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EXHIBIT 10.1
EMPLOYMENT AGREEMENT, DATED MAY 11, 1999,
BETWEEN AMERICAN BUSINESS PRODUCTS, INC.
AND XXXXX X. XXXXXXXXXXX, III
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EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into by and between XXXXX X. XXXXXXXXXXX, III
(the "Executive") and AMERICAN BUSINESS PRODUCTS, INC. (the "Company").
WHEREAS, the Executive is currently employed by the Company, having been
hired under certain terms and conditions set forth in an offer letter dated
February 24, 1998; and
WHEREAS, the Company and the Executive desire to further set forth in a
written agreement the complete terms and conditions pursuant to which the
Executive shall continue to be employed by the Company; and
WHEREAS, the Company and the Executive intend that this Agreement will
supersede any and all previous oral or written employment agreements between
the Company and the Executive, including the offer letter.
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1.
DEFINITIONS
As used in this Agreement, the following words and/or phrases shall have
the meanings set forth below unless a different meaning plainly is required by
the context:
1.1 Agreement shall mean this Employment Agreement between the Company
and the Executive.
1.2 Affiliate shall mean any parent, brother-sister or subsidiary
corporation of the Company, any joint venture in which the Company owns at
least a 50 percent interest, and any partnership, limited liability partnership
or limited liability corporation in which the Company or any of its
wholly-owned subsidiaries owns at least a 50 percent interest.
1.3 Board shall mean the Board of Directors of the Company.
1.4 Cause shall mean (i) the Executive's willful and continued failure to
perform any substantial duty of his position with the Company and its
affiliates (other than any such failure resulting from incapacity due to
Disability), within fifteen (15) days after a written demand for
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substantial performance from the Board to the Executive which specifically
identifies the manner in which the Board believes that he has not substantially
performed his duties; (ii) the Executive's willful engagement in any illegal
conduct or gross misconduct which is materially and demonstrably injurious to
the Company; or (iii) the Executive's engagement in any activity that is in
conflict of interest or competitive with the Company or its affiliates (other
than any isolated, insubstantial and inadvertent action not taken in bad faith
and which is promptly remedied by the Executive upon notice by the Board). Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than a majority of the entire membership of
the Board (excluding the Executive) at a meeting called and held for such
purpose (after reasonable notice is provided to the Executive and the Executive
is given an opportunity, together with counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, the Executive is guilty of
the conduct described in (i), (ii) or (iii) above.
1.5 Change in Control shall mean the occurrence of any one of the events
described in this Section 1.5(a)-(e). The terms used in this Section 1.5 with
an initial capital letter shall have the meanings set forth in Section 1.5(f),
unless otherwise defined in this Agreement.
(a) The acquisition by a Person, together with Affiliates and
Associates of such Person, whether by purchase, tender offer, exchange,
reclassification, recapitalization, merger or otherwise, of a sufficient
number of shares of Common Stock or Common Stock Equivalents to constitute
the Person an Acquiring Person; or
(b) The acquisition by a Person (other than the Xxxxxx Investment
Company, LLC), together with Affiliates and Associates of such Person, of
a number of shares of Common Stock (but not less than 20 percent of the
shares of Common Stock) equal to or greater than the number of shares of
Common Stock held by any Person who or who, together with all Affiliates
and Associates of such Person, is the Beneficial Owner of 30 percent or
more of the shares of Common Stock as of the Effective Date; or
(c) During any period of two consecutive years, individuals who at
the beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election of each
director who was not a director at the beginning of such period has been
approved in advance by a majority of the Continuing Directors then in
office; or
(d) Any merger or consolidation the result of which is that less
than 70 percent of the common stock, Voting Securities or other equity
interests of the surviving or resulting corporation or other Person shall
be owned in the aggregate by the former shareholders of the Company, other
than Affiliates or Associates of any party to such
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merger or consolidation, as the same shall have existed immediately prior
to such merger or consolidation; or
(e) The sale by the Company, in one transaction or a series of
related transactions, whether in liquidation, dissolution or otherwise, of
assets or earning power aggregating more than 50 percent of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons.
