executive without causing
the constructive receipt of income for federal income tax purposes (the
"Deferred Compensation Trust") and distributed, together with interest or other
earnings thereon, according
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to a payment schedule to be designated by Executive. Terms of the Deferred
Compensation Trust shall be reasonably satisfactory to the Executive and provide
maximum flexibility under applicable Internal Revenue Service regulations. The
Company shall bear the costs of administering the Deferred Compensation Trust.
4.2 Long Term Incentive Plan. Executive shall be entitled to participate in
the Long Term Incentive Plan ("LTIP") adopted by the Company on the terms and
conditions set forth therein. Concurrently with the effectiveness of this
Agreement, Executive will be granted Unit Options (as defined in the LTIP)
pursuant to the LTIP in an amount equal to 4.0% of the number of Unit Options
initially available to be granted under the LTIP and substantially in the form
of the grant agreement attached hereto as Attachment A.
4.3 Participation in Benefit Plans. During the Term, Executive shall be
eligible to participate in all employee benefit plans and arrangements now in
effect or which may hereafter be established that are generally applicable to
other senior executives of the Company, including, without limitation, all life,
group insurance, and medical and dental care plans and all disability,
retirement, 401(k) and other employee benefit plans of the Company, as long as
any such plan or arrangement remains generally applicable to other senior
executives of the Company. Executive shall also be entitled to the same vacation
benefits as are generally available to senior executives of the Company,
provided in any case that Executive shall have a minimum of four weeks' vacation
per year.
4.4 Reimbursement of Expenses. The Company shall reimburse Executive for
reasonable expenses incurred by Executive in the performance of Executive's
duties hereunder in accordance with the policy of the Company for reimbursement
of expenses as adopted by the Board from time to time and generally applicable
to all senior executives of the Company. Executive shall furnish the Company
with the supporting documentation required under the Company's policy in
connection with the reimbursement of such expenses.
Section 5. [Intentionally Omitted].
Section 6. Termination.
6.1 Termination by the Company Without Cause. The Company may terminate
Executive's employment other than for Cause or Executive becoming Disabled (as
such terms are defined below) at any time during the Term if the Board
determines, in its sole discretion, that the continued employment of Executive
is not in the continued interests of the Company. In the event the Company
terminates Executive's employment pursuant to this Section 6.1, then Executive
shall be paid on termination (i) any unpaid Base Salary earned hereunder prior
to the termination date, (ii) all unused vacation time accrued by Executive as
of the termination date in accordance with the Company's vacation policy for
senior executives, (iii) all unpaid amounts of compensation in which Executive
is vested as of the termination date under any and all incentive compensation
plans or programs of the Company, (iv) any expenses in respect of which
Executive has requested, and is entitled to, reimbursement in accordance with
Section 4.6, (v) a prorated bonus for the year of such termination calculated
based on the bonus being equal to 100% of Base Salary, and (vi) an amount
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equal to the amount of Base Salary that Executive would receive if Executive's
employment had continued without change through the remainder of the Term or for
12 months, whichever is less (items (i) through (iv) above being the "Earned
Amounts").
6.2 Termination by the Company for Cause. The Company may terminate this
Agreement at any time, in the discretion of the Board, in the event of (i) any
conviction of Executive for a felony, (ii any material breach by Executive of a
material written agreement between Executive and the Company or the UST Group,
including this Agreement, (ii any breach caused by Executive of the limited
partnership agreement or operating agreement of any member of the UST Group, or
the charter or bylaws of any corporation within the UST Group, provided that
Executive had prior written notice of such agreement or other document and any
amendment thereto (including a copy of the full text thereof) and provided that
such breach has a material adverse effect on the Company, (iv any willful
conduct by Executive materially injurious to the Company or the UST Group or
their respective businesses, (v) any willful failure by Executive to comply with
any material policies, procedures, or directives of the Board, provided that,
Executive shall first be given notice from the Board of such failure and such
failure shall not have been cured within ten days after such notice or, if such
failure is not capable of being cured within ten days, Executive shall not have
commenced and be diligently pursuing in good faith efforts to cure such default,
or (vi any fraud, misappropriation of funds, embezzlement, or other similar acts
of misconduct by Executive with respect to the Company or the UST Group. In the
event the Company terminates Executive's employment pursuant to this Section 6.2
for Cause, then Executive shall be paid on termination the Earned Amounts. For
purposes of this Agreement, no act or failure to act on Executive's part shall
be deemed "willful" unless done, or omitted to be done, in bad faith or without
the reasonable belief that the act or failure to act was in the best interests
of the Company or the UST Group. Any act or failure to act on the basis of
authority given by resolution duly adopted by the Board or on the basis of
advice given by legal counsel for the Company shall be conclusively presumed to
have been done, or omitted to be done, in good faith and in the best interests
of the Company or the UST Group. No termination of Executive's employment shall
be for Cause unless such termination shall have been authorized in advance by a
resolution adopted by the Board and delivered to Executive, following a meeting
of the Board at which Executive (together with his counsel) shall have been
afforded a reasonable opportunity to refute the purported grounds for
termination for Cause.
