Exhibit 10.9
EMPLOYMENT AGREEMENT
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AGREEMENT, by and between Polaroid Corporation, a
Delaware corporation, together with its successors and
assigns permitted under this Agreement (the "Company"), and
Xxxx X. XxXxxxxxx (the "Executive") originally entered into
October 20, 1995, and amended as of December 21, 1995, is
hereby amended and restated this 12th day of May, 1997.
W I T N E S S E T H :
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WHEREAS, the Company desires to employ the Executive
and to enter into an agreement embodying the terms of such
employment (this "Agreement") and the Executive desires to
enter into this Agreement and to accept such employment,
subject to the terms and provisions of this Agreement;
WHEREAS, the Executive is a skilled and dedicated
employee who has important management responsibilities and
talents which benefit the Company. The Company believes
that its best interests will be served if the Executive is
encouraged to remain with the Company. The Company has
determined that the Executive's ability to perform the
Executive's responsibilities and utilize the Executive's
talents for the benefit of the Company, and the Company's
ability to retain the Executive as an employee, will be
significantly enhanced if the Executive is provided with
fair and reasonable protection from the risks of a change
in ownership or control of the Company.
NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein and for other good and
valuable consideration, the receipt of which is mutually
acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. Definitions.
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person,
is the Beneficial Owner of twenty percent (20%) or more of
the Stock then outstanding, but does not include any
Subsidiary of the Company, any employee benefit plan of the
Company or any of its Subsidiaries or any Person holding
Stock for or pursuant to the terms of any such employee
benefit plan.
(b) "Affiliate" and "Associate" when used with reference
to any Person, shall have the meaning given to such terms
in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(c) "Annual Bonus" shall mean a bonus amount payable under
the Company's executive annual bonus plan (currently the
Polaroid Incentive Plan for Executives). Unless otherwise
specifically provided, this annual bonus shall be
calculated assuming the Company target has been achieved
and that there are no factors that reduce the ultimate
distribution.
(d) "Base Salary" shall mean the annual rate of base
salary (disregarding any reduction in such rate that
constitutes Constructive Termination) as provided for in
Section 4 below as increased by the Board from time to
time.
(e) "Beneficial Owner" shall be a Person deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly; or
(ii) which such Person or any of such Person's Affiliates
or Associates has:
(A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding
(written or oral), or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted
for purchase or exchange thereunder; or
(B) the right to vote pursuant to any agreement,
arrangement or understanding (written or oral); provided
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding (written or oral)
to vote such security (i) arises solely from a revocable
proxy given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the
Exchange Act and (ii) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or
successor report).
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(C) which are beneficially owned, directly or indirectly,
by any Person with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (written or oral), for the
purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in Section l(e)(ii)(B) of this
Agreement) or disposing of any securities of the Company.
(f) "Board" shall mean the Board of Directors of the
Company.
(g) "Cause" means either of the following:
(i) Executive's willful malfeasance having a material
adverse effect on the Company; or
(ii) Executive's conviction of a felony;
provided, that any action or refusal by
Executive shall not constitute "Cause"
if, in good faith, Executive believed
such action or refusal to be in, or not
opposed to, the best interests of the
Company, or if Executive shall be
entitled, under applicable law or under
an applicable Certificate of
Incorporation or By-Laws of the Company,
as they may be amended or restated from
time to time, to be indemnified with
respect to such action or refusal.
(h) "Change in Control" shall mean:
(i) the date on which a change in control of the Company
occurs of a nature that would be required to be reported
(assuming that the Company's Stock was registered under the
Exchange Act) in response to an item (currently item 6(e))
of Schedule 14A of Regulation 14A promulgated under the
Exchange Act or an item (currently Item l(a)) of Form 8-K
under the Exchange Act;
(ii) the date on which there is an Acquiring Person and a
change in the composition of the Board of the Company
within two years after the Share Acquisition Date such that
the individuals who constitute the Board prior to the Share
Acquisition Date shall cease for any reason to constitute
at least a majority of the Board;
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(iii) any day on or after the Share Acquisition Date
when directly or indirectly, any of the transactions
specified in the following clauses occurs:
(A) the Company shall consolidate with, or merge with and
into, any other Person;
(B) any Person shall merge with and into the Company; or
(C) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries
shall sell, lease, exchange or otherwise transfer or
dispose of), in one or more transactions, the major part of
the assets of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons;
(iv) the date when a Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or any of its Subsidiaries or any Person holding
Stock for or pursuant to the terms of any such employee
benefit plan) alone or together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of
thirty percent (30%) or more of the Stock then outstanding;
(v) the date on which the stockholders of the Company
approve a merger or consolidation of the Company with any
other corporation other than:
(A) a merger or consolidation which would result in voting
securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving or parent entity) fifty percent (50%) or more
of the combined voting power of the voting securities of
the Company or such surviving or parent entity outstanding
immediately after such merger or consolidation, or
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(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person acquires fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities; or
(vi) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets (or any transaction having a
similar effect).