(f) The following definitions shall apply in determining when a
Change in Control has occurred:
(i) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall become
the Beneficial Owner of 30 percent or more of the shares of Common Stock
then outstanding, but shall not include the Company, any Subsidiary of the
Company, or any Person who or which, together with all Affiliates and
Associates of such Person, is the Beneficial Owner of 30 percent or more
of the shares of Common Stock as of the Effective Date, any employee
benefit plan of the Company or of any Subsidiary of the Company (if
approved by a majority of the Continuing Directors), or any Person or
entity organized, appointed or established by the Company for or pursuant
to the terms of any such plan.
(ii) "Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended and in effect on the Effective Date (the
"Exchange Act").
(iii) "Associate" shall mean:
(A) Any corporation or organization, or parent or
subsidiary of such corporation or organization, of which a Person is
an officer, director or partner or is, directly or indirectly, the
Beneficial Owner of 10 percent or more of any class of equity
securities;
(B) Any trust or other estate in which a Person has a
beneficial interest of 10 percent or more or as to which such Person
serves as trustee or in a similar fiduciary capacity; and
(C) Any brother or sister (whether by whole or half
blood), ancestor, lineal descendant or spouse of a Person, or any
such relative of such spouse.
(iv) "Beneficial Owner" shall mean, with respect to any
securities, any Person who, together with such Person's Affiliates and
Associates, directly or indirectly:
(A) Has the right to acquire such securities (whether
such right is exercisable immediately or only after the passage of
time) pursuant to any
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agreement, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, a Person shall not be
deemed the Beneficial Owner of, or to Beneficially Own:
(1) Securities acquired by participation in good
faith in a firm commitment underwriting by a Person
engaged in business as an underwriter of securities until
the expiration of 40 days after the date of such
acquisition; or
(2) Securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or
(3) Securities issuable upon exercise of rights
issued to all shareholders generally, which rights are
only exercisable upon separation from the Common Stock, or
securities issuable upon exercise of rights that have
separated from the Common Stock upon the occurrence of
events specified in a rights agreement between the Company
and a rights agent;
(B) Has the rights to vote or dispose of or has
Beneficial Ownership (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act) of such
securities, including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, a Person shall
not be deemed the Beneficial Owner of, or to Beneficially Own, any
security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding:
(1) Arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the
Exchange Act; and
(2) Is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(C) With respect to any securities which are
Beneficially Owned, directly or indirectly, by any other Person (or
any Affiliate or Associate thereof), has any agreement, arrangement
or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described herein or disposing of any voting securities of the
Company.
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(vi) "Common Stock Equivalents" shall mean preferred stock or
other equity securities of the Company having the right to be converted by
the holders thereof into shares of Common Stock, or having the right to
vote generally for the election of directors and on other matters. For
purposes of determining the total amount of Common Stock and Common Stock
Equivalents owned by any Person, such Common Stock Equivalents shall be
equal to the number of shares into which they may be converted by the
holders thereof, or in the case of securities that are not convertible
having the right to vote, shall be equal to the number of votes they are
entitled to cast in elections for directors.
(vii) "Continuing Director" shall mean:
(A) Any member of the Board who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or
Associate, and was a member of the Board prior to the Effective Date;
or
(B) Any Person who subsequently becomes a member of the
Board who is not an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person, or a representative of an Acquiring Person or of
any such Affiliate or Associate, if such Person's nomination for
election or election to the Board is recommended or approved by a
majority of the Continuing Directors.
(viii) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(ix) "Subsidiary" shall mean any corporation, partnership,
joint venture, trust or other entity more than 50 percent of the Voting
Securities of which are Beneficially Owned, directly or indirectly, by a
Person.
(x) "Voting Securities" shall mean any class of then
outstanding shares of stock or other beneficial interests entitled to vote
in election of directors or other Persons charged with management of a
Person."
1.6 CODE shall mean the Internal Revenue Code of 1986, as amended.
1.7 COMPANY shall mean American Business Products, Inc., its successors and
assigns, and any other corporation, partnership, sole proprietorship or other
type of business entity into which the Company may be merged, consolidated or
otherwise combined.
1.8 DISABILITY shall mean a physical or mental impairment that prohibits
the Executive from performing the essential duties of his position, is expected
to be of a long and continued duration, and for which he becomes eligible to
receive benefits under the Company's long-term disability plan.
