1
EXHIBIT 10(i)
CHANGE IN CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT by and between P. H. Glatfelter Company (the
"Company"), and Xxxxxx X. Xxxxxxxxxx XX (the "Employee"), dated as of the 31 day
of December, 2000.
The Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company and its subsidiaries will have the continued dedication of the
Employee, notwithstanding the possibility, threat, or occurrence of a Change in
Control (as defined below) of the Company. The Board believes it is imperative
to diminish the inevitable distraction of the Employee by virtue of the personal
uncertainties and risks created by a threatened or pending Change in Control, to
encourage the Employee's full attention and dedication to the Company currently
and in the event of any threatened or pending Change in Control, and to provide
the Employee with compensation arrangements upon a Change in Control that
provide the Employee with individual financial security and which are
competitive with those of other comparably situated companies and, in order
2
to accomplish these objectives, the Board has authorized the Company to enter
into this Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. EFFECTIVE DATE.
(a) The "Effective Date" shall be the first date during the
"Change in Control Period" (as defined in Section 1(b)) on which a Change in
Control occurs. Anything in this Agreement to the contrary notwithstanding, if
the Employee's employment with the Company is terminated prior to the date on
which a Change in Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (ii) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Effective Date" shall mean the date immediately prior to the
date of such termination.
(b) The "Change in Control Period" is the period commencing on
the date hereof and ending on the second anniversary of such date; provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
is hereinafter referred to as the "Renewal Date"), the Change in Control Period
shall be
2
3
automatically extended so as to terminate two years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
that the Change in Control Period shall not be so extended.
2. CHANGE IN CONTROL. For the purpose of this Agreement, a "Change
in Control" shall mean:
(a) The acquisition, directly or indirectly, other than from
the Company, by any person, entity or "group" (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), excluding, for this purpose, the Company, its subsidiaries, any
employee benefit plan of the Company or its subsidiaries, and any purchaser or
group of purchasers who are descendants of, or entities controlled by
descendants of, P. H. Glatfelter which acquires beneficial ownership of voting
securities of the Company) (a "Third Party") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors; or
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the date hereof whose
3
4
election, or nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the Incumbent Directors who are directors at
the time of such vote shall be, for purposes of this Agreement, an Incumbent
Director; or
(c) Consummation of (i) a reorganization, merger or
consolidation, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation (other than the acquiror) do not, immediately thereafter,
beneficially own more than 50% of the combined voting power of the reorganized,
merged or consolidated company's then outstanding voting securities entitled to
vote generally in the election of directors, or (ii) a liquidation or
dissolution of the Company or the sale of all or substantially all of the assets
of the Company (whether such assets are held directly or indirectly) to a Third
Party.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Employee in its employ, and the Employee hereby agrees to remain in the employ
of the Company, for the period commencing on the Effective Date and ending on
the second anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
4
5
(i) During the Employment Period,
(A) the Employee's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 90-day period immediately preceding the Effective Date and
(B) the Employee's services shall be performed at
the location where the Employee was employed immediately preceding the Effective
Date or any office or location less than forty (40) miles from such location.
(ii) During the Employment Period, excluding any periods
of vacation and sick leave to which the Employee is entitled, the Employee
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Employee hereunder, to use the
Employee's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Employee to
(A) serve on corporate, civic or charitable boards
or committees,
5
6
(B) deliver lectures, fulfill speaking engagements
or teach at educational institutions, and
(C) manage personal investments, so long as such
activities do not significantly interfere with the performance of the Employee's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Employee prior to the Effective Date,
the continued conduct of such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Employee's
responsibilities to the Company.
(b) COMPENSATION.
(i) Base Salary. During the Employment Period, the
Employee shall receive a base salary ("Base Salary") at a monthly rate at least
equal to the highest monthly base salary paid or payable to the Employee by the
Company during the twelve-month period immediately preceding the month in which
the Effective Date occurs. During the Employment Period, the Base Salary shall
be reviewed at least annually and shall be increased at any time and from time
to time as shall be substantially consistent with increases in base salary
awarded in the ordinary course of business to other key employees of the Company
and its subsidiaries in the same salary grade
6
7
(or, if there are no salary grades, to other key employees of the Company and
its subsidiaries in comparable positions). Any increase in Base Salary shall not
serve to limit or reduce any other obligation to the Employee under this
Agreement. Base Salary shall not be reduced after any such increase.
