EXECUTION COPY
S.D. XXXXXX COMPANY
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Xx. Xxxxx X. Xxxxxx
00 Xxxxx Xxxx
Xxxxxxx, XX 00000
September 1, 1995
Dear Monte:
I refer to our discussions concerning the terms on which you will be
employed by S.D. Xxxxxx Company (the "Company") as President and Chief Executive
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Officer. This letter agreement sets forth the terms and conditions of such
employment.
1. TERM OF EMPLOYMENT
------------------
You shall be employed by the Company for an initial period of three years,
commencing October 1, 1995, subject to termination as provided herein.
Commencing on October 1, 1998, and on the first day of each month
thereafter, the expiration of the term of your employment will be
automatically extended for successive one month periods, until September
30, 2002, unless your employment is terminated as provided herein. Either
you or the Company may cause such one-month extensions to cease by
delivering written notice (a) 36 months in advance of the date as of which
such extensions shall cease, if such notice is given prior to October 1,
1997, or (b) 24 months in advance of such date if given on or after October
1, 1997. During the final six months prior to the date on which the term
of your employment ceases to extend under this Section 1, you will
cooperate fully in ensuring an orderly transition to a new President and
Chief Executive Officer.
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2. DUTIES; REPRESENTATION
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You shall serve as President and Chief Executive Officer of the Company and
shall serve the Company and its affiliates in such other executive
capacities as may be specified from time to time by the Board of Directors
of the Company (the "Board"), including serving as a director (and as a
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member of board committees) of the Company and one or more of its
affiliates. You shall have such duties as may be assigned to you from time
to time by the Board, including with respect to affiliates of the Company,
and in the performance of your duties you shall comply with the policies of
and be subject to the direction of the Board and the board of directors of
any affiliate of the Company with respect to which you perform any such
duties. The foregoing duties shall be performed without any compensation
being payable beyond that provided for herein. During your employment by
the Company, you shall devote your entire professional time, energy and
skill to the performance of your duties hereunder and to the business of
the Company and its affiliates (except for reasonable time spent for
trade, civic and charitable activities or for service on other boards of
directors, subject to the consent of the Board, which shall not be
unreasonably withheld) and you shall not be actively engaged in any duties
or pursuits which are or could reasonably be expected to be substantially
detrimental to the interests or reputation of the Company. Upon
termination of employment you shall be deemed to have resigned from all
offices and directorships.
You represent and warrant to the Company that you are free to be employed
by the Company upon the terms contained herein and that you are not bound
by any employment agreement, restrictive covenant, confidentiality or
proprietary information or other agreement that would prohibit or inhibit
in any way the full and complete performance by you of your duties
hereunder or as President and Chief Executive Officer of the Company.
3. ANNUAL BASE SALARY
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Your annual base salary for all services rendered hereunder in any capacity
will be $600,000 per year,
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paid in 26 equal installments. The annual base salary will be increased
for the second and third year of employment by at least a percentage equal
to the prior calendar year's percentage increase in the Consumer Price
Index (as defined below), as published by the U.S. Department of Labor.
After the third year of employment, any increase will be solely at the
discretion of the Compensation Committee of the Board, which committee will
review your compensation at least annually. The annual base salary will be
paid net of any disability payments under disability policies of the
Company.
The "Consumer Price Index" for any calendar year shall refer to the
"Consumer Price Index: All Items, Wage Earners and Clerical Workers--Not
Seasonally Adjusted--(1982-84 = 100)" as published by the Bureau of Labor
Statistics, U.S. Department of Labor. In the event the aforesaid Consumer
Price Index is discontinued, then the successor index, if any, or a
comparable index (as determined in good faith by the Board) shall be
applicable.
4. INCENTIVE BONUS
---------------
Throughout the term of your employment, you will be entitled to participate
in an annual bonus scheme pursuant to which you will have the opportunity
to earn an annual bonus of up to 75% (or such higher amount as may be
determined in the discretion of the Board) of your base salary based upon
achievement by the Company of annual performance targets determined in
advance by the Board after consultation with you. During the first year of
your employment such bonus may be earned in accordance with the scheme
attached as Exhibit A and shall not be less than $300,000 or more than
$450,000. Such bonus for any year shall be forfeited upon termination of
your employment for any reason; provided that if your employment is
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terminated pursuant to Section 8(a), 8(d) or 9 during the first year of
your employment, you will receive a bonus with respect to such year of
$300,000.