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1.9 Effective Date shall mean January 1, 1999.
1.10 Executive shall mean Xxxxx X. Xxxxxxxxxxx, III.
1.11 Erisa shall mean the Executive Retirement Income Security Act of
1974, as amended.
1.12 Good Reason shall mean (i)the assignment of duties inconsistent with
the Executive's position as President and Chief Executive Officer or Chairman
of the Board of the Company, or any action by the Company which results in
diminution of the Executive's position, authority, duties or responsibilities
as in effect on the Effective Date (other than any isolated, insubstantial and
inadvertent action not taken in bad faith and which is promptly remedied by the
Company upon notice by the Executive); (ii) a reduction in the Executive's base
salary or benefits (unless such reduction in benefits applies to all officers
of the Company); (iii) a material breach by the Company of its obligations
hereunder; (iv) the Company requiring the Executive to have his office based at
a location other than the metropolitan Atlanta area; or (v) any failure by a
successor to the Company to assume and agree to perform the Company's
obligations hereunder.
1.13 Proprietary Information shall mean information that meets the
definition of "trade secret" under the laws of the State of Georgia (i.e., the
Uniform Trade Secrets Act, O.C.G.A. s. 10-1-760, et seq.) as well as any
scientific or technical information, design, process, procedure, formula or
improvement that is secret and of value, information that the Company takes
reasonable efforts to protect from disclosure and from which the Company
derives actual or potential economic value due to its confidential nature,
including, but not limited to, technical or nontechnical data, formulas,
complications, programs, devices, methods, techniques, drawings, processes,
financial data, lists of actual or potential customers, price lists, business
plans, customer and vendor records, training and operations materials and
memoranda, personnel records, financial information relating to the business of
the Company, accounts, customers, vendors, employees and affairs of the
Company, and any information marked "confidential" by the Company.
1.14 Restricted Territory shall mean the geographic area described as
follows: the continental United States of America.
1.15 Termination Date shall mean the date specified as the Executive's
official termination of employment date.
1.16 Term shall mean the period during which this Agreement is wholly
effective, which shall be the period commencing on the Effective Date and
ending on the Termination Date.
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2.
DUTIES AND AUTHORITY
2.1 Duties and Authority. The Executive is engaged and agrees to perform
services for and on behalf of the Company as its President and Chief Executive
Officer and shall report directly to the Board. The Executive shall have such
duties and authority as may be assigned to him by the Company's bylaws or by the
Board. The Executive agrees to perform such duties diligently and efficiently
and in accordance with the reasonable directions of the Board. The Executive
shall conduct himself at all times in a business-like and professional manner as
appropriate for his position and shall represent the Company in all respects in
compliance with good business and ethical practices. In addition, the Executive
shall be subject to and abide by the policies and procedures of the Company
applicable to personnel of the Company, as may be adopted from time to time.
2.2 Best Efforts. During the term of this Agreement, the Executive shall
devote his full attention, energies and best efforts to rendering services on
behalf of the Company (or subsidiaries or affiliates thereof), and shall not
engage in any outside employment without the express written consent of the
Board. Notwithstanding the foregoing, the Executive is not prohibited from
investing or trading in stocks, bonds, commodities or other forms of investment,
including real property, so long as the Executive does not "participate" (within
the meaning of Treas. Reg. ss1.469-5(f) and 1.469-5T(f)) in such investments.
Further, the Executive may pursue personal interests as he may have so long
as such participation does not interfere with the Executive's performance of his
duties hereunder, and the Executive may participate in industry, civic and
charitable activities so long as such activities do not materially interfere
with the performance of his duties hereunder. The Executive may also participate
in any interest or activity which is approved in writing by the Board. At least
once each year during the term of this Agreement, and at any time upon the
Board's request, the Executive shall provide a full disclosure to the Executive
Committee of the Board of his participation in any industry, civic and
charitable activities (including service on corporate or charitable boards of
directors or trustees). Prior to pursuing or accepting any activity other than
those in which he is engaged on the Effective Date, the Executive agrees to
discuss such activity with the Executive Committee of the Board.