(ii) Annual Bonus. In addition to Base Salary, the
Employee shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (an "Annual Bonus"), either pursuant to the Company's
Management Incentive Plan or otherwise, in cash at least equal to the sum of (a)
the target bonus paid or payable to the Employee under the Company's Management
Incentive Plan for the last full fiscal year preceding the fiscal year in which
the Effective Date occurs and (b) a profit-sharing bonus equal to 7.5% of
Employee's actual annual base compensation for the fiscal year in which the
Effective Date occurs.
(iii) Incentive, Savings and Retirement Plans. In
addition to Base Salary and Annual Bonus payable as hereinabove provided, the
Employee shall be entitled to participate during the Employment Period in all
incentive, savings and retirement plans, practices, policies and programs
applicable to other key employees of the Company and its subsidiaries (including
the 1992 Key Employee Long-Term Incentive Plan). Such plans, practices, policies
and programs, in the aggregate, shall provide the Employee with compensation,
benefits and reward opportunities at least as favorable
7
8
as the most favorable of such compensation, benefits and reward opportunities
provided by the Company to the Employee under such plans, practices, policies
and programs as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as provided
at any time thereafter with respect to other key employees of the Company and
its subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).
(iv) Welfare Benefit Plans. During the Employment
Period, the Employee and/or the Employee's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
subsidiaries (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs), at least as favorable as the most
favorable of such plans, practices, policies and programs of the Company and its
subsidiaries in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee and/or the
Employee's family, as in effect at any time thereafter with respect to other key
employees of the Company and its subsidiaries in the same salary grade (or, if
there are no salary
8
9
grades, to other key employees of the Company and its subsidiaries in comparable
positions).
(v) Expenses. During the Employment Period, the Employee
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by the Employee in accordance with the most favorable
policies, practices and procedures of the Company and its subsidiaries in effect
at any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Employee, as in effect at any time thereafter with
respect to other key employees of the Company and its subsidiaries in the same
salary grade (or, if there are no salary grades, to other key employees of the
Company and its subsidiaries in comparable positions).
(vi) Fringe Benefits. During the Employment Period, the
Employee shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and its
subsidiaries in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as in effect
at any time thereafter with respect to other key employees of the Company and
its subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).
9
10
(vii) Vacation. During the Employment Period, the
Employee shall be entitled to paid holidays and vacation in accordance with the
most favorable plans, policies, programs and practices of the Company and its
subsidiaries as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as in effect
at any time thereafter with respect to other key employees of the Company and
its subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).
5. TERMINATION.
(a) DEATH OR DISABILITY. This Agreement shall terminate
automatically upon the Employee's death. If the Company determines in good faith
that the Disability of the Employee has occurred (pursuant to the definition of
"Disability" set forth below), it may give to the Employee written notice of its
intention to terminate, or its intention to cause its subsidiary to terminate,
the Employee's employment. In such event, the Employee's employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Employee (the "Disability Effective Date"), provided that, within 30 days
after such receipt, the Employee shall not have returned to full-time
performance of the Employee's duties. For purposes of this Agreement,
"Disability" means disability as defined in the Company's Long Term Disability
Plan (or, if the Company
10
11
does not have such a plan, a disability which, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Employee or the Employee's
legal representative (such agreement as to acceptability not to be withheld
unreasonably)).
(b) CAUSE. The Company may terminate the Employee's employment
for "Cause." For purposes of this Agreement, "Cause" means (i) an act or acts of
personal dishonesty taken by the Employee and intended to result in substantial
personal enrichment of the Employee at the expense of the Company, (ii) repeated
violations by the Employee of the Employee's obligations under Section 4(a) of
this Agreement which are demonstrably willful and deliberate on the Employee's
part and which are not remedied in a reasonable period of time after receipt of
written notice from the Company, (iii) violation by the Employee of any of the
Company's policies, including, but not limited to, policies regarding sexual
harassment, xxxxxxx xxxxxxx, confidentiality, substance abuse and conflicts of
interest, which violation could result in the termination of the Employee's
employment; or (iv) the conviction of the Employee of a felony.