(i) "Code" means the Internal Revenue Code of 1986, as
amended.
(j) "Confidential Information" means nonpublic information
relating to the business plans, marketing plans, customers
or employees of the Company other than information the
disclosure of which cannot reasonably be expected to
adversely affect the business of the Company.
(k) "Constructive Termination" shall occur when the
Executive voluntarily terminates his employment with the
Company or retires after the occurrence of one or more of
the following events:
(i) unless effected with the Executive's consent, a
reduction in the Executive's Base Pay or the
discontinuation of or any reduction in an Executive's
participation or membership in any bonus, incentive or
other benefit plan in which the Executive was a participant
or member, without an economically equivalent replacement;
(ii) the reassignment of the Executive without his consent
to a location more than thirty (30) miles from his regular
workplace;
(iii) the reduction in the Executive's job title or
level;
(iv) the provision of significantly less favorable working
conditions; or
(v) a significant diminution of duties or responsibilities
or the reassignment of the Executive to duties which
represent a position of lesser responsibility.
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(l) "Disability" shall mean the Executive's disability
within the meaning of the Polaroid Long Term Disability
Plan.
(m) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as in effect on the date in question.
(n) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust,
unincorporated organization or other entity.
(o) "Share Acquisition Date" shall mean the first date any
Person shall become an Acquiring Person.
(p) "Stock" shall mean the outstanding shares of Common
Stock of the Company and any other shares of capital stock
of the Company into which the Common Stock shall be
reclassified or changed.
(q) "Subsidiary" of the Company shall mean any corporation
of which the Company owns, directly or indirectly, more
than fifty percent (50%) of the Voting Stock.
(r) "Term of Employment" shall mean the period specified
in Section 2 below.
(s) "Trading Day" is any day on which the Stock is traded
on the New York Stock Exchange.
(t) "Termination Date" shall mean the date of the
Executive's termination of employment from the Company.
(u) "Voting Stock" shall mean capital stock of any class
or classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect
the directors of a corporation.
2. Term of Employment. The Company hereby employs the
Executive, and the Executive hereby accepts such
employment, for the period commencing October 20, 1995 and
ending October 31, 2000, subject to earlier termination as
provided below.
3. Position, Duties and Responsibilities.
(a) During the Term of Employment, the Executive shall be
employed commencing December 1, 1995 as the Chief Executive
Officer of the Company and be responsible for the general
management of the affairs of the Company. It is the
intention of the Parties that the Executive shall be
elected to and serve as a member of the Board and
thereafter shall be Chairman of the Board. The Executive,
in carrying out his duties under this Agreement, shall
report to the Board.
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(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from:
(i) serving, subject to approval of the Board, on the
boards of directors of a reasonable number of other
corporations or the boards of a reasonable number of trade
associations and/or charitable organizations,
(ii) engaging in charitable activities and community
affairs, and
(iii) managing his personal investments and affairs,
provided that such activities do not interfere with the
proper performance of his duties and responsibilities as
the Company's Chairman and Chief Executive Officer.
4. Base Salary. The Executive shall be paid an
annualized Base Salary, payable in accordance with the
regular payroll practices of the Company, of no less than
five hundred fifty thousand dollars ($550,000). The Base
Salary shall be reviewed periodically by the Board.
5. Annual Bonus. Commencing January 1, 1996, the
Executive shall participate in the Company's annual bonus
plan using the targets and performance factors set forth in
the Plan, with an annual target award opportunity of at
least eighty percent (80%) of Base Salary. A minimum of
four hundred thousand dollars ($400,000) shall be
guaranteed in 1996.