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5. TRANSFER COSTS
--------------
The Company will bear the reasonable out-of-pocket expenses set forth
below which you incur in connection with transferring your residence from
Chicago to Boston and which are approved by the Company prior to your
commitment therefor:
a) The reasonable expenses of moving your furniture and personal effects
to Boston;
b) The customary agents's commission and other reasonable legal and
incidental costs incurred in disposing of your house in Chicago and
the reasonable transfer costs and other legal expenses associated with
closing the purchase by you of a house in Boston (which need not occur
during the nine month period referred to in clause (c) below but must
occur while you are an employee in good standing with the Company);
and
c) The reasonable costs of renting a temporary residence in Boston for a
period not to exceed nine months.
In the event that you are unable in good faith to sell your house in
Chicago within nine months, the Company will acquire the house at current
market value as determined by the average value of the appraisals thereof
of three licensed real estate appraisers selected by you and acceptable to
the Company and will then use reasonable efforts to dispose of the house.
Any profit on such sale will be paid to you (net of all broker's fees and
commissions and other out-of-pocket expenses incurred in carrying,
maintaining and disposing of the house and of any taxes payable in
connection with carrying the house or the sale thereof). Any shortfall
will be for the Company's account.
In the event your employment is terminated other than pursuant to Section 8
or 9 prior to October 1, 1997, you will promptly reimburse the Company for
all costs incurred or reimbursed by the Company pursuant to this Section 5.
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6. CLUB MEMBERSHIP
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The Company will reimburse you for membership dues for one luncheon club
and one country club in Boston and for reasonable business-related expenses
in connection therewith. The choice of such clubs will be subject to the
approval of the Company.
7. LEGAL COSTS
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Promptly following commencement of your employment with the Company, the
Company will reimburse the reasonable fees and disbursements of your legal,
tax and financial advisors in connection with their review of this letter
agreement for you, up to an aggregate of $15,000.
8. TERMINATION OF EMPLOYMENT
-------------------------
a) Your employment shall be deemed to have been terminated by the Company
if you voluntarily terminate your employment within 30 days following
any of the following events to which you have not consented: (i) any
removal from your position as President and Chief Executive Officer of
the Company without your appointment to a position of comparable
dignity; (ii) the assignment to you of duties materially inconsistent
with the status of President and Chief Executive Officer of the
Company, which assignment continues for 30 days after notice by you to
the Board of your intention to terminate your employment as a result
of such assignment; (iii) any failure to be elected as a member of the
Board (or the board of directors of any successor to the Company) or
any removal from membership thereof; (iv) a reduction by the Company
in your annual base salary; (v) any failure by the Company to make any
payment, or fulfill any of its obligations, under this letter
agreement or any bonus or benefit plan in which you participate, which
failure has not been cured within 30 days following notice thereof to
the Board; and (vi) elimination or material modification of any bonus
or benefit plan (other than welfare plans) in which you participate
which reduces the value of your aggregate compensation, which
elimination or modification is not cured
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within 30 days after notice by you to the Board of your intention to
terminate your employment as a result thereof.
b) In the event of your death, this letter agreement shall be terminated
as of the date of such death. In the event of your Disability (as
defined below), the Board shall have the right to terminate your
employment at any time from and after the date of such Disability.
The term "Disability" shall mean the inability, due to illness,
accident or any other physical or mental incapacity, to perform your
duties in a normal manner (or your absence from employment for any
such reason) for a period of 120 days (whether or not consecutive) in
any 12-month period during the term of your employment. Whether or
not a Disability exists shall in each case be determined by the Board,
and any determination made by the Board in good faith shall be
conclusive.
c) Your employment may be terminated by the Company at any time for Cause.