(c) GOOD REASON. The Employee's employment may be terminated
by the Employee for Good Reason. For purposes of this Agreement, "Good Reason"
means
11
12
(i) the assignment to the Employee of any duties
inconsistent in any respect with the Employee's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any other
action by the Company which results in a diminution in such position, authority,
duties or responsibilities;
(ii) any failure by the Company to comply with any of
the provisions of Section 4(b) of this Agreement;
(iii) the Company's requiring the Employee to be based
at any office or location other than that described in Section 4(a)(i)(B)
hereof, except for travel reasonably required in the performance of the
Employee's responsibilities;
(iv) any purported termination by the Company of the
Employee's employment otherwise than as expressly permitted by this Agreement;
or
(v) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement; provided that within fifteen (15) days
after the occurrence of any of the events listed in clauses (i), (ii), (iii),
(iv) or (v) above the Employee delivers written notice to the Company of his
intention to terminate for Good Reason specifying in reasonable detail the facts
and circumstances claimed to give rise to the Employee's right to terminate his
employment for Good Reason and the Company shall not have cured such
12
13
facts and circumstances within thirty (30) days after delivery of such notice by
the Employee to the Company (unless the Company shall have waived its right to
cure by written notice to the Employee), and provided further that within
fifteen (15) days after the expiration of such thirty (30) day period or the
date of receipt of such waiver notice, if earlier, the Employee delivers a
Notice of Termination to the Company under Section 5(d) based on the same Good
Reason specified in the notice of intent to terminate delivered to the Company
under this Section 5(c).
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Employee shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause or by the Employee for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 14(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than fifteen (15) days after
the giving of such
13
14
notice). The failure by the Employee to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good Reason shall not
waive any right of the Employee hereunder or preclude the Employee from
asserting such fact or circumstance in enforcing his rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date
of receipt of the Notice of Termination or any later date specified therein as
permitted by Section 5(d), as the case may be; provided, however, that (i) if
the Employee's employment is terminated by the Company or a subsidiary of the
Company other than for Cause or Disability, the Date of Termination shall be the
date on which the Company or such subsidiary notifies the Employee of such
termination and (ii) if the Employee's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Employee or the Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Employee's employment is terminated during
the Employment Period by reason of the Employee's death, this Agreement shall
terminate without further obligations to the Employee's legal representatives
under this Agreement, other than those obligations accrued or earned and vested
(if applicable) by the Employee as of the Date of Termination, including, for
this purpose (i) the Employee's full Base Salary through the Date of Termination
at
14
15
the rate in effect on the Date of Termination, (ii) any compensation previously
deferred by the Employee (together with any accrued interest thereon) and not
yet paid by the Company and any accrued vacation pay not yet paid by the Company
(such amounts are hereinafter referred to as "Accrued Obligations"). All such
Accrued Obligations shall be paid to the Employee's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days after the Date of Termination.
(b) DISABILITY. If the Employee's employment is terminated
during the Employment Period by reason of the Employee's Disability, this
Agreement shall terminate without further obligations to the Employee, other
than Accrued Obligations. All such Accrued Obligations shall be paid to the
Employee in a lump sum in cash within 30 days after the Date of Termination.
(c) TERMINATION FOR CAUSE; TERMINATION BY EMPLOYEE OTHER THAN
FOR GOOD REASON. If, during the Employment Period, the Employee's employment is
terminated for Cause, or, if the Employee terminates employment other than for
Good Reason, this Agreement shall terminate without further obligations to the
Employee, other than Accrued Obligations. All such Accrued Obligations shall be
paid to the Employee in a lump sum in cash within 30 days after the Date of
Termination.
(d) TERMINATION FOR GOOD REASON; TERMINATION BY THE COMPANY
OTHER THAN FOR CAUSE OR DISABILITY. If, during the Employment
15
16
Period, the Company terminates the Employee's employment other than for Cause,
Disability, or death, or if the Employee terminates his employment for Good
Reason:
(i) the Company shall pay to the Employee in a lump sum
in cash within 30 days after the Date of Termination the aggregate of the
following amounts:
(A) to the extent not theretofore paid, the
Employee's Base Salary through the Date of Termination; and
(B) the product of the Annual Bonus paid to the
Employee for the last full fiscal year before the Date of Termination and a
fraction, the numerator of which is the number of days in the current fiscal
year through the Date of Termination, and the denominator of which is 365; and
(C) the product of (x) three and (y) the sum of
(1) the Employee's annual Base Salary at the highest rate in effect at any time
during the period beginning 90 days before the Effective Date through the Date
of Termination and (2) the Annual Bonus paid to the Employee for the last full
fiscal year before the Date of Termination; and
(D) in the case of compensation previously
deferred by the Employee, all amounts previously deferred (together
16
17
with any accrued interest thereon) and not yet paid by the Company and any
accrued vacation pay not yet paid by the Company; and
(ii) for a period of three years after the Date of
Termination, or such longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Employee and/or the
Employee's family at levels substantially equal to those which would have been
provided to them in accordance with the plans, programs, practices and policies
described in Section 4(b)(iv) of this Agreement if the Employee's employment had
not been terminated, including health, disability and life insurance, in
accordance with the most favorable plans, practices, programs or policies of the
Company and its subsidiaries in effect during the 90-day period immediately
preceding the Date of Termination or, if more favorable to the Employee, as in
effect at any time thereafter with respect to other key employees in the same
salary grade (or, if there are no salary grades, to other key employees of the
Company and its subsidiaries in comparable positions) and their families;
provided, however, that the Company may, at its election, pay to the Employee an
amount in cash equal to the Company's cost of providing any of such benefits for
such period, in lieu of continuing to provide the benefits. For purposes of
eligibility for retiree benefits pursuant to such plans, practices, programs and
policies and for purposes of health benefit continuation coverage pursuant to
Section 601 et seq of ERISA ("COBRA"), the Employee shall be considered to
17
18
have remained employed until the end of the Employment Period and to have
retired on the last day of such period.
