EXHIBIT E
[Form of Letter Agreement]
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Dear :
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Unisource Worldwide, Inc. (the "Company") considers it essential to the
best interests of its stockholders to ▇▇▇▇▇▇ the continuous employment of the
key management personnel of the Company. In this connection, the Board of
Directors of the Company (the "Board") recognizes that the possibility of a
change in control of the Company exists and that such possibility, and the
uncertainty and questions which it may raise, may result in the departure or
distraction of key management personnel to the detriment of the Company and its
stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of key management
personnel, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from any possible
change in control of the Company. The Board has also determined that it is in
the best interest of the Company and its stockholders to ensure your continued
availability to the Company in the event of a change in control.
In order to induce you to remain in the employ of the Company, the Company
agrees that you shall receive the severance benefits set forth in this letter
agreement (the "Agreement") in the event your employment with the Company is
terminated subsequent to a Change in Control (as defined in Section 2 below)
under the circumstances described below.
1. Term of Agreement. This Agreement shall be effective as of the date
hereof and shall continue in effect during the period you are employed by the
Company or any of its affiliates or successors and for 25 months after you cease
to be so employed following a Change in Control.
2. Change in Control. For purposes of this Agreement, the phrase "Change
in Control" shall mean first to occur of the following events:
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(a) any "Person" or "Group" (as such terms are used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act")), other than any employee benefit plan sponsored by the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities representing
25% or more of the combined voting power of the Company's then outstanding
voting securities;
(b) individuals who constitute the Board on January 1, 1999 (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to such
date whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee of the Company for director), but excluding for this
purpose any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents by
or on behalf of an individual, corporation, partnership, group, associate
or other entity or "person" other than the Board, shall be, for purposes of
this paragraph (b), considered as though such person were a member of the
Incumbent Board;
(c) the approval by the shareholders of the Company of a plan or
agreement providing (i) for a merger or consolidation of the Company other
than with a wholly-owned subsidiary and other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or (ii) for a sale, exchange or other
disposition of all or substantially all of the assets of the Company; or
(d) the adoption of a resolution by the Incumbent Board stating that
a specified event or transaction shall constitute a Change in Control for
purposes of this Agreement.
3. Termination Following Change in Control. (a) Definitions.
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(i) Disability. You shall be deemed to be under a Disability if you
become totally and permanently disabled (as defined in the Company's Long-
Term Disability Plan applicable to senior executive officers as in effect
on the date hereof).
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(ii) Retirement. Termination by the Company or you of your
employment based on "Retirement" shall mean termination in accordance with
the Company's retirement policy, including early retirement, generally
applicable to its salaried employees or in accordance with any retirement
arrangement established with your written consent with respect to you.
(iii) Cause. Termination by the Company of your employment for
"Cause" shall mean termination upon (A) your willful and continued failure
substantially to perform your duties with the Company (other than as a
result of total or partial incapacity due to physical or mental illness or
as a result of a termination by you for Good Reason) after a written demand
for substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, (B) your willful engaging in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise or (C) your conviction of a felony under the laws
of the United States or any state thereof. For purposes of this clause
(iii), no act or failure to act on your part shall be deemed "willful"
unless done or omitted to be done by you not in good faith and without
reasonable belief that your action or omission was in the best interest of
the Company. Notwithstanding the foregoing, you shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered
to you a copy of a resolution duly adopted by the affirmative vote (which
cannot be delegated) of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board called and held for such
purpose (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board), finding that in
the good faith opinion of the Board you were guilty of conduct set forth
above in subclauses (A), (B) or (C) above, specifying the particulars
thereof in detail.
(iv) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without your express written consent, any of the following:
(A) You are removed from your position for any reason other
than by reason of your death, Disability or Retirement or for Cause;
(B) A material reduction in your duties, a material
diminution in your position or a material adverse change in your
reporting relationship from those in effect prior to the date of the
Change in Control;
(C) The Company fails to pay you any amounts otherwise
vested and due under any applicable compensation or
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employment plan or agreement, including any bonus, and such failure
continues for ten (10) business days following notice to the Company
thereof;
(D) A reduction in your pay or bonus opportunity as in
effect immediately prior to the Change in Control or as the same may
be increased from time to time;
(E) The failure by the Company to continue in effect any
compensation plan in which you participate, including but not limited
to the compensation plans in effect on the date hereof or any
substitute plans adopted prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan providing you with substantially similar benefits)
has been made with respect to such plan in connection with the Change
in Control, or the failure by the Company to continue your
participation therein on the same basis, both in terms of the amount
of benefits provided and the level of your participation relative to
other participants, as existed at the time of the Change in Control;
(F) The failure by the Company to continue to provide you
with benefits at least as favorable to those enjoyed by you under any
of the Company's pension, life insurance, medical, health and
accident, disability, deferred compensation or savings plans in which
you were participating at the time of the Change in Control, or the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive you of any material
fringe benefit enjoyed by you at the time of the Change in Control,
except where such failure to provide benefit plans or fringe benefits
is due to a change by the Company in such plans or benefits applicable
to employees of the Company in general; or
(G) The failure by the Company to provide you with the
number of paid vacation days to which you are entitled on the basis of
the Company's practice with respect to you as in effect at the time of
the Change in Control; or
(H) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 5 hereof; or
(I) Any purported termination of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (b) below (and, if applicable, the
requirements of Subsection (a)(iii) above);
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for purposes of this Agreement, no such purported termination shall be
effective; or
(J) Your office is relocated outside of a thirty-five (35)
mile radius of your place of employment immediately prior to a Change
in Control.