6.3 Termination Upon Death or Disability of Executive. This Agreement shall
terminate upon the death of Executive, or upon Executive becoming Disabled (as
defined below). In the event of a termination of this Agreement pursuant to this
Section 6.3, Executive (or Executive's estate, if applicable) shall be paid on
termination the Earned Amounts. For purposes of this Agreement, "Disabled" shall
mean that Executive shall have qualified for and be receiving benefits under the
Company's long-term disability insurance plan or, if there is no such plan, that
Executive shall have qualified for and be receiving disability benefits under
the federal Social Security Act.
6.4 Voluntary Resignation for Good Reason. Executive may resign Executive's
employment with the Company at any time and, if such resignation is for "Good
Reason", Executive shall be entitled to the same payments and benefits that
Executive would receive under Section 6.1 (i)-(vi) if Executive's employment
were being terminated by the Company other than for Cause or Executive becoming
Disabled. "Good Reason" shall mean any one or more of the following:
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(i) failure of the Company to appoint or re-appoint Executive to the offices of
Vice President--Finance and Controller or to more senior offices; (ii failure
of the Company, by act, omission, amendment to the instruments governing its
organization and operation or otherwise, to vest in Executive the position,
duties and responsibilities contemplated by this Agreement; (ii failure by the
Company to pay when due any portion of the compensation payable to Executive
hereunder; (iv any material breach by the Company of any material provision of
this Agreement; or (v) on or following a Change of Control (as such term is
defined in the Company's LTIP as the same may be amended from time to time),
either Executive is assigned any duties or responsibilities materially
inconsistent with, or diminished from, Executive's duties and responsibilities
with the Company and the UST Group immediately prior to the Change of Control,
or, Executive's status, duties, responsibilities, titles or offices with the
Company and the UST Group are materially diminished from those in effect
immediately prior to the Change of Control, as determined in the good faith
opinion of Executive; provided, however, Good Reason shall exist with respect to
a matter described above that is capable of being corrected by the Company only
if such matter is not corrected by the Company within a reasonable period
following its receipt of written notice of such matter from Executive, and in no
event shall a termination by Executive occurring more than 60 days following any
such written notice be for Good Reason.
Section 7. Covenant Not to Compete; Confidentiality.
7.1 Noncompetition. Unless granted written permission by the Board and
subject to any further restrictions contained in the agreements of limited
partnership within the UST Group, while employed by the Company and for a period
of 12 months after the termination of such employment, Executive covenants that
Executive shall not (i) own (as a proprietor, partner, or stockholder of greater
than 4.9 percent of outstanding equity securities, interests or otherwise) an
interest in, or (ii) participate (as an officer, director, or in any other
capacity) in the management, operation, or control of, or (iii) perform services
as or act in the capacity of any employee, independent contractor, consultant,
or agent of any enterprise which engages in one or more of the following
activities in a state in which the Company or the UST Group is then conducting
business and in which the Company or the UST Group commenced conducting business
prior to the commencement of such activities therein by Executive:
(a) acquisition, exchange, operation or sale of timber-producing real
property or rights to harvest timber, a principal purpose of which is
producing logs or other forest products;
(b) harvesting of timber other than harvesting which is incidental to
the ownership or operation of real property not owned or operated for a
principal purpose of producing logs or other forest products;
(c) sale, exchange or purchase of logs other than sales, exchanges or
purchases which are incidental to the ownership or operation of real
property not owned or operated for a principal purpose of producing logs or
other forest products;
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(d) acquisition or sale of any facilities used to convert logs into
lumber, plywood or other wood products;
(e) conversion of logs into lumber, plywood or other wood products;
(f) marketing and sale of lumber, plywood or other wood products;
(g) import or export of logs, lumber, plywood or other wood products
to or from the United States;
(h) manufacture, marketing or sale of manufactured, engineered, or
substitute wood products to the extent such products compete with products
produced by the Company or any member of the UST Group; or
(i) any and all other activities relating to the United States forest
products industry to the extent such activities compete with activities of
the Company or any member of the UST Group;
The noncompetition restrictions set forth in this Section 7.1 shall not apply in
the event of a termination of this Agreement pursuant to Section 6.1 or 6.4 nor,
in the event of Executive's termination due to Executive becoming Disabled in
accordance with Section 6.3, shall they apply following Executive ceasing to be
Disabled unless the Company offers to re-employ Executive on terms and
conditions at least as favorable as those set forth in this Agreement.