6. Stock Option Awards. Upon commencement of employment,
the Executive shall be awarded a ten (10) year option, to
purchase two hundred fifty thousand (250,000) shares of
Stock (the "Option"). The Executive shall be eligible to
participate in the ongoing stock option award program
commencing in 1997.
7. Restricted Stock. Upon commencement by the Executive
of his full time duties, he shall be awarded:
(a) twenty five thousand (25,000) shares of restricted
stock which shall vest at the rate of five thousand (5,000)
shares at the end of each of the first five (5) years of
employment and
(b) fifteen thousand (15,000) shares of restricted stock
which shall fully vest if the Executive achieves anytime
within five (5) years from the date of this Agreement the
performance criteria to be established by mutual agreement
of the parties.
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8. Special Payment. Upon commencement of employment, the
Executive shall be paid in cash the amount of five hundred
thousand dollars ($500,000).
9. Employee Benefit Programs. During the Term of
Employment, the Executive shall be entitled to participate
in all employee pension and welfare benefit plans and
programs made available to the Company's senior level
executives, as such plans or programs may be in effect from
time to time, including, without limitation, pension,
savings and other retirement plans or programs, medical,
dental, hospitalization, short-term and long-term
disability and life insurance. Notwithstanding anything in
this Agreement to the contrary, the terms of this Agreement
shall replace the Executive's participation in The Polaroid
Extended Severance Plan.
10. Supplemental Pension. After any additional credit
which may become applicable under the Change in Control
provision set forth in Section 15, the Company shall
provide the Executive an additional monthly retirement
benefit pursuant to the terms of this Agreement which shall
be equal to the excess of (i) the monthly pension benefit
that would be payable to the Executive under the terms of
the Polaroid Pension Plan enhanced by the benefits under
the Polaroid Retirement Parity Plan and the Polaroid
Executive Equalization Retirement Plan ("Retirement
Benefit") as in effect on the date hereof, assuming that
the Executive is credited with one (1) additional year of
service for each of his first ten (10) years of actual
service with the Company over (ii) the monthly Retirement
Benefit which is actually payable to the Executive without
regard to this Section 10. In determining the amount of
any offset as provided in the preceding sentence, such
amount shall be calculated assuming the same frequency of
payment, the same form of annuity and the same commencement
date of payment as the benefits to be paid under this
Section 10. The Retirement Benefit payable to or in
respect of the Executive pursuant to this Section 10 shall
be vested upon completion of two and one-half (2 1/2) years
of service, and shall commence to be paid at the same time
as the Executive's Retirement Benefit. The Retirement
Benefit payable to or in respect of the Executive pursuant
to this Section 10 shall be paid in the form of a straight
life annuity for his lifetime or in such other alternative
form of benefit permitted under the terms of the Plans as
currently in effect as the Executive may elect in
accordance with the election provisions applicable. This
benefit shall be provided pursuant to the Supplemental
Retirement Benefit Plan.
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11. Reimbursement of Business and Other Expenses. The
Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this
Agreement and the Company shall promptly reimburse him for
all business expenses incurred in connection with carrying
out the business of the Company, subject to documentation
in accordance with the Company's policy.
12. Termination Due to Disability or Death. In the event
the Executive's employment is terminated due to his
Disability or death, he, or his estate or his
beneficiaries, as the case may be, shall be entitled to:
(a) Base Salary through the date of termination;
(b) pro-rata portion of the Annual Bonus for the year in
which the Executive's Disability or death occurs. Annual
Bonus to be paid as soon as practicable or consistent with
the Executive's election under the Elective Deferred
Compensation Plan;
(c) other benefits or entitlements in accordance with
applicable plans and programs of the Company.
13. Termination by the Company for Cause. In the event
the Company terminates the Executive's employment for
Cause, he shall be entitled to:
(a) Base Salary through the date of the termination of his
employment for Cause;
(b) other benefits or entitlements, if any, in accordance
with applicable plans or programs of the Company; however,
notwithstanding the foregoing, the Executive shall not be
entitled to any bonus (annual or long term) for the year in
which his termination occurs.