(b) Notice of Termination. Any purported termination of your employment
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by the Company or by you shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 6 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(c) Date of Termination. "Date of Termination" shall mean (i) if your
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employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such thirty (30) day period), (ii) if your
employment is terminated by reason of your death, the date of your death, and
(iii) if your employment is terminated by reason of your Retirement, for Cause,
for Good Reason or for any other reason (other than Disability or death), the
date specified in the Notice of Termination (which, in the case of a termination
for Cause shall not be less than thirty (30) nor more than sixty (60) days from
the date such Notice of Termination is given). In the event that you terminate
your employment for Good Reason, the Company shall have seven (7) calendar days
after receiving the Notice of Termination to cure the "Good Reason." In the
event such cure has not been effected within such seven (7) day period, your
Notice of Termination shall be immediately effective in accordance with its
terms. In the event the Company terminates your employment for "Cause," you
shall have seven (7) calendar days after receiving the Notice of Termination to
cure the "Cause." In the event such cure has not been effected within such seven
(7) day period, the Company's Notice of Termination shall be immediately
effective in accordance with its terms.
4. Compensation Upon Termination of Employment. Upon termination of your
employment you shall be entitled to the following benefits:
(a) Termination for Cause or for Other Than Good Reason, Disability,
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Death or Retirement. If your employment shall be terminated by the Company
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for Cause or by you other than for Good Reason, Disability, death or
Retirement, the Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of Termination
is given and any amounts to be paid to you pursuant to the Company's
retirement and other benefit plans of the Company then
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in effect, and the Company shall have no further obligations to you under
this Agreement.
(b) Termination for Retirement, Death or Disability. If your
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employment shall be terminated by the Company or by you for Retirement, or
by reason of your death or Disability, the Company shall pay to you or your
estate, as the case may be, your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is
given, and any other benefits shall be determined in accordance with the
Company's retirement, benefit, disability and insurance programs then in
effect.
(c) Termination for Good Reason or for Other Than Cause, Death,
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Disability or Retirement. If within the twenty-four (24) month period
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following a Change in Control your employment with the Company shall be
terminated (i) by the Company other than for Cause and other than because
of your death, Disability or Retirement or (ii) by you for Good Reason,
then, effective as of the Date of Termination, any employment agreement
between you and the Company shall terminate and you shall not have any
obligations or be entitled to any severance benefits thereunder and, in
lieu of any severance benefits which you otherwise would be eligible to
receive under severance plans of the Company as in effect immediately prior
to the Change in Control, you shall be entitled to the benefits provided
below:
(i) The Company shall pay you (i) your full base salary
through the Date of Termination at the rate in effect at the time the
Notice of Termination is given, plus all other amounts to which you
are entitled under any compensation or benefit plan of the Company
(excluding any severance benefits under the Company's severance plan
referred to above) at the time such payments are due under the terms
of such plans and (ii) an amount equal to the annual target bonus (or,
alternatively, equal to any guaranteed bonus if greater than the
annual target bonus) for the year in which the Date of Termination
occurs, multiplied by a fraction, the numerator of which is the number
of months or fraction thereof in which you were employed by the
Company in such year, and the denominator of which is 12.
(ii) In lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company shall pay
as severance to you, not later than the fifth day following the Date
of Termination, upon the execution of a release, in form substantially
similar to the form annexed hereto as Exhibit A, provided by the
Company, a lump sum severance payment (the "Severance Payment") equal
to [_] times the sum of (i) your
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annual base salary as in effect immediately prior to the Change in
Control or, if greater, as in effect immediately prior to the Date of
Termination and (ii) the amount of the target bonus in effect
immediately prior to the Change in Control, assuming 100% attainment
of relevant target performance for such year under the bonus plan
applicable to senior company executives; provided however, that the
amounts in (i) and (ii) shall not exceed $[ ] for any annual
period.