2.3 Term. The term of this Agreement shall commence on the execution date
hereof and shall continue until the close of business at the end of three (3)
years from the date hereof, subject to earlier termination as provided in this
Agreement. At least sixty (60) days prior to the end of the initial term hereof
and each subsequent year thereafter, this Agreement shall be deemed to be
extended automatically for an additional one-year term on the same terms and
conditions unless either the Company or the Executive gives contrary written
notice to the other party no less than sixty (60) days prior to the date on
which this Agreement would otherwise be extended.
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3.
COMPENSATION AND BENEFITS
3.1 Annual Base Salary. The Company shall pay to the Executive as
compensation for his services provided hereunder a base salary of $450,000 per
year ("Base Salary"), payable in accordance with the Company's normal payroll
procedures. The Compensation and Nominating Committee of the Board of Directors
of the Company shall review the Executive's Base Salary annually, and in its
sole discretion, subject to approval of the Board of Directors of the Company,
may increase the Executive's Base Salary from year to year. The annual review of
the Executive's salary by the Board will consider, among other things, the
Executive's own performance and the Company's performance.
3.2 Annual Incentive Compensation. The Executive shall participate in the
Company's annual incentive program for executives, which is subject to change at
any time.
3.3 Long-Term Incentives. The Executive shall participate in the Company's
long-term incentive program for executives, which is subject to change at any
time, or in any other long-term incentive arrangement that the Board may provide
for him.
3.4 Employee Benefit Plans and Policies. The Executive shall be entitled to
participate in each employee benefit plan, policy or arrangement which is
sponsored, maintained or contributed to by the Company and in which current
executive officers of the Company may participate, in accordance with the terms
and provisions of such plans. Contributions by the Executive to such plans shall
be required only to the extent required of other executive officers of the
Company.
3.5 Automobile Allowance. The Company shall provide the Executive with a
monthly allowance of $600 for his use in owning or leasing an automobile for
business purposes.
3.6 Vacation. Executive shall be entitled to such paid vacation time as is
generally provided to the Company's executive officers subject to the rules in
effect regarding such leave.
3.7 Expense Reimbursement. The Company shall reimburse the Executive for
reasonable and necessary travel and other business related expenses, including
entertainment expenses, incurred by him in performance of the business of the
Company in accordance with the Company's standard expense reimbursement
practices and policies in existence from time to time, subject to such dollar
limitations and verification and record keeping requirements as may be
established from time to time by the Company.
3.8 Withholding, FICA, FUTA, Etc. Any amount to be paid to the Executive
under the provisions of this Agreement which represents taxable income to him
shall be subject to, and reduced by, any applicable federal, state or local
taxes imposed by law, included, but not limited to, taxes imposed under Subtitle
C of the Code.
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3.9 Club Dues. For general business purposes (and not as compensation to
the Executive), the Company shall pay the Executive's periodic dues for
membership in The Commerce Club, The Capital City Club and the Young Presidents
Organization. The Company shall also pay (or reimburse the Executive for) all
expenses of his participation in the Young Presidents Organization.
4.
RESTRICTIVE COVENANTS
4.1 Use and Return of Documents and Property. Executive acknowledges that
in the course of his employment with the Company, he will have the opportunity
to inspect and use certain property, both tangible and intangible, of the
Company and its Affiliates. All such property shall remain the exclusive
property of the Company and its Affiliates, and Executive has and shall have no
right or interest in such property. Executive shall use Company property only
during employment and only in the performance of his job and to further the
Company's interests, and he will not remove Company property from the Company's
premises except to the extent necessary to perform his duties and to the extent
approved by the Company, either expressly or generally under its policies.
Promptly upon the Executive's Termination Date, Executive shall return to the
Company all of the Company's memoranda, notes, records, data, books, sketches,
computer programs, audio-visual materials, correspondence, lists, every piece of
information recorded in any form, and all other tangible property.
4.2 New Developments. Any discovery, invention, process or improvement
made or discovered by the Executive during the term of this Agreement in
connection with or in any way affecting or relating to the business of the
Company or any of its Affiliates (as then carried on or under active
consideration) shall forthwith be disclosed to the Company and shall belong to
and be the absolute property of the Company. The preceding sentence does not
apply to any invention for which no equipment, supplies, facility, trade secret
information of the Company was used and which was developed entirely on the
Executive's own time, unless the invention relates directly to the business of
the Company or its Affiliates or to its or their actual or demonstrably
anticipated research or development, or the invention results from any work
performed by the Executive for the Company.