The term "Cause" shall mean, as reasonably determined by the Board:
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(i) any wilful breach, in any material respect, by you of the
performance of your duties hereunder or any other obligation hereunder
(not including errors in business judgement made in good faith), (ii)
any attempt to secure any personal profit in connection with the
business of the Company or any of its affiliates, (iii) breach of the
representation and warranty contained in Section 2 hereof, (iv)
conviction of you, or a plea of nolo contendere by you to, a felony or
(vi) any other gross negligence or wilful misconduct (including acts
of dishonesty or moral turpitude) that, in the absence of this letter
agreement, would reasonably entitle the Company to terminate your
employment for cause. Prior to termination of your employment for
Cause, you shall be given a reasonable opportunity to present an
explanation of the acts or circumstances upon which such termination
is based to the Board or a committee thereof, and if, in the good
faith opinion of the Board, such acts or circumstances are of a nature
that can be remedied (including as to past detriment) without
detriment to the Company, the Board will provide you with a reasonable
period
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(not to exceed 30 days) in which to remedy such acts or circumstances.
d) Your employment may be terminated by the Company at any time for any
other reason, subject to Section 10.
9. CHANGE OF CONTROL PROTECTION
----------------------------
In the event that a Change of Control occurs, you will, upon notice to the
Company given within 12 months of the Change of Control, have the right to
terminate your employment and, if you do so, you will be entitled to the
termination benefits provided below. A Change of Control will be deemed to
occur if (i) the Sappi Group ceases to beneficially own (as defined in Rule
13d-3 under the Securities Exchange Act of 1934 ("Rule 13d-3") more than
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50% of the total voting power of the voting stock of the Company, (ii) any
person or group of persons under common control (other than South African
National Life Assurance Company, Sankorp Limited, Genbel Investments Ltd.
or Rembrandt Group Limited or any of their affiliates) obtains beneficial
ownership (as defined in Rule 13d-3) of more than 50% of the total voting
power of the voting stock of Sappi Limited, (iii) the board of directors of
the Company approves any agreement or plan of merger or consolidation of
the Company into any entity other than SDW Holdings Corporation
("Holdings") or a member of the Sappi Group, (iv) the shareholders of the
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Company approve any plan of complete liquidation of the Company, other than
a plan pursuant to which the Company will be liquidated into Holdings or a
member of the Sappi Group or (v) the Company's shareholders approve a sale
or other disposition of all or substantially all of the assets of the
Company, other than a sale to Holdings or a member of the Sappi Group. If
you terminate your employment following a Change of Control, your
employment shall terminate 60 days after the Company receives notice
thereof or such shorter period as the Company may elect. The "Sappi Group"
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shall mean Sappi Limited and each other entity in respect of which more
than 50% of the total voting power of the voting stock of such entity is
beneficially owned by members of the Sappi Group.
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10. COMPENSATION UPON TERMINATION.
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a) If your employment is terminated other than pursuant to Section 8(a),
8(d) or 9, you shall be entitled to the accrued but unpaid portion of
your annual salary through the date of termination and any benefits
which may then be due to you under any of the Company's disability or
benefit plans, but you shall forfeit any bonus and shall not be
entitled to any further compensation or benefits hereunder except as
provided in Sections 10(d), 10(e) and 10(f). If your employment is
terminated pursuant to Section 8(c) following notice of termination
(but prior to termination) pursuant to Section 8(a) or 8(d),
termination shall be deemed for all purposes to be pursuant to Section
8(c). If your employment is terminated pursuant to Section 8(b)
following notice of termination (but prior to termination) pursuant to
Section 8(a) or 8(d), termination shall be deemed for all purposes to
be pursuant to Section 8(a) or 8(d); provided, however, that any
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payments to which you are entitled pursuant to the second sentence of
Section 10(b) shall be reduced by the amount of all proceeds payable
under life insurance policies maintained on your behalf by the
Company.