(iii) In lieu of participation for twenty-four (24) months
following such termination in the life, medical, health and accident,
and disability insurance plans of Company in which you were eligible
to participate immediately prior to the Change in Control, a lump sum
payment, payable at the time of the Severance Payment, in cash equal
to the cost to the Company, as of the Change in Control, for providing
such benefits for such period plus such additional amount that after
payment of all applicable Federal, state and local taxes thereon,
computed at the marginal rates , is equal to all such taxes, so
computed, imposed with respect to such payment.
(iv) The Company shall cause you to be 100% vested in your
accrued benefit under the Company's Supplemental Employee Retirement
Plan (the "SERP") as of the Date of Termination and to pay to you, not
later than the fifth day following the Date of Termination, in a lump
sum, the present value of such benefit, calculated by the actuarial
firm utilized by the Company immediately prior to the Change in
Control, in accordance with the terms of the SERP and pursuant to the
actuarial procedures and assumptions utilized by such actuarial firm
immediately prior to the Change in Control.
(v) (A) Anything herein to the contrary notwithstanding,
in the event that it is determined that any payment or distribution by
the Company to or for your benefit, whether paid or payable or
distributed or distributable pursuant to the terms hereof or
otherwise, other than any payment pursuant to this Section 4(c)(v)(A),
(a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then you shall be
entitled to receive, within fifteen (15) business days following the
determination described in Section 4(c)(v)(B) below, an additional
payment ("Excise Tax Adjustment Payment") in an amount such that after
payment by
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you of all applicable Federal, state and local taxes (computed at the
maximum marginal rates and including any interest or penalties imposed
with respect to such taxes), including any Excise Tax, imposed upon
the Excise Tax Adjustment Payment, you shall retain an amount of the
Excise Tax Adjustment Payment equal to the Excise Tax imposed upon the
Payments.
(B) All determinations required to be made under this
Section 4(c)(v), including whether an Excise Tax Adjustment Payment is
required and the amount of such Excise Tax Adjustment Payment, shall
be made by the accounting firm utilized by the Company immediately
prior to the Change in Control, which shall provide to the Company and
you detailed supporting calculations within fifteen (15) business days
of the Date of Termination. Except as hereinafter provided, any
determination by such accounting firm shall be binding upon the
Company and you. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination
hereunder, it is possible that (x) Excise Tax Adjustment Payments
which should have been made will not have been made by the Company
("Underpayment"), or (y) certain Payments will have been made which
should not have been made ("Overpayment"), consistent with the
calculations required to be made hereunder. In the event of an
Underpayment, the Company shall promptly determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for your benefit. In the event that
you discover that an Overpayment shall have occurred, the amount
thereof shall be promptly repaid to the Company.
(vi) The Company shall also pay to you as incurred all
legal and accounting fees and expenses incurred by you as a result of
such termination (including all such fees and expenses, if any, in
seeking to obtain or enforce any right or benefit provided by this
Agreement or any other compensation-related plan, agreement or
arrangement of the Company) unless your claim is found by an arbitral
tribunal of competent jurisdiction to have been frivolous.
(vii) All your options to purchase equity securities of the
Company outstanding under any Company stock option or incentive plan,
whether vested or unvested, shall be immediately exercisable on the
Date of Termination and shall expire, to the extent not then
exercised, 90 days after the Date of Termination.
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(d) No Mitigation. You shall not be required to mitigate the amount
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of any payment provided for in this Section 4 by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided for
in this Section 4 be reduced by any compensation earned by you as the
result of employment by another employer or by retirement benefits after
the Date of Termination, or otherwise.
(e) Other Benefits. In addition to all other amounts payable to you
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under this Section 4, you shall be entitled to receive all benefits payable
to you under any other plan or agreement relating to retirement benefits in
accordance with the terms of such plan or agreement, provided, however,
that the severance payments referred to in Section 4(c) shall be in lieu of
any severance payments, or payments in lieu of notice, under any employment
agreement between you and the Company entered into prior to the date
hereof.
5. Successors; Binding Agreement. (a) Assumption of Agreement. The
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Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as herein before defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise. Prior to a Change in
Control, the term "Company" shall also mean any affiliate of the Company to
which you may be transferred and the Company shall cause such successor employer
to be considered the "Company" bound by the terms of this Agreement and this
Agreement shall be amended to so provide. Following a Change in Control, the
term "Company" shall not mean any affiliate of the Company to which you may be
transferred unless you shall have previously approved of such transfer in
writing, in which case the Company shall cause such successor employer to be
considered the "Company" bound by the terms of this Agreement and this Agreement
shall be amended to so provide.
(b) Enforceability. This Agreement shall inure to the benefit of and be
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enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
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registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement; provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive law (and not the choice of law rules) of the
Commonwealth of Pennsylvania.