14. A Constructive Termination or a Termination Without
Cause. If prior to Change in Control, the Executive's
employment is terminated without Cause, other than due to
Disability or death, or in the event there is a
Constructive Termination, the Executive shall be entitled
to:
(a) Base Salary through the date of termination of the
Executive's employment;
(b) Base Salary, at the annualized rate in effect on the
date of termination of the Executive's employment for a
period of twenty four (24) months following such
termination (the "Severance Period");
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(c) Annual Bonus payments for the period from the
beginning of the year in which the termination occurs
through the end of the Severance Period based on the actual
performance of the Company(i.e., Company target) without
regard to any other factors that could reduce the ultimate
distribution; any such payment for a period of less than a
full year shall be pro-rated by the number of days for
which payment is made;
(d) Medical, dental and life insurance benefits for twenty
four (24) months following the Executive's Termination Date
at the same rate as active employees similarly situated.
(e) Other benefits or entitlements in accordance with
applicable plans and programs of the Company.
(f) Should the Executive become eligible to receive
payments and benefits under this Section and die prior to
receipt of all such payments and benefits, the residual
payments shall be made to the Executive's beneficiary(ies).
Any residual family medical and dental benefits which the
Executive was receiving on the Executive's date of death
shall continue to the family members the Executive had
covered in such medical and dental plans on such date.
15. Termination of Employment Following a Change in
Control. Notwithstanding anything in this Agreement to the
contrary, if the Executive's employment terminates
(voluntarily or involuntarily) within eighteen (18) months
following a Change in Control for any reason other than
Cause he shall be entitled to the following benefits:
(a) Severance Benefits. Within ten (10) business days
after the Termination Date, the Company shall pay the
Executive a lump sum amount, in cash, equal to:
(i) Three (3) times the sum of:
(A) the Executive's Base Salary; and
(B) the Executive's Annual Bonus; and
(ii) The Executive's Annual Bonus multiplied by a fraction,
the numerator of which shall equal the number of days the
Executive was employed by the Company in the calendar year
in which the Termination Date occurs and the denominator of
which shall equal three hundred sixty five (365).
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(b) Continued Welfare Benefits. Until the third
anniversary of the Termination Date, the Executive shall be
entitled to participate in the Company's medical, dental,
and life insurance, at the highest level provided to the
Executive during the period beginning immediately prior to
the Change in Control and ending on the Termination Date
and at no greater cost than the cost the Executive was
paying immediately prior to Change in Control; provided,
however, that if the Executive becomes employed by a new
employer, the Executive's coverage under the applicable
Company plans shall continue, but the Executive's coverage
thereunder shall be secondary to (i.e., reduced by) any
benefits provided under like plans of such new employer.
(c) Payment of Accrued But Unpaid Amounts. Within ten
(10) business days after the Termination Date, the Company
shall pay the Executive:
(i) earned but unpaid compensation, including, without
limitation, any unpaid portion of the bonus accrued with
respect to the full calendar year ended prior to the
Termination Date; and
(ii) all compensation previously deferred by the Executive
on a non-qualified basis but not yet paid.
(d) Retiree-Medical Benefits. If within three (3) years
after Change in Control, the Executive would be at least
fifty-five (55) with the Executive's age and service equal
to sixty-five (65) and the Executive would have at least
five (5) years of service with the Company, the Executive
shall be eligible for retiree medical benefits (as such are
determined immediately prior to Change in Control). The
Executive shall commence receiving such retiree medical
benefits based on the terms and conditions of the
applicable plans in effect immediately prior to the Change
in Control.
(e) Supplemental Retirement and Profit Sharing Benefits.
(i) On the Termination Date, the Executive shall become
vested in the benefits provided under the Company's non-
qualified defined benefit pension plans or any successor
plans (the "Supplemental Plans").
(ii) Within ten (10) business days after the Termination
Date, the Company shall pay the Executive a lump sum cash
amount equal to the present value of the Executive's
accrued benefit under the Supplemental Plans. For purposes
of computing the lump sum present value of the Executive's
accrued benefit under the Supplemental Plans in addition to
the supplemental benefit provided pursuant to Section 10
above.
