Exhibit 10.1
EMPLOYMENT AND SEVERANCE BENEFITS AGREEMENT
Employment and Severance Benefits Agreement (the
"Agreement"), dated as of March 6, 1997, between Chesapeake
Packaging Co., a Virginia corporation (the "Company"), and Xxxxxx
X. Xxxxxx (the "Employee").
WHEREAS, the Board of Directors recognizes that the Employee
has made and is expected to make substantial contributions to the
past and future growth and prospects of the Company; and
WHEREAS, the Board of Directors desires to assure the
Company of the continued services of the Employee now and in the
event that the Company or an affiliate is faced with a change in
control; and
WHEREAS, the Employee desires to agree to remain in the
employ of the Company during the term of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements set forth herein, the parties hereto
covenant and agree as follows:
1. When used in this Agreement, the following terms shall
have the meanings specified:
(a) CAUSE. "Cause", when referring to a termination of
employment, shall mean any termination resulting from the
Employee's failure to devote his full business time and energies
to the business and affairs of the Company, failure to use his
best efforts, skill and abilities to promote the Company's
business, aiding competitors of the Company or conviction by a
court of competent jurisdiction for a felony involving dishonesty
or moral turpitude.
(b) CHANGE IN CONTROL. "Change in Control" shall mean
(i) the sale of all or substantially all of the outstanding stock
of Chesapeake Paper Products Company ("CPPC") or (ii) the sale of
all or substantially all of the assets of CPPC.
(c) CONTROL CHANGE DATE. "Control Change Date" shall
mean the effective date of a Change in Control.
(d) PURCHASER. "Purchaser" shall mean the company or
entity or its successors that purchases all or substantially all
of the outstanding stock or assets of CPPC.
-1-
(e) REDUCTION IN SERVICE. A "Reduction in Service"
shall be deemed to have occurred if the job title, job
description, responsibilities or duties assigned to the Employee
are materially reduced from those assigned to him on the date
hereof.
(f) RETIREMENT. "Retirement" shall mean early, normal or
delayed retirement under the terms of the Chesapeake Corporation
Retirement Plan for Salaried Employees.
(g) TOTAL AND PERMANENT DISABILITY. "Total and Permanent
Disability" shall have the same meaning as such term is defined
in the Chesapeake Corporation Retirement Plan for Salaried
Employees.
2. If a Control Change Date has not occurred on or before
5:00 p.m. Richmond, Virginia time on December 31, 1997, then this
Agreement shall terminate as of such time.
3. During the period that the Employee is an active
employee of the Company pursuant to this Agreement, the Employee
agrees to (i) devote his full business time and energies to the
business and affairs of the Company, (ii) use his best efforts,
skill and abilities to promote the Company's interests and (iii)
not aid competitors of the Company.
4. From the date of this Agreement to the earlier of a
Control Change Date or December 31, 1997, the Company will not
terminate the employment of the Employee without Cause or reduce
the base salary of the Employee from the base salary as of the
date of this Agreement.
5. The Employee will be eligible to receive any awards
under the Chesapeake Packaging Co. Management Incentive Plan (or
any other plan implemented by management to replace this plan)
that may be awarded to him under the plan.
6. If a Control Change Date occurs during the term of this
Agreement and the Employee is in the employ of the Company on
such Control Change Date:
(a) The Employee will be eligible to receive the lump
sum bonus as set forth in the memorandum dated January 8, 1997.
-2-
(b) The Company agrees that it will retain the
Employee in its employ for a period of two years after the
Control Change Date unless the Employee's employment is
terminated for Cause. The Employee's base salary during this two
year period will not be reduced below his base salary as of the
Control Change Date. In the event (i) the Employee voluntarily
terminates his employment due to a Reduction in Service or (ii)
the Company terminates the Employee's employment without Cause,
during the two year period and the Employee does not accept
another position with the Company or one of its affiliates, the
Employee will be entitled to continue to receive his base salary
on the normal payroll payment dates for a period of twelve (12)
months. In addition, the Employee shall continue to be eligible
to participate in all life, medical, dental and retirement
benefit plans or programs or arrangements in which he
participates immediately prior to his date of termination on such
terms as are then in effect, provided that his continued
participation is possible under the general terms and provisions
of such plans and programs. In the event that the Employee's
participation in any such plan or program is barred by its terms,
the Company shall arrange to provide the Employee with benefits
substantially similar to those which he is entitled to receive
under such plans and programs. Cause shall not include refusal to
accept a transfer or relocation to another facility or office of
the Company or any affiliate. If the Employee voluntarily
terminates his employment for any reason other than a Reduction
in Service during the two year period, the Employee will not be
entitled to any continuation of compensation or benefits.
(c) The Company further agrees that if the Employee
elects retirement from the Company after the two year period
specified in Section 6(b) above, the Employee's retirement
benefits under the Chesapeake Corporation Retirement Plan for
Salaried Employees (the "Qualified Plan") and the Chesapeake
Corporation Executive Supplemental Retirement Plan (the
"Supplemental Plan") will be enhanced by adding five (5) years to
his age and service under both plans. The enhancement amount will
be paid as an additional benefit under the Supplemental Plan and
will be subject to the provisions of the Supplemental Plan.
-3-
7. In the event that, as of the Control Change Date, the
Employee owns or has the right (except to the extent such right
is generally available to public investors) to acquire, in excess
of one percent (1%) of the equity of any entity participating in
a Change in Control transaction involving the Company or CPPC,
all obligations under this Agreement on the part of the Company
or Chesapeake Corporation to provide employment, pay compensation
or provide benefits shall terminate. It is the Employee's
responsibility to notify the Chesapeake Corporation of his
ownership interest or his right to acquire such interest.
8. During the period of his employment by the Company, the
Employee has had access to certain confidential, non-public
information concerning the Company and Chesapeake Corporation
(the "Information"). The Employee agrees to maintain the
Information as confidential and not disclose it to third parties
or to use it in his employment following the Control Change Date.
The Employee agrees that if this confidentiality obligation is
breached, the Company and/or Chesapeake Corporation shall, in
addition to other remedies available, be entitled to injunctive
relief.
9. In the event of the Employee's death, Total and
Permanent Disability, or Retirement while an employee of the
Company during the term of this Agreement, the Company's and/or
Chesapeake Corporation's obligations to provide employment, pay
compensation or provide benefits shall cease except to the extent
that such obligations are provided for under applicable Company
benefit plans as are then in effect.
10. 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 expressly to 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.
Failure by the Company to obtain such agreement prior to the
effectiveness of any succession shall be a breach of this
Agreement and shall entitle the Employee to compensation from the
Company in the same amount and on the same terms as he would be
entitled to receive pursuant to Sections 5 and 6 hereof. As used
in this Agreement, "Company" shall mean the Company as defined
herein and any successor to its business and/or assets which
executes and delivers the agreement provided for in this Section
10 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law or otherwise.
-4-
11. The Employee agrees that he will not voluntarily leave
the employ of the Company during the term of this Agreement and
that he will render services to the Company and its affiliates
commensurate with his position throughout the term of this
Agreement.
12. In the event the Employee becomes eligible to receive
benefits under the Chesapeake Corporation Salaried Employees'
Benefits Continuation Plan, those benefits shall reduce the
Company's and/or Chesapeake corporation's obligation to pay
compensation or provide benefits under this Agreement.
13. This Agreement shall inure to the benefit of and be
enforceable by the personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees of the Employee. If the Employee should die while any
amounts are still payable to him hereunder, then all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisees,
legatees, or other designees or, if there be no such designees,
to his estate.
14. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Employee and such officer
as may be specifically designated by the Board of Directors of
the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of the Commonwealth of Virginia other than its choice
of laws provision.
15. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full
force and effect.
-5-
IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed on its behalf, and the Employee has duly
executed this Agreement, all as of the date first above written.
Chesapeake Packaging Co.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ X. Xxxxxx Fox
-------------------- -----------------
Xxxxxx X. Xxxxxx X. Xxxxxx Fox
Employee Vice President
Chesapeake Corporation hereby confirms acceptance of its
obligations as stated in this Agreement.
Chesapeake Corporation
By: /s/ Xxxxxx X. Xxxxx
-------------------
Xxxxxx X. Xxxxx
Vice President
-6-