b) In the event that your employment is terminated pursuant to Section
8(a), 8(d) or 9, (i) you shall be entitled to the accrued but unpaid
portion of your annual base salary through the date of your
termination and any benefits which may be due you under any of the
Company's disability or benefit plans, (ii) you may be entitled to a
portion of a bonus for the year in which such termination occurred to
the extent provided in Section 10(f) and (iii) you will continue to
receive welfare benefits provided by the Company to executives during
the Severance Payment Period (as defined below), subject to
termination or offset to the extent benefits are provided by another
employer and subject to the terms of such plans of the Company and to
your making any required contributions thereto. In addition, you will
be paid in a lump sum in cash, within 30 days following the date of
termination, an amount equal to the net present value (as determined
in good faith by the Board) of the aggregate annual base
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salary (at the rate in effect immediately prior to such termination)
that would be payable over the Severance Payment Period. The
"Severance Payment Period" with respect to a date of termination means
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a period beginning on such date and having a duration equal to the
lesser of the then applicable notice period under Section 1 and the
period from such termination date until the term would have ceased to
extend under Section 1 (taking into account any notice previously
given thereunder). Notwithstanding the foregoing, in the event that
your employment is terminated pursuant to Section 9 and the aggregate
of all payments made or provided to you under this letter agreement
and under all other plans and programs of the Company is determined to
constitute an excess Parachute Payment as such term is defined in
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended,
the aggregate amount of payments or benefits paid by the Company to
you pursuant to this letter agreement shall be reduced to the extent
that your after-tax position (taking into account all applicable
income and excise taxes) would be improved thereby.
c) In the event that your employment is terminated pursuant to Section
8(a), 8(d) or 9 prior to payment of the first-year incentive bonus
described in Section 4, you shall be entitled to receive such bonus at
the guaranteed level of $300,000.
d) In the event that your employment is terminated pursuant to Section
8(b) as a result of your Disability, you shall be entitled to receive
payments in an amount equal to 60% of your aggregate annual base
salary (at the rate in effect immediately prior to such termination),
payable at the intervals and for the applicable period provided under
the Company's Long Term Disability Plan in effect on the date hereof
(as described in Exhibit B hereto). All such payments will be made
net of any disability payments under disability policies of the
Company.
e) Subject to your continued cooperation as contemplated by the next
sentence, in the event that your employment is terminated pursuant to
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Section 8(b) as a result of your death, your estate or beneficiaries
will be paid in a lump sum in cash, within 30 days following death, an
amount equal to two times your annual base salary (at the rate in
effect at the time of death). The Company may satisfy or fund such
obligation through the maintenance of life insurance and you agree to
cooperate fully in connection with any effort by the Company to
maintain insurance (including by submitting to all required physicals
and providing all required information).
f) In the event that your employment is terminated pursuant to Section
8(a), (b) or (d) or Section 9 on or after the end of the sixth month
of any fiscal year of the Company, the Company shall pay to you within
120 days following the end of such year an amount equal to the product
of (i) the bonus (if any) you would have received in respect of such
year under any annual bonus plan in place at the time of your
termination (assuming your employment continued through the end of
such year) and (ii) a fraction, the numerator of which is the number
of days in which you were employed by the Company during such year and
the denominator of which is 365.
11. BENEFITS
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You shall be entitled during your employment to participate in any benefit
plans and may utilize any corporate financial planning services available
to the Company's senior executive employees from time to time, to the
extent that you are eligible to do so under the terms of any such plan or
service; provided, that, in determining your level of participation in any
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bonus, incentive or profit sharing plan, the Board may consider the
benefits contemplated by Sections 4 and 12 (it being the understanding of
the parties that such benefits were specifically provided because no such
plans currently exist; it being the intent of the parties that your right
to participate in future plans is not meant to be duplicative of such
benefits; and it being the expectation of the parties that you would only
participate in grants under any stock option plan after the initial grants
made to executives under the plan) and any determination by the Board in
good faith
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as to your level of participation shall be conclusive. The Company agrees
that it will consider in good faith the implementation of a long-term
incentive plan to compensate the President and other key senior executive
personnel based on the performance of the Company as compared to selected
peer group companies.
12. EQUITY PARTICIPATION
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a) Promptly following commencement of your employment, you will be
offered 10,000 ordinary shares of Sappi Limited at a price of $20 per
share pursuant to, and subject to the terms and conditions of, Sappi
Limited's executive share purchase scheme, which is attached as
Exhibit C. Such shares shall be "restricted shares" for U.S.
securities law purposes and you shall hold such shares subject to
appropriate restrictions to ensure compliance with securities laws.
b) Promptly following commencement of your employment, you will be
granted 220,000 Equity Participation Rights with respect to the common
stock of SDW Holdings Corporation ("Holdings"; such common stock,
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"Holdings Common Stock") on the terms and subject to the conditions
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set forth in Exhibit D.