4.3 Covenant Not to Compete. Executive agrees that, during the term of
his employment under this Agreement and for a period of one (1) year following
the Termination Date, regardless of the reasons for the Executive's termination
of employment, Executive will not, directly or indirectly, expressly or tacitly,
for himself or on behalf of any entity anywhere in the Restricted Territory, (i)
act as an officer, manager, advisor, executive, controlling shareholder, or
consultant to any business in which his duties at or for such business include
oversight of or actual involvement in providing services which are competitive
with the services or products being provided or which are being produced or
developed by the Company or its Affiliates, or are under investigation by
the Company or any of its Affiliates on the Termination
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Date, (ii) recruit investors on behalf of an entity which engages in activities
which are competitive with the services or products being provided or which are
being produced or developed by the Company or its Affiliates, or are under
investigation by the Company or any of its Affiliates on the Termination Date,
or (iii) become employed by such an entity in any capacity which would require
Executive to carry out, in whole or in part, the duties Executive has performed
for the Company which are competitive with the services or products being
provided or which are being produced or developed by the Company or any of its
Affiliates, or are under active investigation by the Company or any of its
Affiliates on the Termination Date. This covenant shall apply to any services
or products under investigation by the Company or any of its Affiliates on the
Termination Date only to the extent that the Executive initiated, promoted,
participated in, or otherwise had knowledge of such investigation. Executive
acknowledges that because of the nationwide nature of the Company's (including
its Affiliates) business, this restriction will prevent the Executive from
acting in any of the foregoing capacities for any competing entity wherever
located within the Restricted Territory and that this scope is reasonable in
light of the business of the Company and its Affiliates.
4.4 Nonsolicitation of Customers, Clients and Suppliers. Executive agrees
that during the term of his employment with the Company, he will not, directly
or indirectly, without the Company's prior written consent, contact any
customer, client or supplier of the Company or any of its Affiliates for
business purposes unrelated to furthering the business of the Company or its
Affiliates. Executive further agrees that for a period of one (1) year following
his Termination Date, he will not directly or indirectly, (i) contact, solicit
or divert, or attempt to contact, solicit, divert or take away, any customer,
client or supplier of the Company or its Affiliates for purposes of, or with
respect to, providing a customer, client or supplier to a competing business;
or (ii) take any affirmative action with a customer, client or supplier of the
Company or its Affiliates for purposes of providing a customer, client or
supplier to a business competing with the Company or its Affiliates. The
prohibitions of the preceding sentence shall apply only to customers, clients
and suppliers of the Company with whom the Executive had Material Contact on the
Company's behalf during the twelve months immediately preceding the Termination
Date. For purposes of this Agreement, the Executive had "Material Contact" with
a customer, client or supplier if (a) he had business dealings with the
customer, client or supplier on the Company's behalf; (b) he was responsible for
supervising or coordinating the dealings between the Company and the customer,
client or supplier; or (c) he obtained Proprietary Information about the
customer, client or supplier as a result of his association with the Company.
4.5 Nonsolicitation of Employees. The Executive agrees that during his
employment with the Company and for one (1) year after his Termination Date,
the Executive will not, directly or indirectly, solicit or attempt to recruit
or hire any employees of the Company or its Affiliates who were employed by the
Company or its Affiliates at any time during the last year of the Executive's
employment with the Company and who are actively employed by the Company or its
Affiliates at the time of the solicitation or attempted solicitation, to provide
services similar to those performed by the employee for the Company on behalf
of, or for the purpose of engaging in employment with, a competitor of the
Company.
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4.6 Nondisclosure of Trade Secrets and Proprietary Information. Except to
the extent reasonably necessary for Executive to perform his duties for the
Company, the Executive shall not, directly or indirectly, furnish or disclose
to any person, or use in any way, any trade secrets of the Company or its
Affiliates, for so long as such trade secrets remain "trade secrets" under
applicable state law. Except to the extent reasonably necessary for Executive
to perform his duties for the Company, Executive shall not, during the term of
his employment with the Company and for a period of one (1) year following the
Executive's Termination Date, directly or indirectly, furnish or disclose to
any person, or use in any way, for personal benefit or the benefit of others,
any Proprietary Information of the Company or its Affiliates.