9. Validity. If any provision of this Agreement shall be declared to be
invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. Counterparts. This Agreement may be signed in several counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
11. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Philadelphia, Pennsylvania 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 having jurisdiction; provided that you shall be
entitled to seek specific performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
12. Continued Employment. You agree to be bound by the terms and
conditions of this Agreement and to remain in the employ of the Company during
any period following any public announcement by any person of any proposed
transaction or transactions which, if effected, would result in a Change in
Control until a Change in Control has taken place or, in the opinion of the
Board, such person has abandoned or terminated its efforts to effect a Change in
Control. Subject to the foregoing, nothing contained in this Agreement shall
impair or
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interfere in any way with your right to terminate your employment or the right
of the Company or any subsidiary to terminate your employment with or without
cause prior to a Change in Control, in which such event all rights and
obligations hereunder shall immediately terminate. Nothing contained in this
Agreement shall be construed as a contract of employment between the Company and
you.
13. Payment Obligations Absolute. Subject to the execution by you and the
Company of mutual releases following a Change in Control and prior to payment of
the Severance Payment, the Company's obligations to make all payments and honor
all commitments under this Agreement shall be absolute and unconditional and
shall not be affected by any circumstances including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against you.
14. Interest on Late Payments. To the extent that any payments required
to be made hereunder following a Change in Control are not made within the
period specified therefor, the Company shall be liable for interest on such
delayed payments at the rate of 150% of the prime rate, compounded monthly, as
posted by the ▇▇▇▇▇▇ Guaranty Trust Company of New York, from time to time.
15. Withholding. Payments under this Agreement will be subject to normal
deductions for taxes and other legally required withholding.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
UNISOURCE WORLDWIDE, INC.
By________________________
▇▇▇ ▇. ▇▇▇▇▇
Chairman & CEO
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Agreed to this _____ day of
______________, 1999
____________________________
ATTACHMENT A
WAIVER AND RELEASE OF CLAIMS
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In consideration of, and subject to, the payment to be made by Unisource
Worldwide, Inc., (the "Company"), of the "Severance Payment" (as defined in the
Agreement entered into between me and the Company on (date), I hereby waive any
claims I may have for employment or re-employment by the Company or any
subsidiary of the Company after the date hereof, and I further agree to and do
release and forever discharge the Company or any subsidiary of the Company, and
their respective past and present officers, directors, shareholders, employees
and agents from any and all claims and causes of action, known or unknown,
arising out of or relating to my employment with the Company or any subsidiary
of the Company, or the termination thereof, including, but not limited to,
wrongful discharge, breach of contract, tort, fraud, the Civil Rights Acts, Age
Discrimination in Employment Act, Employee Retirement Income Security Act,
Americans with Disabilities Act, or any other federal, state or local
legislation or common law relating to employment or discrimination in employment
or otherwise.
Notwithstanding the foregoing or any other provision hereof, nothing in
this Waiver and Release of Claims shall adversely affect (i) my rights under the
Agreement (other than my rights to the Severance Payment); (ii) my rights under
the Company's letter to me dated July 1, 1998, as amended on December 8, 1998;
(iii) my rights under plans, programs and arrangements of the Company or any
subsidiary of the Company which are accrued but unpaid as of the date of my
termination; or (iv) my rights to indemnification under any indemnification
agreement, applicable law and the certificates of incorporation and bylaws of
the Company and any subsidiary of the Company, and my rights under any
directors' and officers' liability insurance policy covering me.
The "Change-in-Control Payment" to be made to me pursuant to the Agreement
and in consideration of this general release of claims is in addition to all
other amounts, including those amounts described in the preceding paragraph, to
which I may have been entitled had I not executed this Waiver and Release of
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Claims.
I acknowledge that I have signed this Waiver and Release of Claims
voluntarily, knowingly, of my own free will and without reservation or duress,
and that no promises or representations have been made to me by any person to
induce me to do so other than the promise of payment set forth in the first
paragraph above and the Company's acknowledgment of my rights reserved under the
second paragraph above.
I acknowledge that I have been given not less than twenty-one (21) days to
review and consider this Waiver and Release of Claims, and that I have had the
opportunity to consult with an attorney or other advisor of my choice and have
been advised by the Company to do so if I choose. I may revoke this Waiver and
Release of Claims seven (7) days or less after its execution by providing
written notice to the Company.
I understand that this Waiver and Release of Claims is not effective and
that I will not receive any payment hereunder until the revocation period has
expired.
Finally, I acknowledge that I have read this Waiver and Release of Claims
and understand all of its terms.
____________________________________
(Employee's Signature)
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Print Name
____________________________________
Date Signed