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c) At such time as Holdings (or any other subsidiary of Sappi Limited of
which the Company is a direct or indirect subsidiary) has an executive
share purchase or restricted share purchase plan in effect, you may,
and if requested by the Board shall, purchase 60,000 shares of
Holdings Common Stock (or, at the option of the Board, an amount of
common shares of any such other entity to be determined in accordance
with the adjustment provisions of Exhibit D) pursuant to such plan at
a price per share of $14.40 (or a price per common share of such other
entity determined in accordance with the adjustment provisions of
Exhibit D). Such shares may be "restricted shares" for U.S.
securities law purposes and you shall hold such shares subject to
appropriate restrictions to ensure compliance with securities laws.
You will not be required or permitted to make any such purchase if
such purchase would
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result in a breach under any agreement to which the Company or
Holdings (or any such other entity) is a party or require an
adjustment in the terms of any outstanding securities of the Company
or Holdings (or any such other entity), including, without limitation,
Holdings' Class A and Class B Warrants. If requested at least 30 days
prior to the date of such purchase, the Company will, at the time of
such purchase, lend to you on a secured, recourse basis and at an
interest rate equal to the lesser of the prime rate (as publicly
announced by Chemical Bank, or any successor thereto) and the average
weighted cost of the Company's senior debt, the lesser of (A) the
excess of the aggregate purchase price of such shares over $250,000
and (B) the maximum amount allowed to be so loaned under the U.S.
margin rules. The Company and you will use reasonable efforts to take
such action as is necessary to permit such loan to be in the amount
specified in clause (A) above (including (x) in the case of the
Company, reasonable efforts to provide for loans in any such plan and
to seek shareholder approval of such plan and (y) in your case,
reasonable efforts to provide additional collateral for such loan).
You shall not, in any event, be required to invest more than $250,000
of your funds (with the amount of stock purchased to be appropriately
adjusted to reflect your maximum investment) pursuant to this
paragraph (c) without your consent. Such loan shall (i) be secured by
a pledge of all shares purchased by you with the proceeds of such loan
(the "Pledged Stock") and any other collateral provided as
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contemplated above, (ii) provide for, at the request of the Board,
mandatory prepayment with the pre-tax net proceeds of any sale
(including to the Company) of Pledged Stock of a percentage of the
outstanding principal amount of such loan corresponding to the
percentage of your Pledged Stock disposed of in such sale, as well as
all accrued but unpaid interest on such loan and (iii) otherwise be
structured to ensure compliance with the U.S. margin rules. Such loan
shall become due in full 180 days following termination of your
employment hereunder, provided, that to the extent you are not legally
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permitted to sell the Pledged Stock during such period, such loan
shall become due (on
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a ratable basis) as you become legally permitted to sell the Pledged
Stock. In the event that a public primary offering of Holdings Common
Stock or of the common stock of a subsidiary of Sappi Limited of which
the Company is a direct or indirect subsidiary is not effected within
12 months following the date of any such purchase and you wish to sell
such shares (and are permitted to do so), the Company will, upon
request, and subject in all respects to all applicable securities
laws, purchase or cause to be purchased the shares you wish to sell
for a price per share equal to the Participation Value (as defined in
Exhibit D). Subject to the provisions of any such loan and to
applicable laws, you will be entitled to transfer such shares (whether
or not you are employed by the Company at the time of such transfer)
in accordance with the following schedule: 1/3 on or after October 1,
1996, 1/3 on or after October 1, 1997, and 1/3 on or after October 1,
1998, provided that Pledged Stock may be transferred at any time
following termination of your employment.
The Company and you will negotiate in good faith regarding
arrangements to compensate you for any additional Federal and state
taxes payable by you as a result of the fair market value of such
shares at the time of purchase being greater than $19.20, it having
been the intent of the parties that you would be able to purchase such
shares as soon as practicable after the date hereof.
If the issuer of common equity purchased by you pursuant to this
paragraph (c) proposes to register shares of its common equity under
the U.S. Securities Act of 1933 (other than pursuant to a registration
statement on Form S-4 or S-8 or any successor form or filed in
connection with an exchange offer or acquisition or an offering of
securities solely to the existing shareholders or employees of such
issuer), it shall use reasonable efforts to provide you with a
reasonable opportunity to register such number of such shares as you
may request, subject to any limitations recommended by the managing
underwriters, if any, in view of market conditions or perceptions.
