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EXHIBIT 16
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
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resulting from incapacity due to Disability), within fifteen (15) days after a
written demand for 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 right 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. ss.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. ss.ss.1.469-5(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 after 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 such 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 provisions of Section 6.1(d) hereof.
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(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 serving 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 enforceable. The terms of the restrictive covenant provisions
of this Agreement shall be deemed modified to the extent necessary to be
enforceable 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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