4.7 Reasonableness. Executive has carefully considered the nature and
extent of the restrictions upon his and the rights and remedies conferred on
the Company under this Agreement, and Executive hereby acknowledges and agrees
that:
(a) the restrictions and covenants contained herein, and the rights
and remedies conferred upon the Company, are necessary to protect the
goodwill and other value of the business of the Company;
(b) the restrictions places upon Executive hereunder are fair and
reasonable in time and territory, will not prevent him from earning a
livelihood, and place no greater restraint upon the Executive than is
reasonably necessary to secure the business and goodwill of the Company;
(c) the Company is relying upon the restrictions and covenants
contained herein in continuing to make available to Executive information
concerning the business of the Company;
(d) Executive's employment hereunder places him in a position of
confidence and trust with the Company and its employees, customers and
suppliers; and
(e) the provisions of this section shall be interpreted so as to
protect the Proprietary Information, and to secure for the Company the
exclusive benefits of the work performed on behalf of the Company by the
Executive under this Agreement, and not to unreasonably limit his ability
to engage in employment and consulting activities in noncompetitive areas
which do not endanger the Company's legitimate interests expressed in this
Agreement.
4.8 Remedy for Breach. Executive acknowledges and agrees that his breach
of any of the covenants contained in this Article of this Agreement will cause
irreparable injury to the Company and that remedies at law available to the
Company for any actual or threatened breach by the Executive of such covenants
will be inadequate and that the Company shall be entitled to specific
performance of the covenants in this Article or injunctive relief against
activities in violation of this Article by temporary or permanent injunction or
other appropriate judicial remedy, writ or order, without the necessity or
proving actual damages. This provision with respect to injunctive relief shall
not diminish the right of the Company to claim and recover
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monetary damages against the Executive for any breach of this Agreement, in
addition to injunctive relief. The Executive acknowledges and agrees that the
covenants contained in this Article shall be construed as agreements
independent of any other provision of this or any other contract between the
parties hereto, and that the existence of any claim or cause of action by the
Executive against the Company, whether predicated upon this or any other
contract, shall not constitute a defense to the enforcement by the Company of
said covenants.
5.
TERMINATION OF EMPLOYMENT
It is the intent of the parties that the relationship between the parties
remain one of at-will employment. The Company shall have the right to terminate
the Executive's employment under this Agreement at any time, with or without
Cause, and with or without prior written notice to the Executive. The Executive
shall have the right to voluntarily terminate his employment for any reason,
including Good Reason, at any time, upon 30 days' prior written notice to the
Board.
6.
SEVERANCE BENEFITS
6.1 Severance Obligations as of Termination Date.
(a) Termination by the Company Without Cause or Voluntary
Termination by Executive for Good Reason. In the event the Company
terminates the Executive's employment without Cause or if the Executive
voluntarily terminates his employment for Good Reason, then in
consideration of the Executive's services rendered prior to such
termination:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Termination Date the sum of (1) the
Executive's Base Salary through the Termination Date to the extent
not theretofore paid, and (2) the product of (x) the Executive's
target annual incentive bonus for the year in which the Termination
Date occurs and (y) a fraction, the numerator of which is the number
of days in the current fiscal year through the Termination Date, and
the denominator of which is 365 (the sum of the amounts described in
clauses (1) and (2) shall be hereinafter referred to as the "Accrued
Obligations"); and
(ii) the Company shall pay to the Executive, on a regular
payroll basis during the 24-month period following the Termination
Date, the amount equal to two times the sum of (A) the Executive's
Base Salary in effect as of the
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Termination Date, and (B) the Executive's most recent annual bonus (the
"Severance Payment"); provided, however, that if the Termination Date
occurs within two years after or otherwise in connection with the
occurrence of a Change of Control, the Severance Payment shall be the
amount equal to three times the sum of the amounts described in clauses
(A) and (B) above and such amount shall be payable in a lump sum in cash
within 30 days after the Termination Date; and
(iii) for two years after the Executive's Termination Date (or three
years in the event that the Termination Date occurs within two years after
or otherwise in connection with a Change of Control), the Company shall
continue medical, dental, life insurance, and accidental death and
dismemberment insurance benefits to the Executive and/or the Executive's
covered dependents at least equal to those which would have been provided
to them if the Executive's employment had not been terminated; provided,
that such two-year period shall offset any period of continuation coverage
provided under COBRA applicable to such benefits; provided further,
however, that if the Executive becomes employed with another employer and
is eligible to receive medical or other welfare benefits under another
employer-provided plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan during
such applicable period of continued eligibility; and
(iv) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice of the Company (such
other amounts and benefits shall be hereinafter referred to as the "Other
Benefits").