Your right to participate in any such registration
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shall also be subject to execution by you of customary agreements,
including with respect to registration procedures and cooperation,
indemnification and contribution. All registration expenses of
Holdings or such other issuer (including with respect to the
registration of your shares) will be for its account.
Holdings hereby represents and warrants that the aggregate number of
shares of Holdings Common Stock outstanding on the date hereof is
35,937,500 (on a fully diluted basis).
The Company hereby agrees to use reasonable efforts to take such
action as is necessary to permit you to purchase the shares
contemplated by this paragraph (c) on or prior to October 1, 1996. If
you wish to purchase such shares after such date and are otherwise not
permitted to do so, the Company will negotiate in good faith with you
regarding alternate equity participation or other compensation to
preserve for you the economic benefit of being permitted to purchase
such shares at the price set forth in paragraph (c) above.
d) The Board shall make appropriate adjustments to the Equity
Participation Rights and/or the number of shares of Holdings Common
Stock or the common stock of any other applicable entity purchasable
by you pursuant to paragraph (c) above, or the purchase price thereof,
in order to reflect any change in such stock as a result of merger,
consolidation, reorganization, recapitalization, combination of
shares, stock split-up or stock dividend.
13. PENSION
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In the event you remain employed hereunder until attaining the age of 62,
are an employee in good standing at the time of the termination of your
employment and are not terminated for Cause, you shall receive pension
payments in an amount of $150,000 per annum, payable in 26 equal
installments on a biweekly basis and commencing with the first day of the
first year after you attain the age of 62 and are no longer employed by the
Company and continuing until your
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death. Such pension payments shall be net of any sickness or accident
disability payments under the insurance programs of the Company and net of
any payments under the Company's Senior Executive Retirement Plan (or any
successor thereto). All rights with respect to such pension benefits shall
automatically be forfeited without compensation in the event that over the
course of your employment you have realized or have had the opportunity to
realize (based on the highest valuation after vesting, whether or not
options were exercised or stock sold) pre-tax gain or income aggregating at
least $3.5 million in respect of the benefits contemplated by Section 12
and in Exhibit D.
14. VACATION
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You will be entitled to five calendar weeks vacation each year subject to
the Company's normal vacation policies.
15. INTELLECTUAL PROPERTY.
----------------------
You shall hold in a fiduciary capacity for the benefit of the Company, and
shall disclose fully to the Company immediately upon origination or
acquisition thereof, any inventions, discoveries, processes or devices
which you (or others with you) discover or develop while employed by the
Company and which may be useful in, or relate to, the products, business or
research and development work of the Company and the same shall be the
exclusive property of the Company. At the request of the Company you shall
execute such assignments and other instruments as the Company shall from
time to time deem desirable to establish, maintain, perfect, protect,
enforce or defend its right, title and interest in or to such property.
You hereby agree that all documents or materials, and all other
Confidential Information (as defined below) relating to the business of the
Company or any of its affiliates that was furnished or made available to or
prepared by you in the course of your employment shall be the Company's
property and shall be delivered to the Company promptly upon termination of
your employment or at any other time at the Company's request.
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16. ACTIVITIES AFTER TERMINATION OF EMPLOYMENT
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a) During the term of your employment by the Company and for a two-year
period following termination thereof, you shall not, directly or
indirectly: (i) engage (or assist any person or entity in any way to
engage) anywhere in the United States in the Xxxxxx Business,
including soliciting any customer or prospective customer of the
Company to purchase any Xxxxxx Products other than from the Company
and its affiliates; or (ii) perform any action, activity or course of
conduct which is substantially detrimental to the business or business
reputation of the Company or any of its affiliates, including (A)
recruiting or hiring any employees of the Company or any of its
affiliates or persons who have worked for the Company or any of its
affiliates within one year prior to such recruiting or hiring or (B)
encouraging any employee of the Company or any of its affiliates to
leave the employment of the Company or any of its affiliates. "Xxxxxx
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Business" means the manufacture or sale of coated printing or
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publishing paper or flat or embossed release papers (collectively,
"Xxxxxx Products").