7.2 Confidentiality. Executive acknowledges that in the course of
Executive's employment by the Company, Executive will be furnished and have
access to certain information concerning the business, financial condition,
operations, assets and liabilities of the Company and the UST Group that is
confidential or proprietary in nature. All such information (irrespective of the
form of communication) is hereinafter collectively referred to as the
"Information." Until the date of termination of Executive's employment
hereunder, and for a period of 18 months thereafter, Executive agrees to keep
the Information confidential and agrees that Executive will use the Information
solely for the purpose of performing Executive's duties hereunder or as
otherwise authorized by the Company. This Agreement shall be inoperative as to
such portions of the Information which (a) are or become generally available to
the public other than as a result of a disclosure by Executive in violation of
this Agreement, (b) become available to Executive on a non-confidential basis
from a source other than the Company or the UST Group that is not bound by an
obligation of confidentiality to such entity or entities, or (c) are required to
be disclosed by an order or decree of a court or other tribunal of competent
jurisdiction, provided the Company is given prompt notice of, and the
opportunity to contest disclosure under, such order or decree. Upon termination
of this Agreement, Executive will return the Information furnished by the
Company or the UST Group and any documents that contain, reflect, or are based
upon, in whole or in part, the Information.
7.3 Equitable Relief. Executive acknowledges and agrees that it would be
difficult to measure damage to the Company or the UST Group from any breach by
Executive of Section 7.1
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or 7.2 and that monetary damages would be an inadequate remedy for any such
breach. Accordingly, Executive agrees that if Executive shall breach Section 7.1
or 7.2, the Company shall be entitled, in addition to all other remedies it may
have at law or in equity, to an injunction or other appropriate orders or
equitable relief to restrain any such breach, without showing or proving any
actual damage sustained by the Company or the UST Group. Executive further
agrees to waive any requirement for the securing or posting of any bond in
connection with such remedies.
7.4 Executive's Acknowledgment. Executive hereby expressly acknowledges and
agrees that (i) the restrictions and obligations set forth in and imposed by
this Section 7 will not prevent Executive from obtaining gainful employment in
Executive's field of expertise or cause Executive undue hardship, and (ii) in
view and consideration of the substantial benefits Executive will receive from
the Company pursuant to this Agreement and the Company Agreement, the
restrictions and obligations imposed on Executive under this Section 7 are
reasonable and necessary to protect the legitimate business interests of the
Company and its members and the UST Group.
Section 8. Indemnification.
(a) During the Term and for a period of six years thereafter, the
Company shall cause Executive to be covered by and named as an insured
under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Company or service
in other capacities at the request of the Company. The coverage provided
to Executive pursuant to this Section 8 shall be of a scope and on terms
and conditions at least as favorable as the coverage (if any) provided to
any other officer or director of the Company.
(b) To the maximum extent permitted under applicable law, during the
Term and for a period of six years thereafter, the Company shall indemnify
Executive against and hold Executive harmless from any costs, liabilities,
losses and exposures to the fullest extent and on the most favorable terms
and conditions that similar indemnification is offered to any director or
officer of the Company or any subsidiary or affiliate thereof.
Section 9. Representations and Warranties.
9.1 By Executive. Executive represents and warrants to the Company that (i)
Executive is under no contractual or other restriction or obligation which would
prevent the performance of Executive's duties hereunder or interfere with the
rights of the Company hereunder and (ii) this Agreement has been duly executed
and delivered by Executive, is the legal, valid and binding obligation of
Executive, and is enforceable against Executive in accordance with its terms,
except that no representation or warranty is made with respect to the provisions
of Section 7.
9.2 By the Company. The Company represents and warrants to Executive that
(i) it has all requisite limited liability company power and authority to
execute, deliver and perform this Agreement, (ii) all necessary proceedings of
the Company have been duly taken to authorize the execution, delivery and
performance of this Agreement, and (iii) this Agreement has been duly
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authorized, executed and delivered by the Company, is the legal, valid and
binding obligation of the Company, and is enforceable against the Company in
accordance with its terms.
Section 10. Life Insurance.