(b) Termination by Reason of Death or Disability. If the Executive's
employment is terminated by reason of his death or Disability, this Agreement
shall terminate without further obligations to the Executive, the Executive's
estate, heirs or other legal representatives under this Agreement, other than
for payment of Accrued Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the Executive, the Executive's
estate or designated beneficiary, as applicable, in a lump sum in cash within 30
days of the Termination Date.
(c) Termination by the Company for Cause or Voluntary Termination by the
Executive without Good Reason. If the Executive's employment shall be
terminated for Cause, or if the Executive voluntarily terminates employment
without Good Reason (other than during the 30-day window period described in
Section 6.1(d) below), this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations
(excluding the pro-rata bonus described in clause 2 of Section 6.1(a)) and the
timely payment or provision of Other Benefits.
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(d) Voluntary Termination by the Executive During Limited Window Period.
If the Executive voluntarily terminates employment without Good Reason during
the 30-day period beginning on the first anniversary of a Change in Control of
the Company, this Agreement shall terminate without further obligations to the
Executive, other than for the payment of Accrued Obligations, the timely payment
or provision of Other Benefits and the timely payment or provision of the
following severance benefits:
(i) a lump sum amount, payable in cash within 30 days after the
Termination Date, equal to the sum of (A) the Executive's Base Salary in
effect as of the Termination Date, and (B) the Executive's most recent
annual bonus; and
(ii) for one year the Executive's Termination Date, the Company
shall continue medical, dental, life insurance, and accidental death and
dismemberment insurance benefits to the Executive and/or the Executive's
covered dependents at least equal to those which would have been provided
to them if the Executive's employment had not been terminated; provided,
that such one-year period shall offset any period of continuation coverage
provided under COBRA applicable to such benefits; provided further,
however, that if the Executive becomes employed with another employer and
is eligible to receive medical or other welfare benefits under another
employer-provided plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan during
such one-year period of continued eligibility.
6.2 Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 6.2) (a "Payment") would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments; provided, however,
that the total amount of the Gross-Up Payment made by the Company under this
provision shall not exceed $1,000,000; and provided further, that no Gross-Up
Payment shall be made by the Company to the Executive with regard to any
payments or benefits provided to the Executive pursuant to the provision of
Section 6.1(d) hereof.
Xxxxxxxxxxx Employment Agreement
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16
(b) All determinations required to be made under this Section 6.2,
including whether and when a Gross-Up Payment is required, the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, shall be made by the Company's regular independent
accounting firm (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is servicing as accountant or auditor for
the individual, entity or group effecting the Change in Control, the
Executive shall appoint another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 6.2, shall be paid
by the Company to the Executive within 15 days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should
have been made ("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
the Executive.
6.3 Other Benefits After Termination Date. Except for the payments and
benefits, if any, provided under this Article 6, no other benefits, compensation
or other remuneration of any type, whether taxable or nontaxable, shall be
payable to the Executive after his Termination Date, except as required by law
or by the applicable terms and provisions of any employee benefit plan or
arrangement applicable to the Executive.
7.