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b) The foregoing shall not be deemed breached solely as a result of (i)
your ownership of less than an aggregate of 1% of any class of stock
of a corporation engaged, directly or indirectly, in the Xxxxxx
Business; provided that such stock is listed on a national securities
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exchange or is quoted on the NASDAQ National Market System or (ii)
your employment by a corporation or other entity so long as, at the
time of the commencement of such employment, the Xxxxxx Business does
not account for (and is not anticipated to account for in the
foreseeable future) more than 10% of the assets, revenues or earnings
of such corporation or other entity or any of its affiliates.
c) You agree that the foregoing territorial and time limitations are
reasonable and properly required for the adequate protection of the
business and the goodwill of the Company.
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d) Following the term of your employment, you shall furnish such
information and assistance as may be reasonably required by the
Company or any of its affiliates in connection with any litigation
relating to the period during which you were employed by the Company.
17. CONFIDENTIALITY
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You shall hold in a fiduciary capacity for the benefit of the Company all
Confidential Information as defined below and shall not, during your
employment hereunder or after the termination of such employment, divulge
any Confidential Information to, or use any Confidential Information for
the benefit of, any person or entity other than the Company or persons or
entities designated by the Company. "Confidential Information" shall mean
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all business information (whether or not in written form) which relates to
the Company, any of its affiliates or their respective businesses or
products and which is not known to the public generally, including but not
limited to technical notebooks and technical records; technical reports;
patent applications; machine, equipment, process and product designs
including any drawings and descriptions thereof; unwritten knowledge and
"know-how"; formulas; operating instructions; training manuals; production
and development processes; production schedules; customer lists; customer
buying records and habits; product sales records and documents, and product
development, marketing and sales strategies; territory listings; market
surveys; marketing plans; profitability analyses; product cost; long-range
plans; information relating to pricing, competitive strategies and new
product development; information relating to any forms of compensation and
other personnel-related information; contracts; and supplier lists.
18. CONSULTING
----------
During a period of six-months following termination of your employment, you
shall provide limited consulting services to the Company on a reasonable
basis subject to appropriate notice and reimbursement of travel and other
expenses and subject to the time requirements of any other employment you
may obtain. The purpose of
18
such services will be to ensure an orderly transition upon your termination
and to avoid disruption in the business.
19. TAX WITHHOLDING
---------------
The Company may withhold from any amounts payable to you any amount that
the Company is required to withhold with respect to such payments under the
then applicable provisions of the Internal Revenue Code or any state, local
or foreign income tax laws unless you otherwise satisfy such withholding
requirements.
20. REMEDIES.
---------
a) You agree that immediate and irreparable harm, for which damages would
be an inadequate remedy, would occur in the event any of the
provisions of Section 15, 16 or 17 hereof were not performed in
accordance with their specific terms or were otherwise breached.
Accordingly, you agree that the Company shall be entitled to an
injunction or injunctions to prevent breaches of such provisions and
to enforce specifically the terms and provisions thereof without the
necessity of proving actual damages or providing prior notice, in
addition to any other remedy to which it may be entitled at law or
equity. Notwithstanding the foregoing, the Company will, to the
extent practicable, provide notice to you prior to taking any such
action; provided, that failure to provide such notice shall not affect
--------
the rights of the Company under this letter agreement.
b) You shall have no rights, remedies or claims for damages, at law, in
equity or otherwise with respect to any termination of your
employment, and shall be entitled to no compensation or benefits
hereunder, other than as set forth in Section 10 hereof, and except as
otherwise expressly provided herein you unconditionally release the
Company and its affiliates and its and their directors, officers,
employees and stockholders from all claims, liabilities and
obligations pertaining to any such termination. You agree that by
entering into this letter agreement you are releasing and
19
waiving any claims that you may have under the Federal Age
Discrimination in Employment Act of 1967, as amended by the Older
Workers Benefit Protection Act of 1990, or under the age
discrimination provisions of Massachusetts General Laws, Chapter 151B,
Section 4, or under any other Federal, state or local laws prohibiting
employment discrimination, arising out of any termination of your
employment in accordance with this letter agreement.