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(A) Before applying Section 10 of this Agreement, the
Company shall credit the Executive with three (3) years of
plan participation and service and three (3) years of age
for all purposes (including additional accruals and
eligibility for early retirement) over the Executive's
actual years and fractional years of plan participation
and service and age credited to the Executive on the
Termination Date; and
(B) The Company shall apply the present value (and any
other actuarial adjustment required by this Agreement)
using the actuarial assumptions set forth in Section 1.01
of the Pension Plan. In determining the Executive's
benefits under this paragraph (e)(2), the terms of the
Supplemental Plans as in effect immediately prior to the
Change in Control, except as expressly modified in this
paragraph (e), shall govern.
This benefit shall be provided pursuant to the Supplemental
Retirement Benefit Plan.
(f) Outplacement Counseling. Outplacement services will
be provided consistent with the Company's outplacement
practices in effect prior to the Change in Control.
(g) Indemnification; Director's and Officer's Liability
Insurance. The Executive shall, after the Termination
Date, retain all rights to indemnification under applicable
law or under the Company's Certificate of Incorporation or
By-Laws, as they may be amended or restated from time to
time. In addition, the Company shall maintain Director's
and Officer's liability insurance on behalf of the
Executive, at the better of the level in effect immediately
prior to the Change in Control or the Executive's
Termination Date, for the three (3) year period following
the Termination Date, and throughout the period of any
applicable statute of limitations.
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(h) Costs of Proceedings. The Company shall pay all of
the Executive's costs and expenses, including attorneys'
fees and disbursements, at least monthly, in connection
with any legal proceeding (including arbitration), whether
or not instituted by the Company or the Executive, relating
to the interpretation or enforcement of any provision of
this Agreement, except that if the Executive instituted the
proceeding and the judge, arbitrator or other individual
presiding over the proceeding affirmatively finds that the
Executive instituted the proceeding in bad faith, the
Executive shall pay his own costs and expenses, including
attorneys' fees and disbursements. The Company shall pay
pre-judgment interest on any money judgment obtained by the
Executive as a result of such a proceeding, calculated at
the prime rate of The Chase Manhattan Bank (or its
successors), as in effect from time to time, from the date
that payment should have been made to the Executive under
this Section.
16. Effect on Existing Plans. All Change in Control
provisions applicable to the Executive and contained in any
plan, program, agreement or arrangement maintained as of
the date this Agreement is signed (including, but not
limited to, any stock option, restricted stock or pension
plan) shall remain in effect through the date of a Change
in Control, and for such period thereafter as is necessary
to carry out such provisions and provide the benefits
payable thereunder, and may not be altered in a manner
which adversely affects the Executive without the
Executive's prior written approval. This means that all
awards of options, performance shares or such other awards
as may be granted shall upon Change in Control be fully
vested consistent with there terms. Notwithstanding the
foregoing, no benefits shall be paid to the Executive,
however, under the Polaroid Extended Severance Plan or any
other severance plan maintained generally for the employees
of the Company if the Executive is eligible to receive
severance benefits under this Agreement.
17. Mitigation. Executive shall not be required to
mitigate damages or the amount of any payment provided for
under this Agreement by seeking other employment or
otherwise, and compensation earned from such employment or
otherwise shall not reduce the amounts otherwise payable
under this Agreement. No amounts payable under this
Agreement shall be subject to reduction or offset in
respect of any claims which Polaroid (or any other Person
or entity) may have against Executive unless specifically
referenced herein.
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18. Gross-up.
(a) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by the
Company, or one or more trusts established by the Company
for the benefit of its employees, 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) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or
penalties incurred by the Executive with respect to such
excise tax (such excise tax, together with any such
interest and penalties, hereinafter collectively referred
to as the "Excise Tax"), 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 the 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.
(b) Subject to the provisions of Section 18(c), all
determinations required to be made under this Section 18,
including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be
made by a nationally recognized certified public accounting
firm as may be designated by the Executive (the "Accounting
Firm") which shall provide detailed supporting calculations
both to the Company and the Executive within fifteen (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 an individual,
entity or group effecting the change in ownership or
effective control (within the meaning of Section 280G of
the Code), 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 18, shall be paid by the Company
to the Executive within five (5) business days after the
receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall so indicate to the Executive in
writing. 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 Company exhausts its remedies pursuant to Section
18(c) and 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 Executive's benefit.