If requested by the Company, Executive shall submit to such physical
examinations by a physician and otherwise take such actions and execute and
deliver such documents as may be reasonably necessary to enable the Company to
obtain life insurance on the life of Executive for the benefit of the Company,
but in no event shall Executive's failure to qualify for such coverage, as a
result of the outcome of the medical examination or otherwise, be grounds for a
termination of Executive's employment.
Section 11. Notices.
Any notice given pursuant to this Agreement shall be in writing and shall
be deemed given on the earlier of the date (i) the notice is personally
delivered to the party to be notified, (ii) that is three days after the notice
is mailed, postage prepaid, certified with return receipt requested, addressed
as follows, or at such other address as a party may from time to time designate
by notice to the other party, (iii) the notice is delivered at the party's
address via courier service, or (iv) the notice is received by fax or
telecopier:
To the Company: U.S. Timberlands Services Company, L.L.C.
000 Xxxxxxx Xxxxxx - Xxxxx 00-X
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxx
Facsimile No: (000) 000-0000
To Executive: Xxxx X. XxXxxxxx
00000 XX 00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Section 12. General Provisions.
12.1 Remedies on Default. In the event either party breaches this
Agreement, the other party shall be entitled to pursue all remedies available at
law or in equity. Except as otherwise provided herein, in the event this
Agreement is breached by either party, the non-breaching party shall not
terminate this Agreement without notice and a reasonable opportunity to cure
such breach.
12.2 Assignment; Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor of the Company, by merger
or otherwise. Except as provided in the preceding sentence, this Agreement, and
the rights and obligations of the parties hereunder, are personal and neither
this Agreement, nor any right, benefit, or obligation of either party hereto,
shall be subject to voluntary or involuntary assignment, alienation or transfer,
whether by operation of law or otherwise, without the prior written consent of
the other party. Subject to the foregoing, the provisions of this Agreement
shall be binding upon and inure to the benefit of the
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parties and their respective heirs, personal representatives, administrators,
successors, and permitted assigns.
12.3 Waiver. Failure of any party at any time to require performance of any
provision of this Agreement shall not limit such party's right to enforce such
provision, nor shall any waiver of any breach of any provision of this Agreement
constitute a waiver of any succeeding breach of such provision or a waiver of
such provision itself. No attempted or purported waiver of any provision of this
Agreement shall be effective unless set forth in writing and signed by the party
to be bound.
12.4 Amendment. This Agreement may not be modified or amended except by the
written agreement of the parties.
12.5 Severability. The agreements and covenants contained in this Agreement
are severable, and in the event any of the agreements and covenants contained in
this Agreement should be held to be invalid by any court or tribunal of
competent jurisdiction, this Agreement shall be interpreted as if such invalid
agreements and covenants were not contained herein; provided, however, that if
in any legal proceeding a court shall hold unenforceable the covenants contained
in Section 7 by reason of their extent or duration or otherwise, any such
covenant shall be reduced in scope to the extent required by law and enforced in
its reduced form.
12.6 Integration. This Agreement contains the entire agreement and
understanding of the parties with respect to the employment of Executive by the
Company and supersedes all prior and contemporaneous agreements (oral or
written) between them with respect to such subject matter.
12.7 Attorneys' Fees. If any legal action or other proceeding is brought
for the enforcement or interpretation of this Agreement, or because of an
alleged dispute or breach in connection with any of the provisions of this
Agreement, if Executive is the successful or prevailing party, Executive shall
be entitled to recover from the Company reasonable attorneys' fees and other
costs incurred by Executive in connection with that action or proceeding, and in
any petition for appeal or review therefrom, in addition to any other relief to
which Executive may be entitled. The Company shall reimburse Executive for the
reasonable attorney's fees and expenses Executive has incurred in the
negotiation of this Agreement.
12.8 Third Party Beneficiaries. This Agreement does not create, and shall
not be construed as creating, any rights enforceable by any person not a party
to this Agreement.
12.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
12.10 Survival. In the event of termination of this Agreement by either
party, this Agreement shall become void and there shall be no liability on the
part of Executive or the Company except to the extent such termination results
from the breach by a party hereto of its obligations hereunder (in which case
Section 12.1 shall apply); provided that Sections 6.1, 6.2, 6.3, 6.4, 7, 8, 11
and 12.7 shall survive the termination of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
The Company: U.S. TIMBERLANDS SERVICES COMPANY, L.L.C.,
a Delaware limited liability company
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Chairman
Executive: /s/ Xxxx X. XxXxxxxx
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Xxxx X. XxXxxxxx
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