(iii) in the event that the Employee has not, as of the
Date of Termination, earned sufficient vesting service to have earned (A) a
nonforfeitable interest in his matching contribution account under the P. H.
Glatfelter Company 401(k) Retirement Savings Plan (the "401(k) Plan"), and (B) a
nonforfeitable interest in his accrued benefit under the terms of the P. H.
Glatfelter Company Retirement Plan for Salaried Employees (the "Retirement
Plan") and, if applicable, the Restoration Pension (the "Restoration Pension")
under the terms of the P. H. Glatfelter Supplemental Early Retirement Plan
and/or the Management Incentive Plan Adjustment Supplement (the "MIP Adjustment
Supplement") under the P. H. Glatfelter Company Supplemental Management Pension
Plan (or any successors to those plans), the Company shall pay to the Employee a
lump sum in cash within 30 days after the Date of Termination in an amount equal
to the sum of:
(A) the Employee's unvested matching contribution
account under the 401(k) Plan, valued as of the Date of Termination; and
(B) the actuarial present value of the Employee's
unvested normal retirement pension under the Retirement Plan and, as applicable,
the Restoration Pension and the MIP
18
19
Adjustment Supplement, based on the Employee's accrued benefit under those plans
as of the Date of Termination, as determined by the Company's actuary utilizing
actuarial equivalency factors for determining single sum amounts under the terms
of the Retirement Plan.
In the event that the Employee should return to employment with the
Company and acquire a vested, nonforfeitable interest in any of the plans with
respect to which the payment in this subsection (iii) is determined, the
Employee shall return an amount equal to the payment made under this subsection,
within 30 days of demand by the Company.
(iv) If the Employee is, as of the Date of Termination,
a participant in the P. H. Glatfelter Company Supplemental Management Pension
Plan (the "SMPP") with at least five years of vesting service (as measured for
purposes of the Retirement Plan), then the Company shall be obligated to
contribute funds, to the extent it has not already done so, to the Trust serving
as a funding vehicle for that plan (the P. H. Glatfelter Company Nonqualified
Plans Master Trust) as follows:
(A) If the Employee is a participant in the MIP
Adjustment Supplement under the SMPP, the Company shall fund the Trust with
sufficient assets to pay the Employee's accrued benefit under the MIP Adjustment
Supplement within five days of the Date of Termination.
19
20
(B) If the Employee is eligible to elect to
receive the Early Retirement Supplement under the SMPP, the Company shall fund
the Trust with sufficient assets to pay the Employee's accrued benefit under the
Early Retirement Supplement, within five days following the later to occur of
(1) the Date of Termination or (2) the benefit commencement date with respect to
the Employee's Early Retirement Supplement. The Company shall have no obligation
under this Section 6(d) unless the Employee executes and delivers to the Company
a valid general release agreement in a form reasonably acceptable to the Company
in which the Employee releases the Company from any and all possible liability,
including, without limitation, any and all liability based on the Employee's
employment or the termination of his employment.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or practices
provided by the Company or its subsidiaries and for which the Employee may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Employee may have under any stock option or other agreements with the Company or
any of its subsidiaries. Amounts which are vested benefits or which the Employee
is otherwise entitled to receive under any plan, policy, practice or program of
the Company or any of its subsidiaries
20
21
at or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program.
8. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Employee or others. In no event shall the Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Employee under any of the provisions of this Agreement.
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Employee (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 Internal Revenue Code of 1986, as amended (the "Code"),
or any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Employee shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Employee of all taxes (including any
21
22
interest or penalties imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-Up Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be
made by Deloitte & Touche LLP, or such other firm of independent accountants
engaged to audit the Company's financial statements (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and the
Employee within 15 business days after the Date of Termination or such earlier
time as is requested by the Company. The initial Gross-Up Payment, if any, as
determined pursuant to this Section 9(b), shall be paid to the Employee within
five days of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall furnish the Employee with an opinion that he has substantial authority not
to report any Excise Tax on his federal income tax return. Any determination by
the Accounting Firm shall be binding upon the Company and the Employee. 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 a Gross-Up Payment which will not have been made by the Company
should have been made ("Underpayment"),
22
23
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and the Employee
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
Employee.
(c) The Employee shall notify the Company in writing of any
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 business days after the Employee
knows 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. The Employee shall not
pay such claim prior to the expiration of the thirty-day period following the
date on which it 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 Employee in writing prior to the expiration of such period
that it desires to contest such claim, the Employee 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
23
24
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
effectively to contest such claim,
(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 Employee 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 9(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo 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 Employee to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner, and the Employee 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 determine; provided, however, that if the Company directs the
Employee to pay such claim and xxx for
24
25
a refund, the Company shall advance the amount of such payment to the Employee,
on an interest-free basis, and shall indemnify and hold the Employee 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 further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Employee with respect to which such contested amount
is claimed to be due is limited solely to such contested amount. Furthermore,
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 Employee 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.
(d) If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 9(c), the Employee becomes entitled
to receive any refund with respect to such claim, the Employee shall (subject to
the Company's complying with the requirements of Section 9(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 receipt by the
Employee of an amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Employee shall not be entitled to any refund with
respect to such claim and the Company does not
25
26
notify the Employee in writing of its intent to contest such denial of refund
prior to the expiration of thirty 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.
10. CONFIDENTIAL INFORMATION. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries, and their
respective businesses, which shall have been obtained by the Employee during the
Employee's employment by the Company or any of its subsidiaries and which shall
not be or become public knowledge (other than by acts by the Employee or his
representatives in violation of this Agreement). After termination of the
Employee's employment with the Company, the Employee shall not, without the
prior written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Employee under this Agreement.
11. SUCCESSORS.
26
27
(a) This Agreement is personal to the Employee and without the
prior written consent of the Company shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) 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 (whether such
assets are held directly or indirectly) 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. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
12. ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, or any breach hereof, shall be settled in accordance with the
terms of this Section 12. All claims by the Employee for benefits under this
Agreement shall first be directed to and determined by the Board and shall be in
writing. Any denial by
27
28
the Board of a claim for benefits under this Agreement shall be delivered to the
Employee in writing within thirty (30) days and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Board shall afford a reasonable opportunity to the Employee for a
review of the decision denying a claim and shall further allow the Employee to
appeal to the Board a decision of the Board within thirty (30) days after
notification by the Board that the Employee's claim has been denied. Any further
dispute, controversy or claim arising out of or relating to this Agreement, or
the interpretation or alleged breach hereof, shall be settled by arbitration in
accordance with Employment Dispute Resolution Rules of the American Arbitration
Association (or such other rules as may be agreed upon by the Employee and the
Company). The place of the arbitration shall be Philadelphia, Pennsylvania and
judgment upon the award rendered by the arbitrator(s) may be entered by any
court having jurisdiction thereof. Such an award shall be binding and conclusive
upon the parties hereto.
13. LEGAL EXPENSES. The Company agrees to reimburse the Employee, to
the full extent permitted by law, for all costs and expenses (including without
limitation reasonable attorneys' fees) which the Employee may reasonably incur
as a result of any contest of the validity or enforceability of, or the
Company's liability under, any provision of this Agreement, plus in each case
interest at the applicable Federal rate provided for in Section 7872(f)(2) of
the
28
29
Code; provided, however, that such payment shall be made only if the Employee
prevails on at least one material issue.
14. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without reference
to principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee:
------------------
Xxxxxx X. Xxxxxxxxxx XX
0000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
If to the Company:
------------------
P. H. Xxxxxxxxxx Company
00 Xxxxx Xxxxxx Xxxxxx
Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and
29
30
communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Employee's failure to insist upon strict compliance
with any provision hereof shall not be deemed to be a waiver of such provision
or any other provision hereof.
(f) This Agreement contains the entire understanding of the
Company and the Employee with respect to the subject matter hereof and
supersedes all other agreements or understandings between the Company and the
Employee relating to the subject matter hereof, but only during the Employment
Period.
30
31
IN WITNESS WHEREOF, the Employee has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.
/s/ Xxxxxx X. Xxxxxxxxxx XX
---------------------------------
Xxxxxx X. Xxxxxxxxxx XX
P. H. GLATFELTER COMPANY
By /s/ Xxxxxx X. Xxxx
-------------------------------
31