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(c) The Executive shall notify the Company in writing of
any written claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) business days
after the Executive is informed in writing of such claim
and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid
(but the Executive's failure to comply with this notice
obligation shall not eliminate his rights under this
Section except to the extent of the Company's defense
against the imposition of the Excise Tax is actually
prejudiced by any such failure). The Executive shall not
pay such claim prior to the expiration of the thirty (30)
day period following the date on which he gives such notice
to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting
legal representation with respect to such claim by an
attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
to effectively contest such claim; and
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(iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company
shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section
18(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole
option, either direct the Executive to pay the tax claimed
and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall reasonably
determine; provided, however, that if the Company directs
the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the
Executive, on an interest-free basis, and shall indemnify
and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with
respect to such advance; and provided, further, that if the
Executive is required to extend the statute of limitations
to enable the Company to contest such claim, the Executive
may limit this extension solely to such contested amount.
The Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing
authority.
Page 16 of 21
(d) If, after the Executive receives an amount advanced by
the Company pursuant to Section 18(c), the Executive
receives any refund with respect to such claim, the
Executive shall (subject to the Company's complying with
the requirements of Section 18(c)) promptly pay to the
Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto). If, after the Executive receives an amount
advanced by the Company pursuant to Section 18(c), a
determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the
expiration of thirty (30) days after such determination,
then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
19. Termination for Cause. Nothing in this Agreement
shall be construed to prevent the Company from terminating
the Executive's employment for Cause. If the Executive is
terminated for Cause, only Section 13 shall apply.
20. Disputes. Any dispute or controversy arising under or
in connection with this Agreement shall be settled
exclusively by arbitration in Boston, Massachusetts in
accordance with the Rules of the American Arbitration
Association then in effect. Judgment may be entered on an
arbitrator's award relating to this Agreement in any court
having jurisdiction.
21. Noncompetition and Confidentiality.
(a) Noncompetition. During the period in which the
Executive is employed by the Company or any of its
Subsidiaries and during any Severance Period, as provided
pursuant to Section 14 "Constructive Termination or
Termination without Cause", above, but in no event for a
period of less than twelve (12) months following a
termination of his employment, the Executive shall not
engage in any activity or become associated with any entity
or venture, whether as a principal, partner, employee,
consultant, shareholder (other than as a holder of not in
excess of one percent (1%) of the outstanding voting shares
of any publicly traded company) or otherwise, that is in
competition in any geographic area with any business of the
Company in which it is actively engaged on the Executive's
Termination Date and from which the Company the derives at
least twenty percent (20%) of its consolidated revenues.
Page 17 of 21
(b) Confidentiality. Without the prior written consent of
the Company, except to the extent required by an order of a
court having competent jurisdiction or under subpoena from
an appropriate government agency, the Executive shall
comply with the Confidentiality Agreement he executed at
the time he was hired and shall not disclose any trade
secrets, customer lists, drawings, designs, information
regarding product development, marketing plans, sales
plans, manufacturing plans, management organization
information (including data and other information relating
to members of the Board and management), operating policies
or manuals, business plans, financial records or other
financial, commercial, business or technical information
relating to the Company or any of its Subsidiaries or
information designated as confidential or proprietary that
the Company or any of its Subsidiaries may receive
belonging to suppliers, customers or others who do business
with the Company or any of its Subsidiaries (collectively,
"Confidential Information") to any third Person unless such
Confidential Information has been previously disclosed to
the public by the Company or is in the public domain (other
than by reason of Executive's breach of this Section
19(b)).
(c) Company Property. Promptly following the Executive's
termination of employment, the Executive shall return to
the Company all property of the Company, and all copies
thereof in Executive's possession or under his control.
(d) Nonsolicitation of Employees. During the period in
which the Executive is employed by the Company and any of
its Subsidiaries, during the Severance Period as provided
pursuant to Section 14 "Constructive Termination or
Termination without Cause", the Executive shall not
directly or indirectly induce any employee of the Company
or any of its Subsidiaries to terminate employment with
such entity, and shall not directly or indirectly, either
individually or as owner, agent, employee, consultant or
otherwise, employ or offer employment to any Person who is
employed by the Company or a Subsidiary thereof.
(e) Injunctive Relief with Respect to Covenants.
Executive acknowledges and agrees that the covenants and
obligations of the Executive with respect to
noncompetition, nonsolicitation, confidentiality and
Company property relate to special, unique and
extraordinary matters, including his own skills, and that a
violation of any of the terms of such covenants and
obligations will cause the Company irreparable injury for
which adequate remedies are not available at law.
Therefore, the Executive agrees that the Company shall be
entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond)
restraining Executive from committing any violation of the
covenants and obligations contained in this Section 19.
These injunctive remedies are cumulative and are in
addition to any other rights and remedies the Company may
have at law or in equity.
Page 18 of 21
(f) The obligations of the Executive set out in
Subsections (a) ("Noncompetition") and (d)
("Nonsolicitation") above shall not extend beyond his
Termination Date where such date follows a Change in
Control.
22. Effect of Agreement on Other Benefits. Except as
specifically provided in this Agreement, the existence of
this Agreement shall not prohibit or restrict the
Executive's entitlement to full participation in the
employee benefit and other plans or programs in which
senior executives of the Company are eligible to
participate.
23. Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon, inure to the benefit of
and be enforceable by the Company and the Executive and
their respective heirs, legal representatives, successors
and assigns. If the Company shall be merged into or
consolidated with another entity, the provisions of this
Agreement shall be binding upon and inure to the benefit of
the entity surviving such merger or resulting from such
consolidation. The Company will require any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form
and substance satisfactory to the Executive, to expressly
assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be
required to perform it if no such succession had taken
place. The provisions of this Agreement shall continue to
apply to each subsequent employer hereunder in the event of
any subsequent merger, consolidation or transfer of assets
of such subsequent employer.
24. Representation. The Company represents and warrants
that it is fully authorized and empowered to enter into
this Agreement and each of the parties represents and
warrants that the performance of the obligations of such
party under this Agreement will not violate any agreement
between that party and any other Person, firm or
organization.
25. Entire Agreement. This Agreement, with the plans and
grant agreements referenced herein, contains the entire
understanding and agreement between the Parties concerning
the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the Parties
with respect thereto.
Page 19 of 21
26. Amendment or Waiver. No provision in this Agreement
may be amended unless such amendment is agreed to in
writing and signed by the Executive and an authorized
officer of the Company. No waiver by either Party of any
breach by the other Party of any condition or provision
contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or
subsequent time. Any waiver must be in writing and signed
by the Executive or an authorized officer of the Company,
as the case may be.
27. Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid
or unenforceable for any reason, in whole or in part, the
remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the
fullest extent permitted by law.
28. Survivorship. The respective rights and obligations
of the Parties hereunder shall survive any termination of
the Executive's employment to the extent necessary to the
intended preservation of such rights and obligations.
29. Beneficiaries/References. The Executive shall be
entitled to select (and change, to the extent permitted
under any applicable law) a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder
following the Executive's death by giving the Company
written notice thereof. In the event of the Executive's
death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be
deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative. Absent any written
notice the Beneficiary shall be the Executive's estate.
30. Governing Law. This Agreement shall be governed by
and construed and interpreted in accordance with the laws
of Massachusetts without reference to principles of
conflict of laws.
31. Notices. Any notice given to a Party shall be in
writing and shall be deemed to have been given when
delivered personally or sent by certified or registered
mail, postage prepaid, return receipt requested, duly
addressed to the Party concerned at the address indicated
below or to such changed address as such Party may
subsequently give such notice of:
Page 20 of 21
If to the Company:
Polaroid Corporation
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Vice President, Human Resources
If to the Executive:
Xxxx X. XxXxxxxxx
Polaroid Corporation
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
32. Headings. The headings of the sections contained in
this Agreement are for convenience only and shall not be
deemed to control or affect the meaning or construction of
any provision of this Agreement.
33. Counterparts. This Agreement may be executed in two
(2) or more counterparts.
34. Withholding. The Company may, to the extent required
by law, withhold applicable federal, state and local income
and other taxes from any payments due to the Executive
hereunder.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
Polaroid Corporation
By: Xxxxxx Xxxxxx
-----------------------------
/s/ Xxxx X. XxXxxxxxx
----------------------
Xxxx X. XxXxxxxxx
Page 21 of 21