MISCELLANEOUS PROVISIONS
7.1 Invalidity of Any Provision. It is the intention of the parties hereto
that the provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws of each state and jurisdiction in which such
enforcement is sought, but that the unenforceability (or the modification to
conform with such laws) of any provision hereof shall not render unenforceable
or impair the remainder of this Agreement which shall be deemed amended to
delete or modify, as necessary, the invalid or unenforceable provisions. The
parties further agree to alter the balance of this Agreement in order to render
the same valid and unenforceable. The terms of the restrictive covenant
provisions of this Agreement shall be deemed modified to the extent necessary to
be unenforceable and, specifically, without limiting the foregoing, if the term
of
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the applicable restrictive covenant is too long to be enforceable, it shall be
modified to encompass the longest term which is enforceable and, if the scope
of the geographic area of the applicable restrictive covenant is too great to
be enforceable, it shall be modified to encompass the greatest area that is
enforceable.
7.2 COSTS OF ENFORCEMENT. In any action taken in good faith relating to the
enforcement of this Agreement or any provision herein, the Executive shall be
entitled to be paid any and all costs and expenses incurred by him in enforcing
or establishing his rights thereunder, including, without limitation, reasonable
attorneys' fees, whether suit be brought or not, and whether or not incurred in
arbitration, trial, bankruptcy or appellate proceedings, but only if the
Executive is successful on at least one material issue raised in the enforcement
proceeding; provided, that the total amount of any and all costs and expenses
payable by the Company to the Executive under this provision shall be limited to
$100,000.
7.3 APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Georgia.
7.4 ARBITRATION. Any claim or dispute arising under this Agreement shall be
subject to arbitration, and prior to commencing any court action, the parties
agree that they shall arbitrate all controversies. The arbitration shall be
conducted in Atlanta, Georgia, in accordance with the Employment Dispute Rules
of the American Arbitration Association and the Federal Arbitration Act, 9
U.S.C. ss. 1, et. seq. The arbitrator(s) shall be authorized to award both
liquidated and actual damages, in addition to injunctive relief, but no punitive
damages. The arbitrator(s) may also award attorney's fees and costs, without
regard to any restriction on the amount of such award under Georgia or other
applicable law. Such an award shall be binding and conclusive upon the parties
hereto, subject to 9 U.S.C. ss. 10. Each party shall have the right to have the
award made the judgment of a court of competent jurisdiction.
7.5 WAIVER OF BREACH. The waiver of a breach of any provision of this
Agreement by a party hereto shall not operate or be construed as a wavier of any
subsequent breach by the other party hereto.
7.6 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
the Company and its Affiliates, and their respective successors and assigns.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's estate and/or legal representatives.
7.7 ASSIGNMENT OF AGREEMENT. This Agreement is not assignable by the
Executive, but shall be freely assignable by the Company to any successor with
the written consent of the Executive. The Company will 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 assume
expressly 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.
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7.8 NOTICES. All notices, demands and other communications hereunder shall
be in writing and shall be delivered in person or deposited in the United States
mail, certified or registered, with return receipt requested, as follows:
(a) if to Executive: Xx. Xxxxx X. Xxxxxxxxxxx, III
0000 Xxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
(b) if to Company: AMERICAN BUSINESS PRODUCTS, INC.
Attention: Board of Directors
0000 XxxxxXxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
(with a copy to the Chairman of each Board
Committee)
7.9 ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof. All understanding and
agreements heretofore made between the parties hereto with respect to the
subject matter of this Agreement are merged into this document which alone fully
and completely expresses their agreement. This Agreement may not be changed
orally but only by an agreement in writing signed by both parties.
7.10 SURVIVAL OF PROVISIONS. The provisions of Article 4 -- Restrictive
Covenants shall survive termination of this Agreement.
7.11 CAPTIONS. The captions appearing in this Agreement are inserted only
as a matter of convenience and in no way define, limit, construe or describe the
scope or intent of any provisions of this Agreement or in any way affect this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of this 11th day of May, 1999.
EXECUTIVE:
/s/ Xxxxx X. Xxxxxxxxxxx, III
------------------------------------
XXXXX X. XXXXXXXXXXX, III
[signatures continued on next page]
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COMPANY:
AMERICAN BUSINESS PRODUCTS, INC.
By: /s/ W. Xxxxx Xxxx
------------------------------
W. Xxxxx Xxxx
Title: Chairman, Compensation Committee
[THIS AGREEMENT HAS BEEN EXECUTED IN DUPLICATE.]
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