21. MISCELLANEOUS
-------------
The obligations of the Company with respect to the Equity Participation
arrangements contemplated by Section 12 shall be subject to all applicable
laws, rules and regulations and such approvals by any governmental agencies
as may be required; it being agreed that the Board will negotiate in good
faith with you regarding alternate equity participation or other
compensation to preserve for you, to the maximum extent reasonably
practicable, the economic benefit of such arrangements in the event such
arrangements must be modified or cannot reasonably be implemented as a
result of the applicability of any of the foregoing. To the extent that it
may effectively do so under applicable law, each party hereto hereby waives
any provision of law which renders any provision of this letter agreement
invalid, void or unenforceable in any respect. If any provision hereof is
held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
obligations set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties
hereto hereby agree to take all reasonable actions to preserve the benefits
and carry out the intent of any provision which is so held to be invalid,
void or unenforceable. No failure or delay on the part of the parties
hereto in exercising any power or right hereunder shall operate as a waiver
thereof. No waiver or amendment of any provision of this letter agreement
shall be effective unless in writing and signed by each party hereto. This
letter agreement may be signed in counterparts. You and the Company each
waives, to the fullest extent permitted by applicable law, any right you or
it may have to a trial by jury in respect of any
20
litigation arising out of or relating hereto. No benefit or promise
hereunder shall be secured by any specific assets of the Company; and you
shall have only the rights of a general unsecured creditor in seeking
satisfaction of such benefits or promises. Any powers granted to the Board
may be exercised by a committee appointed by the Board. This letter
agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Massachusetts.
22. SHAREHOLDERS AGREEMENT; APPROVAL
--------------------------------
You hereby acknowledge that the Company is party to a Shareholders
Agreement, pursuant to which the Company has agreed not to take certain
actions, including the hiring of, and the amendment of any compensation
arrangement with respect to, the Chief Executive Officer of the Company,
without the approval of certain parties to such Shareholders Agreement,
including Holdings. The obligations of the Company hereunder shall be
subject to receipt of such approvals and approval by the Board, which the
Company shall endeavor to obtain within two business days following your
acceptance of this letter. Promptly after obtaining such approvals, the
Company will provide you with notice thereof; provided that the failure to
--------
provide such notice at any time shall not affect any of the obligations of
the parties hereunder. You shall be released from all of your obligations
under this Agreement in the event that such approval is not obtained on or
before September 18, 1995.
23. NOTICES
-------
Notices provided for herein shall be in writing and shall be delivered as
follows (or at such other address as either of the parties hereto shall
have specified by notice in writing to the other party):
a) If to the Company, at 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000, Attention
of Secretary;
b) If to you, prior to October 1, 1995, at 00 Xxxxx Xxxx, Xxxxxxx, XX
00000 and thereafter at the address set forth in (a) above but to your
attention, in either case with a copy to Xxxxxx &
21
Xxxxxxxxxxxx, P.C., 2400 Prudential Tower, 000 Xxxxxxxx Xxxxxx,
Xxxxxx, XX 00000-0000, Attention of Xxxxxxx X. Xxxxxx, Esq.
Please indicate your acceptance of the terms described herein by
signing in the appropriate space below. You may take up to 21 days from receipt
of this letter agreement to consider whether to accept the terms described
herein. This letter agreement shall not be effective until 8 days after you
sign it, and you may revoke it at any time during the intervening 7-day period
by either delivering a signed revocation notice to the Company or mailing such
notice to the Company so it is post-marked no later than 7 days after you sign
this letter agreement, in each case at the address provided above. Should you
revoke your acceptance, no agreement will exist. This is an important legal
document, and you may wish to consult with counsel of
22
your own choice in deciding whether to accept the terms described herein.
Very truly yours,
S.D. XXXXXX COMPANY,
by /s/ Xxxxxx van As
__________________________
Name: Xxxxxx van As
Title: President
SDW HOLDINGS CORPORATION
with respect to Sections 12(b), 12(c)
and 12(d) only
by /s/ Xxxxxx van As
__________________________
Name: Xxxxxx van As
Title: President
SAPPI LIMITED
with respect to Section 12(a) only
by /s/ Xxxxxx van As
__________________________
Name: Xxxxxx van As
Title: Executive Chairman
ACCEPTED AND AGREED TO BY
by /s/ Xxxxx X. Xxxxxx
____________________________
Name: Xxxxx X. Xxxxxx
Date:
