UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the first quarter ended January 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________
Commission File Number 1-3013
WESTVACO CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-1466285
(State of Incorporation) (I.R.S. Employer Identification No.)
299 Park Avenue, New York, New York 10171
(Address of principal executive offices)
212-688-5000
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for the past 90
days. YES X NO
At January 31, 2000, the latest practicable date, there were
100,566,927 shares outstanding of Common Stock, $5 par value.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statement of Income for the three
months ended January 31, 2000 and 1999
Consolidated Balance Sheet as of January 31, 2000
and October 31, 1999
Consolidated Statement of Cash Flows for the
three months ended January 31, 2000 and 1999
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market
Risk
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENT OF INCOME
[Unaudited]
In thousands, except per share data
Three Months Ended
January 31
2000 1999
Sales $799,593 $650,715
Other income (expense) 12,359 8,705
811,952 659,420
Cost of products sold (excluding
depreciation shown below) 554,243 464,360
Selling, research and administrative
expenses 60,782 55,006
Depreciation and amortization 71,902 69,331
Interest expense 45,300 30,601
732,227 619,298
Income before taxes 79,725 40,122
Income taxes 29,500 14,900
Net income $ 50,225 $ 25,222
Net income per share:
Basic $ .50 $ .25
Diluted $ .50 $ .25
Shares used to compute net income per share:
Basic 100,412 100,261
Diluted 100,965 100,468
Cash dividends per share of common stock $ .22 $ .22
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED BALANCE SHEET
In thousands
January 31 October 31
2000 1999
[Unaudited]
ASSETS
Cash and marketable securities $ 527,635 $ 108,792
Receivables 364,794 318,369
Inventories 298,181 248,963
Prepaid expenses and other current assets 70,689 61,884
Current assets 1,261,299 738,008
Plant and timberlands:
Machinery 5,596,084 5,094,773
Buildings 758,573 672,744
Other property, including plant land 241,896 226,977
6,596,553 5,994,494
Less: accumulated depreciation 2,847,880 2,779,199
3,748,673 3,215,295
Timberlands - net 265,856 266,386
Construction in progress 147,188 99,702
4,161,717 3,581,383
Other assets 793,558 577,301
$6,216,574 $4,896,692
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $ 398,838 $ 361,959
Notes payable and current maturities of
long-term obligations 374,457 50,200
Income taxes 14,370 12,955
Current liabilities 787,665 425,114
Long-term obligations 2,391,134 1,502,177
Deferred income taxes 819,996 798,113
Shareholders' equity:
Common stock, $5 par, at stated value
Shares authorized: 300,000,000
Shares issued: 103,170,667 (1999-
103,170,667) 766,432 765,810
Retained income 1,633,051 1,607,504
Accumulated other comprehensive
income (loss) (118,178) (129,981)
Common stock in treasury, at cost
Shares held: 2,603,740 (1999-
2,877,824) (63,526) (72,045)
2,217,779 2,171,288
$6,216,574 $4,896,692
The accompanying notes are an integral part of these
financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
[Unaudited]
In thousands
Three Months Ended
January 31
2000 1999
Cash flows from operating activities:
Net income $ 50,225 $ 25,222
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for depreciation and
amortization 71,902 69,331
Provision for deferred income taxes 20,554 10,801
(Gains) losses on sales of plant and
timberlands (2,666) (5,880)
Pension credits and other employee
benefits (24,807) (18,187)
Foreign currency transaction (gains)
losses 193 (122)
Changes in assets and liabilities:
(Increase) decrease in receivables 6,009 16,975
(Increase) decrease in inventories 7,865 (24,550)
(Increase) decrease in prepaid expenses (6,673) (10,662)
(Decrease) increase in accounts payable
and accrued expenses (8,082) (15,552)
(Decrease) increase in income taxes payable 10,838 3,731
Other, net 6,851 2,834
Net cash provided by operating
activities 132,209 53,941
Cash flows from investing activities:
Additions to plant and timberlands (38,574) (64,169)
Payment for acquisitions, net of cash
acquired (763,960) -
Proceeds from sales of plant and
timberlands 10,350 8,734
Other, net (517) (92)
Net cash used in investing activities (792,701) (55,527)
Cash flows from financing activities:
Proceeds from issuance of common stock 5,531 1,298
Proceeds from issuance of debt 1,155,242 278,251
Treasury stock purchases (631) (5,152)
Dividends paid (22,076) (22,056)
Repayment of notes payable and long-term
obligations (59,811) (241,104)
Net cash (used in) provided by
financing activities 1,078,255 11,237
Effect of exchange rate changes on cash 1,080 (19,915)
Increase (decrease) in cash and marketable
securities 418,843 (10,264)
Cash and marketable securities:
At beginning of period 108,792 105,050
At end of period $ 527,635 $ 94,786
The accompanying notes are an integral part of these financial
statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[Unaudited]
1. Statement of Information Furnished
The accompanying unaudited consolidated financial statements have
been prepared in accordance with Form 10-Q instructions and in
the opinion of management contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly the
financial position and the results of operations for the interim
periods presented. These results have been determined on the
basis of generally accepted accounting principles and practices
applied consistently with those used in the preparation of the
company's 1999 Annual Report on Form 10-K.
Certain information and footnote disclosures normally included in
financial statements presented in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that the accompanying consolidated financial
statements be read in conjunction with the financial statements
and notes thereto incorporated by reference in the company's 1999
Annual Report on Form 10-K.
2. Current Assets
Marketable securities of $35,520,000 ($39,349,000 at October 31,
1999) are valued at cost, which approximates market.
Inventories included in the consolidated balance sheet
consist of the following:
January 31 October 31
(In thousands) 2000 1999
Raw materials $ 52,800 $ 45,453
Production materials, stores
and supplies 81,573 66,191
Finished and in process goods 163,808 137,319
Total $298,181 $248,963
3. Net Income Per Common Share
Basic earnings per share for all the periods presented have been
calculated using the weighted average shares outstanding. In
computing diluted earnings per share, incremental shares issuable
upon the assumed exercise of stock options have been added to the
weighted average shares outstanding.
4. Segment Information
In 1997, the Financial Accounting Standards Board issued SFAS No.
131, Disclosures about Segments of an Enterprise and Related
Information, which the company adopted at October 31, 1999.
Adoption of the standard had no impact on our net income.
Previously reported segment information has been restated to
conform to the new standard.
Sales
(In millions) ----------------------
Inter- OperatingSegment
Trade segment Total Profit Assets
Quarter ended January 31, 2000
Paper $288.1 $ 6.7 $294.8 $ 33.0 $1,435.9
Packaging 386.5 1.2 387.7 57.8 2,937.1
Rigesa 37.2 - 37.2 5.5 270.2
Packaging total 423.7 1.2 424.9 63.3 3,207.3
Chemical 75.7 5.7 81.4 12.7 318.7
Corporate and other 12.1 9.0 21.1 (29.3) 1,254.7
Total 799.6 22.6 822.2 79.7 6,216.6
Intersegment eliminations (22.6) (22.6)
Consolidated totals $799.6 $ - $799.6 $ 79.7 $6,216.6
Sales
-----------------------
Inter- OperatingSegment
Trade segment Total Profit Assets
Quarter ended January 31, 1999
Paper $236.2 $ 5.3 $241.5 $ 12.9 $1,494.0
Packaging 294.6 1.1 295.7 32.5 2,142.2
Rigesa 39.5 - 39.5 3.7 220.2
Packaging total 334.1 1.1 335.2 36.2 2,362.4
Chemical 69.3 4.1 73.4 11.3 314.5
Corporate and other 11.1 9.8 20.9 (20.3) 748.4
Total 650.7 20.3 671.0 40.1 4,919.3
Intersegment eliminations (20.3) (20.3)
Consolidated totals $650.7 $ - $650.7 $ 40.1 $4,919.3
5. Comprehensive Income
Comprehensive income reflects changes in equity that result from
transactions and economic events from non-owner sources.
Comprehensive income for the periods presented below included
foreign currency translation adjustments associated with the
company's Brazilian and Czech Republic operations. There was no
tax expense or tax benefit associated with the foreign currency
translation items.
Comprehensive income
(In thousands) Three Months Ended
January 31
2000 1999
Net income $50,225 $ 25,222
Other comprehensive income (loss):
Foreign currency translation
adjustments 11,803 (95,892)
Comprehensive income (loss) $62,028 $(70,670)
6. Acquisitions
On December 29, 1999, the company completed its acquisition of
Temple-Inland's bleached paperboard mill in Evadale, TX
("Evadale"). The total purchase price, net of $82 million of debt
assumed, was $576 million. The company used existing cash reserves,
commercial paper and $400 million of debentures issued on November 5,
1999 to fund the purchase.
On January 7, 2000, the company completed the purchase of Mebane
Packaging Group ("Mebane"), a leading supplier of packaging for
pharmaceutical products and personal care items, based in Mebane,
NC. The company used existing cash reserves and commercial paper
to fund the purchase.
The company accounted for these transactions using the purchase
method of accounting. Accordingly, the assets and liabilities of
the acquired businesses were included in the consolidated balance
sheet at January 31, 2000. The purchase price for these
acquisitions, including transaction costs, has been allocated to
assets acquired and liabilities assumed based on estimated market
values at the date of acquisition. The purchase price allocation
for these acquisitions is preliminary and further refinements are
likely to be made upon completion of final valuation studies. The
operating results of these acquired businesses have been included
in the consolidated statement of income from the date of
acquisition.
The following unaudited pro forma consolidated results of
operations are presented as if the Evadale and Mebane acquisitions
had been made at the beginning of the periods presented. The pro
forma data for the first quarter of 2000 reflects 29 days and 25
days of Westvaco's operations of the Evadale mill and Mebane plants
respectively, the balance of the first quarter of 2000 and all of
the prior year quarter reflect the results of operations under the
management of the prior owners.
Three Months Ended
(In thousands, except per share) January 31
2000 1999
Net sales $884,856 $766,956
Net earnings 48,512 19,787
Basic earnings per common share .48 .20
Diluted earnings per common share .48 .20
The pro forma consolidated results of operations include
adjustments to give effect to depreciation, amortization of
goodwill on a straight-line basis over 40 years and interest
expense on acquisition debt, together with related income tax
effects. The unaudited pro forma information is not necessarily
indicative of the results of operations that would have occurred
had the purchase been made at the beginning of the periods
presented nor is it indicative of the future results of the
combined operations.
Item 2.Management's Discussion and Analysis of
Financial Condition and Results of Operations
[Unaudited]
Results of Operations
Company-wide initiatives implemented following a strategic review
completed last year, including the Evadale acquisition, cost
containment steps and success in improving our market positions,
have beneficially impacted first quarter financial results. Sales
of $799.6 million for the 2000 first quarter were 22.9% more than
the 1999 first quarter reflecting a 21.5% increase in volume, and a
1.4% increase in price and product mix. Net income from operations
for the first quarter ended January 31, 2000 was $50.2 million or
$.50 per share (basic and diluted), compared to $25.2 million or
$.25 per share (basic and diluted) for the 1999 period. Packaging
and coated paper markets in particular have experienced increased
demand compared to the prior year period. Export sales from the
United States increased 29% to $130.1 million, compared to the first
quarter of 1999, principally in bleached paperboard, coated papers
and linerboard, and accounted for approximately 16% of the company's
first quarter sales. Total sales outside of the United States,
including sales of our foreign operating subsidiaries, increased 18%
from the prior year period, and accounted for approximately 21% of
consolidated sales. Gross profit margin for the first quarter of
2000 was 22% compared with 18% for the prior year period due
principally to volume increases as well as the benefits of our cost
reduction program. First quarter 2000 operating expenses also
benefited from an increase in the non-cash pension credits of $7.9
million to $27.1 million, reflecting cumulative favorable investment
returns on pension plan assets.
Paper
Paper segment sales for the first quarter increased 22.0% from the
comparable 1999 quarter due to an increase in volume of 17.4% and a
4.6% increase in price and product mix. Paper segment operating
profit increased substantially in the first quarter ended January
31, 2000 to $33.0 million compared to $12.9 million for the same
1999 period principally due to strong market conditions, lower
manufacturing costs and product mix improvements, along with some
price recovery.
Packaging
Sales for the packaging segment increased 26.8% compared to the
1999 first quarter due to an increase in volume of 28.3%,
partially offset by a 1.5% decrease in price and product mix.
The Evadale mill was accretive to earnings and cash flow during
our first month of ownership, reflecting the mill's significant
progress in improving productivity and product quality.
Operating profit for the packaging segment increased to $63.3
million from the 1999 first quarter profit of $36.2 million,
driven by strong global demand. Rigesa Ltda., our Brazilian
subsidiary, accounted for approximately 8.7% of segment
operating profit in the first quarter of 2000, compared to
approximately 10.3% for the 1999 comparable period. During the
first quarter of 2000, approximately 22% of packaging segment
sales were made to the tobacco industry for packaging tobacco
products compared to approximately 26% for the 1999 comparable
period. Of these tobacco sales, approximately 15% (1999 -18%)
of the segment sales were exported or used to produce products
for export with the remaining 7% (1999-8%) made for the
domestic tobacco industry for sale in the United States. The
current legal, regulatory and legislative pressures on the
tobacco industry may have an adverse effect on packaging
segment profitability. While we would expect to compensate for
such an adverse effect by continuing growth in other consumer
product markets, these alternatives may not, in the short run,
fully offset any decline in profitability related to sales to
the tobacco industry.
Chemicals
Sales for the chemicals segment increased 10.9% from the 1999 first
quarter due to an increase in volume of 8.1% and an increase in
price and product mix of 2.8%. The 2000 first quarter operating
profit for the chemicals segment increased 12.7% to a level of
$12.7 million, reflecting favorable margins for our crude tall oil
products and strong market demand.
Acquisitions
On December 29, 1999, Westvaco completed its acquisition of Temple-
Inland Inc.'s bleached paperboard mill in Evadale, Texas. The total
purchase price, net of $82 million of debt assumed, was $576 million.
The transaction also included a long-term contract with Temple-Inland
for the supply of wood fiber to the mill. The Evadale mill's annual
production capacity of 670,000 tons will increase Westvaco's total
bleached paperboard production capacity to 1.6 million tons. The
Evadale mill was accretive to our earnings and cash flow during the
first month of ownership, reflecting the mill's significant progress
in improving productivity and product quality. These initial results
reinforce our earlier projection that the mill will add at least $100
million a year to pretax earnings by 2002.
On January 7, 2000, Westvaco completed the acquisition of Mebane
Packaging Group, Inc., a leading supplier of packaging for
pharmaceutical products and personal care items, based in Mebane, NC.
Mebane has seven packaging plants located in Greenville, MS, Garner
and Mebane, NC, Chatham and Kearny, NJ, Memphis, TN, and Caguas,
Puerto Rico. The integration of Mebane into Westvaco is proceeding on
schedule, and the acquisition is expected to be accretive to the
company's cash flow and earnings within two years. This acquisition
increases our presence in select packaging markets particularly
pharmaceutical, health care and personal care. Our combined product
development capabilities and manufacturing base will enable us to gain
more business with existing and new customers.
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 2000, the ratio of current assets to current
liabilities was 1.6 compared to 1.7 at October 31, 1999. Cash and
marketable securities increased in the first quarter as cash
provided by operations and financing exceeded cash used for
investing activities. Cash flows from operations totaled $132.2
million for the three months ended January 31, 2000, compared to
$53.9 million for the comparable 1999 period.
Cash expenditures for capital investments, excluding acquisitions,
totaled $38.6 million for the first quarter of 2000, compared to
$64.2 million for the comparable 1999 period. This planned lower
level of capital spending follows the completion of several
important initiatives in support of our long-term strategy. At
January 31, 2000, the amounts committed to complete all authorized
capital projects were approximately $141.4 million. Total capital
expenditures are expected to approximate $250 million in 2000 and
will be used to support our current production capacity levels. The
company may from time to time use outside sources as needed to
finance future capital investments, as it has in the past.
The company maintains a $500 million revolving credit agreement, and
there was no borrowing under this arrangement during the current
period. The ratio of debt to total capital employed was 48% at
January 31, 2000, and 34% at October 31, 1999. The company has
repaid $270 million of higher coupon debt and some commercial paper
in the second quarter; had this taken place, prior to January 31,
2000, the debt to capital employed would have been 44%. Short-term
borrowings amounting to $270 million, whose repayment terms can be
extended under the loan agreement and which are intended to be
outstanding more than one year, have been reclassified as long-term
obligations. In connection with the acquisitions of Temple-Inland's
bleached paperboard mill and the Mebane Packaging Group discussed
above, in November 1999 the company issued $200 million of 6.85%
five-year notes and $200 million of 7.10% ten-year notes, and in
January 2000, the company issued $400 million of 8.20% thirty-year
notes to fund these purchases, with the remainder to be added to the
company's general corporate funds and available for repayment of
existing debt, future capital outlays and working capital purposes.
Accounting changes: In 2001, the company is required to adopt a new
accounting standard issued by the Financial Accounting Standards
Board: Statement of Financial Accounting Standards (SFAS) 133,
Accounting for Derivative Instruments and Hedging Activities. The
company does not believe that the adoption of this statement will
have a material effect on the results of operations.
Year 2000
The company's information and noninformation technology systems
have experienced no material Year 2000 compliance related problems.
During the critical transition period the only problems encountered
were minor and quickly resolved. Equally satisfactory results were
achieved at the bleached paperboard mill recently purchased from
Temple-Inland and the seven packaging plants Westvaco recently
purchased from Mebane Packaging Group. Westvaco is not aware of
any significant Year 2000 related issues with any of its major
customers, vendors or other third parties with whom it has business
relationships.
As of January 31, 2000, total costs of the work necessary to
address the company's Year 2000 issues were $7.6 million including
both internal costs (e.g., related payroll and required downtime)
and external costs (e.g., hiring consultants to assist in
compliance efforts). Program costs do not include the cost of
major new business system implementations scheduled prior to the
company's specific Year 2000 compliance efforts. Costs would have
been substantially greater but for the fact that recent
modernization of many of the company's business systems involved
the replacement of software with new Year 2000 compliant software
at a cost of approximately $30 million. No significant technology
projects were deferred as a result of the company's Year 2000
compliance work.
The company continues to monitor for Year 2000 related problems and
remains optimistic concerning its readiness with respect to
upcoming transition periods. Westvaco does not expect any material
adverse impact on its long-term results of operations, liquidity or
financial position due to any possible Year 2000 related issues.
Environmental Matters
In 1995, the company authorized removal of elemental chlorine from
all of its pulp bleaching processes. This important initiative,
completed during 1997 at a cost of approximately $110 million,
represented a major step by Westvaco in addressing EPA regulations
for the U.S. pulp and paper industry regarding air and water
quality. These regulations, known as the Cluster Rule, were
published in the Federal Register in April 1998. The company
anticipates additional capital costs to comply with other parts of
these new regulations over the next several years to be in the
range of $100 million to $150 million which will also increase
operating costs in the range of $3 million to $7 million annually.
Environmental organizations are challenging the EPA regarding
certain aspects of the Cluster Rule in the U.S. Court of Appeals.
Westvaco and other companies are participating in that litigation.
If the legal challenge by environmental organizations to the
regulations is successful, the company could face additional
compliance costs of up to $150 million over the next several years.
The company is currently named as a potentially responsible
party with respect to the cleanup of a number of hazardous
waste sites under the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) and similar state
laws. While joint and several liability is authorized under
CERCLA, as a practical matter, remediation costs will be
allocated among the waste generators and others involved. The
company has accrued approximately $5 million for estimated
potential cleanup costs based upon its close monitoring of
ongoing activities and its past experience with these matters.
In addition, the company is involved in the remediation of
certain other than CERCLA sites and has accrued approximately
$11 million for remediation of these sites.
Forward-looking statements
Certain statements in this document and elsewhere by management
of the company that are neither reported financial results nor
other historical information are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform
Act of 1995. Such information includes, without limitation, the
business outlook, assessment of market conditions, anticipated
financial and operating results, strategies, future plans,
contingencies and contemplated transactions of the company. Such
forward-looking statements are not guarantees of future
performance and are subject to known and unknown risks,
uncertainties and other factors which may cause or contribute to
actual results of company operations, or the performance or
achievements of the company, or industry results, to differ
materially from those expressed in or implied by the forward-
looking statements. In addition to any such risks, uncertainties
and other factors discussed elsewhere herein, risks,
uncertainties and other factors that could cause or contribute to
actual results differing materially from those expressed in or
implied by the forward-looking statements include, but are not
limited to, competitive pricing for the company's products;
changes in raw materials, energy and other costs; fluctuations in
demand and changes in production capacities; changes to economic
growth in the U.S. and international economies, especially in
Asia and Brazil; governmental policies and regulations, including
but not limited to those affecting the environment and the
tobacco industry; and currency movements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The company's financial market risk arises from fluctuations in
interest rates and foreign currency exchange rates.
No material changes occurred during the quarter to information
previously provided in the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1999.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In April 1999, EPA, Region III, issued Notices of Violation (NOVs) to
seven paper industry facilities, including the company's Luke, Maryland,
mill, alleging violation of EPA's Prevention of Significant Deterioration
(PSD) regulations requiring special permitting and emissions evaluation
prior to industrial expansion. The NOV received by the company primarily
targets three capital projects at the mill, one in 1982 and two in 1989.
The NOV alleges that the company did not obtain PSD permits or install
required pollution controls, and it sets forth EPA's authority to seek
$27,500 per day for each violation. The company has presented substantial
data demonstrating that PSD requirements did not apply to the targeted
projects and that new emission controls proposed by EPA are not
required by the governing regulations. Unless the matter is resolved, an
enforcement action may be brought against the company.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders of Westvaco
Corporation was held on February 22, 2000.
(b) The directors named in the Proxy Statement were elected
to three-year terms expiring in 2003, with the following
results:
Shares Shares
Voted For Withheld
Samuel W. Bodman III 94,140,607 863,277
Dr. Thomas W. Cole, Jr. 94,105,889 897,995
Rudolph G. Johnstone, Jr. 93,981,756 1,022,128
Directors whose terms of office continue: W. L. Lyons Brown,
Jr., Michael E. Campbell, John A. Luke, Jr., William R. Miller,
David L. Hopkins, Jr., Douglas S. Luke, Jane L. Warner and
Richard A. Zimmerman.
(c) The appointment of PricewaterhouseCoopers LLP as independent
accountants was ratified by a vote of 94,649,073 shares in
favor, 104,578 shares in opposition and 250,233 shares
abstained.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10(a). Employment Agreement dated as of March 2, 2000,
by and between Westvaco Corporation and James
A. Buzzard.
10(b). Employment Agreement dated as of March 3, 2000,
by and between Westvaco Corporation and Karen
R. Osar.
(b) Reports on Form 8-K:
A report on Form 8-K was filed on November 12, 1999, and is
incorporated herein by reference. The contents of the
report are summarized below:
Item 5. Other Events - The Company announced the issuance
in an underwritten public offering of $400,000,000 in
notes comprised of $200,000,000 aggregate principal
amount of 6.85% Notes due November 15, 2004 and
$200,000,000 aggregate principal amount of 7.10%
Notes due November 15, 2009.
Item 7. Financial Statements and Exhibits.
A report on Form 8-K was filed on November 23, 1999, and is
incorporated herein by reference. The contents of the
report are summarized below:
Item 5. Other Events - On November 18, 1999, the Company
reported its fourth quarter and audited year-end
sales and earnings for the fiscal year ended October
31, 1999.
Item 7. Financial Statements and Exhibits.
A report on Form 8-K was filed on December 3, 1999, and is
incorporated herein by reference. The contents of the
report are summarized below:
Item 5. Other Events - News release dated November 29,
1999, the Company announced that it signed a
definitive agreement to acquire Mebane Packaging
Group, Inc.
Item 7. Financial Statements and Exhibits.
A report on Form 8-K was filed on January 3, 2000, and is
incorporated herein by reference. The contents of the
report are summarized below:
Item 5. Other Events - News release dated December 29,
1999, the Company completed its previously announced
acquisition of Temple-Inland Inc.'s bleached
paperboard mill in Evadale, TX.
Item 7. Financial Statements and Exhibits.
A report on Form 8-K was filed on January 10, 2000, and is
incorporated herein by reference. The contents of the
report are summarized below:
Item 5. Other Events - News release dated January 7, 2000,
the Company completed its previously announced
acquisition of Mebane Packaging Group, Inc.
Item 7. Financial Statements and Exhibits.
A report on Form 8-K was filed on January 24, 2000, and is
incorporated herein by reference. The contents of the
report are summarized below:
Item 5. Other Events - The Company announced the issuance
in an underwritten public offering of $400,000,000 in
8.20% Debentures due 2030.
Item 7. Financial Statements and Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
WESTVACO CORPORATION
(Registrant)
March 8, 2000 _______________________________
Karen R. Osar
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
EMPLOYMENT AGREEMENT
AGREEMENT by and between Westvaco Corporation, a Delaware
corporation (the "Company") and James A. Buzzard (the "Executive"),
dated as of the 2nd day of March, 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 will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change
of Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date"
shall mean the first date during the Change of Control Period (as
defined in Section 1(b)) on which a Change of Control (as defined
in Section 2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to the
date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment
(i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of
Control, then for all purposes of this Agreement the "Effective
Date" shall mean the date immediately prior to the date of such
termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third anniversary
of the date hereof; 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 shall be
hereinafter referred to as the "Renewal Date"), unless previously
terminated, the Change of Control Period shall be automatically
extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall
give notice to the Executive that the Change of Control Period
shall not be so extended.
(c) The "Multiple" means the least of (i) three, (ii)
the greater of one and the number of years and fractions thereof
during the period from the Date of Termination (as hereinafter
defined) and the Executive's 65th birthday, and (iii) if the
Executive had announced his intention to retire before the Date of
Termination, the number of years and fractions thereof from the
Date of Termination until the date of such intended retirement.
2. Change of Control. For the purpose of this Agree-
ment, a "Change of Control" shall mean:
(a) The acquisition by any individual, 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"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either
(i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially
all of the assets of the Company (a "Business Combination"), in
each case, unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case
may be, (ii) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly,
20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination
or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (iii) at
least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company subject to the terms
and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of such date
(the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i)
During the Employment Period, (A) the Executive'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 120-day
period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date,
any office or location less than 35 miles from such location, or
any other location to which the Company's Headquarters Office,
Corporate Department Office, Division Office where the Executive
was employed immediately preceding the Effective Date is relocated.
Notwithstanding clause (A) of the preceding sentence, the
Executive's position need not comply with the requirements of
clause (A) provided that both of the conditions set forth in the
proviso to clause (i) of Section 5(c) are satisfied.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive 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 Executive hereunder, to use the
Executive'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 Executive to (A)
serve on corporate, civic or charitable boards or committees, (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 Executive'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 Executive 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 Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive an annual base
salary ("Annual Base Salary"), which shall be paid at a monthly
rate, at least equal to twelve times the highest monthly base
salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its
affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date occurs.
During the Employment Period, the Annual Base Salary shall be
reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter
at least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during
the Employment Period, an annual bonus (the "Annual Bonus") in cash
at least equal to the average of the Executive's bonus under the
Company's Annual Incentive Plan, or any comparable bonus under any
predecessor or successor plan, for each of the last three full
fiscal years prior to the Effective Date (annualized in the event
that the Executive was not employed by the Company for the whole of
such fiscal year) (the "Recent Annual Bonus"). Each such Annual
Bonus shall be paid no later than the end of the third month of the
fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans.
During the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with incentive opportunities (measured with respect
to both regular and special incentive opportunities, to the extent,
if any, that such distinction is applicable), savings opportunities
and retirement benefit opportunities, in each case, less favorable,
in the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such
plans, practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective Date
or if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive'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 affiliated companies
(including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits which are
less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other
peer executives of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the Executive at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without
limitation, tax and financial planning services, payment of club
dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
(vii) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and
to exclusive personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided to the
Executive by the Company and its affiliated companies at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the
most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
5. Termination of Employment. (a) Death or
Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment
Period (pursuant to the definition of Disability set forth below),
it may give to the Executive written notice in accordance with
Section 12(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the
Executive's duties. For purposes of this Agreement, "Disability"
shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business
days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive
to perform substantially the Executive's duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is
delivered to the Executive by the Board or the Chief Executive
Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes
that the Executive has not substantially performed the
Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct, gross misconduct or a clearly established violation
of the Company's Code of Conduct, in each case which is
materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act,
on the part of the Executive, shall be considered "willful" unless
it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission
was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company.
(c) Good Reason. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by clause (A) of the last sentence of
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,
excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice
thereof given by the Executive; provided, that such
assignment or other action shall not be considered "Good
Reason" under this clause (i) if (A) the individual who
was the Chief Executive Officer of the Company
immediately before the Effective Date remains an employee
of the Company or of its parent company at the time of
such assignment or action, and (B) after such assignment
or action, the Executive's position has responsibilities
and authority comparable to those of the Executive's
position immediately before the Effective Date (and in
determining such comparability, the Executive's title and
reporting responsibilities shall not be dispositive);
(ii ) any failure by the Company to comply with any
of the provisions of Section 4(b) of this Agreement,
other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied
by the Company promptly after receipt of notice thereof
given by the Executive;
(iii) the Company's requiring the Executive to
be based at any office or location other than as provided
in Section 4(a)(i)(B) hereof or the Company's requiring
the Executive to travel on Company business to a
substantially greater extent than required immediately
prior to the Effective Date;
(iv) any purported termination by the Company of the
Executive'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.
For purposes of this Section 5(c), any good faith
determination of "Good Reason" made by the Executive shall be
conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(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) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive'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 thirty days after the giving of
such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company, respectively, hereunder
or preclude the Executive or the Company, respectively, from
asserting such fact or circumstance in enforcing the Executive's or
the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as
the case may be, (ii) if the Executive's employment is terminated
by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination. (a)
Good Reason; Other Than for Cause, Death or Disability. If, during
the Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability or the Executive
shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of
Termination the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent
not theretofore paid, (2) the product of (x) the
higher of (I) the Recent Annual Bonus and (II) the
Annual Bonus paid or payable, including any bonus or
portion thereof which has been earned but deferred
(and annualized for any fiscal year consisting of
less than twelve full months or during which the
Executive was employed for less than twelve full
months), for the most recently completed fiscal year
during the Employment Period, if any (such higher
amount being referred to as the "Highest Annual
Bonus") and (y) 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 (3) any compensation previously
deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described
in clauses (1), (2), and (3) shall be hereinafter
referred to as the "Accrued Obligations"); and
B. the amount equal to the product of (1) the
Multiple, (2) the sum of (x) the Executive's Annual
Base Salary, (y) the Highest Annual Bonus and (z)
the aggregate amount of the employer contributions
made with respect to the most recently completed
plan year before the Date of Termination to the
Executive's account(s) in the Company's Savings and
Investment Plan and Savings and Investment
Restoration Plan and any successor or other
qualified defined contribution plan sponsored by the
Company or any of its affiliated companies in which
the Executive participated and any related
nonqualified plans; and
C. an amount equal to the excess of (a) the
actuarial equivalent of the benefit under the
Company's Retirement Income Plan and any successor
or other qualified defined benefit retirement plan
sponsored by the Company or any of its affiliated
companies (such plans collectively, the "Retirement
Plan") (utilizing actuarial assumptions no less
favorable to the Executive than those in effect
under the Company's Retirement Plan immediately
prior to the Effective Date), and the Retirement
Income Restoration Plan and any successor or other
nonqualified excess or supplemental defined benefit
retirement plan in which the Executive participates
(together, the "SERP") which the Executive would
receive if the Executive's employment continued for
a number of years equal to the Multiple after the
Date of Termination assuming for this purpose that
all accrued benefits are fully vested, and, assuming
that the Executive's compensation in each of such
years is that required by Section 4(b)(i) and
Section 4(b)(ii), over (b) the actuarial equivalent
of the Executive's actual benefit (paid or payable),
if any, under the Retirement Plan and the SERP as of
the Date of Termination;
(ii) for a number of years equal to the Multiple
after the Executive's Date of Termination, or such longer
period as may be provided by the terms of the appropriate
plan, program, practice or policy, the Company shall
continue benefits to the Executive and/or the Executive's
family at least 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 Executive's employment had not been
terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated
companies and their families, provided, however, that if
the Executive becomes reemployed with another employer
and is eligible to receive medical or other welfare
benefits under another employer provided plan, the
medical and other welfare benefits described herein shall
be secondary to those provided under such other plan
during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree
benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have
remained employed until the expiration of a number of
years after the Date of Termination equal to the Multiple
and to have retired on the last day of such period;
(iii) the Company shall, at its sole expense as
incurred, provide the Executive with outplacement
services the scope and provider of which shall be
reasonable and consistent with industry practice for
similarly situated executives; and
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive
any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract
or agreement of the Company and its affiliated companies
(such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than
for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to
the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(b) shall include, without limitation,
and the Executive's estate and/or beneficiaries shall be entitled
to receive, benefits at least equal to the most favorable benefits
provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated
companies under such plans, programs, practices and policies
relating to death benefits, if any, as in effect with respect to
other peer executives and their beneficiaries at any time during
the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive's estate and/or the Executive's
beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and its
affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable
of those generally provided by the Company and its affiliated
companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect
to other peer executives and their families at any time during the
120-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their
families.
(d) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to
the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred
by the Executive, and (z) Other Benefits, in each case to the
extent theretofore unpaid. If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination
for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such
case, all Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.
7. Non-exclusivity of Rights. Nothing in this
Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor, subject to Section 12(f),
shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company
or any of its affiliated companies; provided, that the Executive
shall not be entitled to receive any pay or benefits under the
Company's Significant Change Severance Pay Plan for Salaried
Employees or any successor or other severance pay plan, policy or
program sponsored by the Company or any of its affiliated companies
in connection with a termination of employment that occurs on or
after the Effective Date. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any
plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program or contract
or agreement except as explicitly modified by this Agreement.
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 Executive or others.
In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company,
the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee
of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at
the applicable Federal rate provided for in Section 7872(f)(2)(A)
of the Internal Revenue Code of 1986, as amended (the "Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it
shall be determined that any payment or distribution by the Company
or its affiliates to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise, but determined without regard
to any additional payments required under this Section 9) (a
"Payment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments. Notwithstanding the foregoing provisions of
this Section 9(a), if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the Payments do not exceed
110% of the greatest amount (the "Reduced Amount") that could be
paid to the Executive such that the receipt of Payments would not
give rise to any Excise Tax, then no Gross-Up Payment shall be made
to the Executive and the Payments, in the aggregate, shall be
reduced to the Reduced Amount.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, 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 such 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 15
business days of the receipt of notice from the Executive that
there has been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting
the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to
as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 9, shall be paid by
the Company to the Executive within five days of the receipt of the
Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(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 benefit of the Executive.
(c) The Executive 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 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. The Executive shall not pay such claim prior to the
expiration of the 30-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 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 effectively to contest such claim, and
(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 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 Executive
to pay the tax claimed and sue 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 determine; provided, however, that if the
Company directs the Executive to pay such claim and sue 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 further
provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive 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 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.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive
becomes entitled to receive any refund with respect to such claim,
the Executive 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 Executive of an amount advanced by the Company pursuant to
Section 9(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 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.
10. Confidential Information. The Executive 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 affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during
the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive
in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company or as may
otherwise be required by law or legal process, 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 Executive under this Agreement.
11. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company
shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive'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 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. Miscellaneous. (a) This Agreement shall be
governed by and construed in accordance with the laws of the State
of Delaware, 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 Executive:
James A. Buzzard
14310 Kenmont Drive
Midlothian, VA 23113
If to the Company:
Westvaco Corporation
299 Park Avenue
New York, NY 10171
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance
herewith. Notice and 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, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to
Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right
of this Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the employment of
the Executive by the Company is "at will" and, subject to Section
1(a) hereof, prior to the Effective Date, the Executive's
employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date,
in which case the Executive shall have no further rights under this
Agreement, provided, that this Agreement may not be terminated by
the Company if it is reasonably demonstrated by the Executive that
such termination (i) was at the request of a third party who has
taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change
of Control. From and after the Effective Date this Agreement shall
supersede any other agreement between the parties with respect to
the subject matter hereof, other than the Westvaco Intellectual
Property Agreement between the Executive and the Company.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board
of Directors, the Company has caused these presents to be executed
in its name on its behalf, all as of the day and year first above
written.
_________________________________________
James A. Buzzard
WESTVACO CORPORATION
By ______________________________________
John W. Hetherington
Vice President and Corporate Secretary
EMPLOYMENT AGREEMENT
AGREEMENT by and between Westvaco Corporation, a Delaware
corporation (the "Company") and Karen R. Osar (the "Executive"),
dated as of the 3rd day of March, 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 will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change
of Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date"
shall mean the first date during the Change of Control Period (as
defined in Section 1(b)) on which a Change of Control (as defined
in Section 2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to the
date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment
(i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of
Control, then for all purposes of this Agreement the "Effective
Date" shall mean the date immediately prior to the date of such
termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third anniversary
of the date hereof; 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 shall be
hereinafter referred to as the "Renewal Date"), unless previously
terminated, the Change of Control Period shall be automatically
extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall
give notice to the Executive that the Change of Control Period
shall not be so extended.
(c) The "Multiple" means the least of (i) three, (ii)
the greater of one and the number of years and fractions thereof
during the period from the Date of Termination (as hereinafter
defined) and the Executive's 65th birthday, and (iii) if the
Executive had announced his intention to retire before the Date of
Termination, the number of years and fractions thereof from the
Date of Termination until the date of such intended retirement.
2. Change of Control. For the purpose of this Agree-
ment, a "Change of Control" shall mean:
(a) The acquisition by any individual, 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"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either
(i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially
all of the assets of the Company (a "Business Combination"), in
each case, unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case
may be, (ii) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly,
20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination
or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (iii) at
least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company subject to the terms
and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of such date
(the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i)
During the Employment Period, (A) the Executive'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 120-day
period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date,
any office or location less than 35 miles from such location, or
any other location to which the Company's Headquarters Office,
Corporate Department Office, Division Office where the Executive
was employed immediately preceding the Effective Date is relocated.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive 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 Executive hereunder, to use the
Executive'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 Executive to (A)
serve on corporate, civic or charitable boards or committees, (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 Executive'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 Executive 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 Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive an annual base
salary ("Annual Base Salary"), which shall be paid at a monthly
rate, at least equal to twelve times the highest monthly base
salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its
affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date occurs.
During the Employment Period, the Annual Base Salary shall be
reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter
at least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during
the Employment Period, an annual bonus (the "Annual Bonus") in cash
at least equal to the average of the Executive's bonus under the
Company's Annual Incentive Plan, or any comparable bonus under any
predecessor or successor plan, for each of the last three full
fiscal years prior to the Effective Date (annualized in the event
that the Executive was not employed by the Company for the whole of
such fiscal year) (the "Recent Annual Bonus"). Each such Annual
Bonus shall be paid no later than the end of the third month of the
fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans.
During the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with incentive opportunities (measured with respect
to both regular and special incentive opportunities, to the extent,
if any, that such distinction is applicable), savings opportunities
and retirement benefit opportunities, in each case, less favorable,
in the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such
plans, practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective Date
or if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive'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 affiliated companies
(including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits which are
less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other
peer executives of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the Executive at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without
limitation, tax and financial planning services, payment of club
dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
(vii) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and
to exclusive personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided to the
Executive by the Company and its affiliated companies at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the
most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
5. Termination of Employment. (a) Death or
Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment
Period (pursuant to the definition of Disability set forth below),
it may give to the Executive written notice in accordance with
Section 12(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the
Executive's duties. For purposes of this Agreement, "Disability"
shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business
days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive
to perform substantially the Executive's duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is
delivered to the Executive by the Board or the Chief Executive
Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes
that the Executive has not substantially performed the
Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct, gross misconduct or a clearly established violation
of the Company's Code of Conduct, in each case which is
materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act,
on the part of the Executive, shall be considered "willful" unless
it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission
was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company.
(c) Good Reason. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive'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,
excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any
of the provisions of Section 4(b) of this Agreement,
other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied
by the Company promptly after receipt of notice thereof
given by the Executive;
(iii) the Company's requiring the Executive to
be based at any office or location other than as provided
in Section 4(a)(i)(B) hereof or the Company's requiring
the Executive to travel on Company business to a
substantially greater extent than required immediately
prior to the Effective Date;
(iv) any purported termination by the Company of the
Executive'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.
For purposes of this Section 5(c), any good faith
determination of "Good Reason" made by the Executive shall be
conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(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) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive'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 thirty days after the giving of
such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company, respectively, hereunder
or preclude the Executive or the Company, respectively, from
asserting such fact or circumstance in enforcing the Executive's or
the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as
the case may be, (ii) if the Executive's employment is terminated
by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination. (a)
Good Reason; Other Than for Cause, Death or Disability. If, during
the Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability or the Executive
shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of
Termination the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent
not theretofore paid, (2) the product of (x) the
higher of (I) the Recent Annual Bonus and (II) the
Annual Bonus paid or payable, including any bonus or
portion thereof which has been earned but deferred
(and annualized for any fiscal year consisting of
less than twelve full months or during which the
Executive was employed for less than twelve full
months), for the most recently completed fiscal year
during the Employment Period, if any (such higher
amount being referred to as the "Highest Annual
Bonus") and (y) 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 (3) any compensation previously
deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described
in clauses (1), (2), and (3) shall be hereinafter
referred to as the "Accrued Obligations"); and
B. the amount equal to the product of (1) the
Multiple, (2) the sum of (x) the Executive's Annual
Base Salary, (y) the Highest Annual Bonus and (z)
the aggregate amount of the employer contributions
made with respect to the most recently completed
plan year before the Date of Termination to the
Executive's account(s) in the Company's Savings and
Investment Plan and Savings and Investment
Restoration Plan and any successor or other
qualified defined contribution plan sponsored by the
Company or any of its affiliated companies in which
the Executive participated and any related
nonqualified plans; and
C. an amount equal to the excess of (a) the
actuarial equivalent of the benefit under the
Company's Retirement Income Plan and any successor
or other qualified defined benefit retirement plan
sponsored by the Company or any of its affiliated
companies (such plans collectively, the "Retirement
Plan") (utilizing actuarial assumptions no less
favorable to the Executive than those in effect
under the Company's Retirement Plan immediately
prior to the Effective Date), and the Retirement
Income Restoration Plan and any successor or other
nonqualified excess or supplemental defined benefit
retirement plan in which the Executive participates
(together, the "SERP") which the Executive would
receive if the Executive's employment continued for
a number of years equal to the Multiple after the
Date of Termination assuming for this purpose that
all accrued benefits are fully vested, and, assuming
that the Executive's compensation in each of such
years is that required by Section 4(b)(i) and
Section 4(b)(ii), over (b) the actuarial equivalent
of the Executive's actual benefit (paid or payable),
if any, under the Retirement Plan and the SERP as of
the Date of Termination;
(ii) for a number of years equal to the Multiple
after the Executive's Date of Termination, or such longer
period as may be provided by the terms of the appropriate
plan, program, practice or policy, the Company shall
continue benefits to the Executive and/or the Executive's
family at least 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 Executive's employment had not been
terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated
companies and their families, provided, however, that if
the Executive becomes reemployed with another employer
and is eligible to receive medical or other welfare
benefits under another employer provided plan, the
medical and other welfare benefits described herein shall
be secondary to those provided under such other plan
during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree
benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have
remained employed until the expiration of a number of
years after the Date of Termination equal to the Multiple
and to have retired on the last day of such period;
(iii) the Company shall, at its sole expense as
incurred, provide the Executive with outplacement
services the scope and provider of which shall be
reasonable and consistent with industry practice for
similarly situated executives; and
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive
any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract
or agreement of the Company and its affiliated companies
(such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than
for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to
the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(b) shall include, without limitation,
and the Executive's estate and/or beneficiaries shall be entitled
to receive, benefits at least equal to the most favorable benefits
provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated
companies under such plans, programs, practices and policies
relating to death benefits, if any, as in effect with respect to
other peer executives and their beneficiaries at any time during
the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive's estate and/or the Executive's
beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and its
affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable
of those generally provided by the Company and its affiliated
companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect
to other peer executives and their families at any time during the
120-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their
families.
(d) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to
the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred
by the Executive, and (z) Other Benefits, in each case to the
extent theretofore unpaid. If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination
for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such
case, all Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.
7. Non-exclusivity of Rights. Nothing in this
Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor, subject to Section 12(f),
shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company
or any of its affiliated companies; provided, that the Executive
shall not be entitled to receive any pay or benefits under the
Company's Significant Change Severance Pay Plan for Salaried
Employees or any successor or other severance pay plan, policy or
program sponsored by the Company or any of its affiliated companies
in connection with a termination of employment that occurs on or
after the Effective Date. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any
plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program or contract
or agreement except as explicitly modified by this Agreement.
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 Executive or others.
In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company,
the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee
of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at
the applicable Federal rate provided for in Section 7872(f)(2)(A)
of the Internal Revenue Code of 1986, as amended (the "Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it
shall be determined that any payment or distribution by the Company
or its affiliates to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise, but determined without regard
to any additional payments required under this Section 9) (a
"Payment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments. Notwithstanding the foregoing provisions of
this Section 9(a), if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the Payments do not exceed
110% of the greatest amount (the "Reduced Amount") that could be
paid to the Executive such that the receipt of Payments would not
give rise to any Excise Tax, then no Gross-Up Payment shall be made
to the Executive and the Payments, in the aggregate, shall be
reduced to the Reduced Amount.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, 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 such 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 15
business days of the receipt of notice from the Executive that
there has been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting
the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to
as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 9, shall be paid by
the Company to the Executive within five days of the receipt of the
Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(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 benefit of the Executive.
(c) The Executive 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 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. The Executive shall not pay such claim prior to the
expiration of the 30-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 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 effectively to contest such claim, and
(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 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 Executive
to pay the tax claimed and sue 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 determine; provided, however, that if the
Company directs the Executive to pay such claim and sue 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 further
provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive 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 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.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive
becomes entitled to receive any refund with respect to such claim,
the Executive 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 Executive of an amount advanced by the Company pursuant to
Section 9(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 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.
10. Confidential Information. The Executive 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 affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during
the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive
in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company or as may
otherwise be required by law or legal process, 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 Executive under this Agreement.
11. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company
shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive'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 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. Miscellaneous. (a) This Agreement shall be
governed by and construed in accordance with the laws of the State
of Delaware, 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 Executive:
Karen R. Osar
70 Aviemore Drive
New Rochelle, NY 10804
If to the Company:
Westvaco Corporation
299 Park Avenue
New York, NY 10171
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
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, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to
Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right
of this Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the employment of
the Executive by the Company is "at will" and, subject to Section
1(a) hereof, prior to the Effective Date, the Executive's
employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date,
in which case the Executive shall have no further rights under this
Agreement, provided, that this Agreement may not be terminated by
the Company if it is reasonably demonstrated by the Executive that
such termination (i) was at the request of a third party who has
taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change
of Control. From and after the Effective Date this Agreement shall
supersede any other agreement between the parties with respect to
the subject matter hereof, other than the Westvaco Intellectual
Property Agreement between the Executive and the Company.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board
of Directors, the Company has caused these presents to be executed
in its name on its behalf, all as of the day and year first above
written.
______________________________________
Karen R. Osar
WESTVACO CORPORATION
By ______________________________________
John W. Hetherington
Vice President and Corporate Secretary
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