<PAGE> 1
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 Quarter Ended June 30, 1998
or
( ) Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Libbey Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-12084 34-1559357
- -------- ------- ----------
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation or
organization)
300 Madison Avenue, Toledo, Ohio 43604
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
419-325-2100
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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 (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Common Stock, $.01 par value - 17,637,981 shares at July 31, 1998.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The Condensed Consolidated Financial Statements presented herein are unaudited
but, in the opinion of management, reflect all adjustments necessary to present
fairly such information for the periods and at the dates indicated. Since the
following condensed unaudited financial statements have been prepared in
accordance with Article 10 of Regulation S-X, they do not contain all
information and footnotes normally contained in annual consolidated financial
statements; accordingly, they should be read in conjunction with the
Consolidated Financial Statements and notes thereto appearing in the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1997.
The interim results of operations are not necessarily indicative of results for
the entire year.
2
<PAGE> 3
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per-share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three months ended June 30,
Revenues: 1998 1997
---- ----
<S> <C> <C>
Net sales $ 113,673 $ 103,954
Royalties and net technical
assistance income 751 696
--------- ---------
Total revenues 114,424 104,650
Costs and expenses:
Cost of sales 79,569 71,894
Selling, general and administrative
expenses 12,795 12,707
--------- ---------
92,364 84,601
--------- ---------
Income from operations 22,060 20,049
Other income:
Equity earnings 3,727 --
Other income - net (175) (20)
--------- ---------
3,552 (20)
--------- ---------
Earnings before interest and income taxes 25,612 20,029
Interest expense - net (3,260) (3,443)
--------- ---------
Income before income taxes 22,352 16,586
Provision for income taxes 8,605 6,454
--------- ---------
Net income $ 13,747 $ 10,132
========= =========
Net income per share
Basic $ 0.78 $ 0.67
========= =========
Diluted $ 0.76 $ 0.65
========= =========
Dividends per share $ 0.075 $ 0.075
========= =========
</TABLE>
See accompanying notes.
3
<PAGE> 4
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per-share amounts)
(unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
Revenues: 1998 1997
---- ----
<S> <C> <C>
Net sales $ 203,761 $ 182,433
Royalties and net technical
assistance income 1,520 1,620
--------- ---------
Total revenues 205,281 184,053
Costs and expenses:
Cost of sales 146,929 128,669
Selling, general and administrative
expenses 25,504 24,457
--------- ---------
172,433 153,126
--------- ---------
Income from operations 32,848 30,927
Other income:
Equity earnings 6,035 --
Other income - net 80 44
--------- ---------
6,115 44
--------- ---------
Earnings before interest and income taxes 38,963 30,971
Interest expense - net (6,683) (6,744)
--------- ---------
Income before income taxes 32,280 24,227
Provision for income taxes 12,428 9,449
--------- ---------
Net income $ 19,852 $ 14,778
========= =========
Net income per share
Basic $ 1.13 $ 0.98
========= =========
Diluted $ 1.10 $ 0.95
========= =========
Dividends per share $ 0.15 $ 0.15
========= =========
</TABLE>
See accompanying notes.
4
<PAGE> 5
LIBBEY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
(unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 3,704 $ 2,634
Accounts receivable:
Trade, less allowances of $3,681
and $3,103 48,408 49,982
Other 1,572 1,975
-------- ---------
49,980 51,957
Inventories:
Finished goods 99,615 91,897
Work in process 5,261 5,056
Raw materials 3,645 3,545
Operating supplies 880 800
-------- ---------
109,401 101,298
Prepaid expenses 5,190 5,575
-------- ---------
Total current assets 168,275 161,464
Other assets:
Repair parts inventories 8,866 7,148
Other 26,060 26,170
Investments 77,592 85,789
Goodwill, net of accumulated
amortization of $12,377 and $11,635 47,518 48,828
-------- --------
160,036 167,935
Property, plant and equipment, at cost 246,547 236,427
Less accumulated depreciation 124,621 116,226
-------- ---------
Net property, plant and equipment 121,926 120,201
-------- ---------
Total assets $450,237 $449,600
======== ========
</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1997 has been
derived from the audited consolidated financial statements at that date but does
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See accompanying notes.
5
<PAGE> 6
LIBBEY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
(unaudited) (Note)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 11,514 $ 10,385
Accounts payable 21,008 29,472
Accrued liabilities 27,620 28,031
Other 18,519 14,019
--------- ---------
Total current liabilities 78,661 81,907
Long-term debt 185,747 200,350
Deferred taxes and other liabilities 16,042 14,880
Nonpension retirement benefits 52,103 52,474
Shareholders' equity:
Common stock, par value $.01
per share, 50,000,000 shares
authorized, 17,624,181 shares
issued and outstanding
(17,580,931 in 1997) 176 175
Capital in excess of par value 280,058 279,208
Deficit (161,580) (178,792)
Accumulated other comprehensive
income (970) (602)
-------- ---------
Total shareholders' equity 117,684 99,989
-------- ---------
Total liabilities and shareholders' equity $450,237 $ 449,600
======== =========
</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1997 has been
derived from the audited consolidated financial statements at that date but does
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See accompanying notes.
6
<PAGE> 7
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
1998 1997
---- ----
<S> <C> <C>
Operating activities
Net income $ 19,852 $ 14,778
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 10,463 11,163
Other non-cash charges 1,160 359
Equity earnings (6,035) --
Net change in components of working
capital and other assets (12,394) (31,829)
-------- --------
Net cash provided by (used in) operating
activities 13,046 (5,529)
Investing activities
Additions to property, plant and equipment (11,073) (6,861)
Dividends from Vitro Investments 14,232 --
-------- --------
Net cash provided by (used in)
investing activities 3,159 (6,861)
Financing activities
Net repayments under Bank Credit Agreement (14,482) (1,438)
Other net borrowings 1,129 15,475
Stock options exercised 851 2,381
Dividends (2,640) (2,265)
-------- --------
Net cash provided by (used in) financing
activities (15,142) 14,153
-------- --------
Effect of exchange rate fluctuations
on cash 7 (3)
-------- --------
Increase in cash 1,070 1,760
Cash at beginning of year 2,634 1,990
-------- --------
Cash at end of period $ 3,704 $ 3,750
======== ========
</TABLE>
See accompanying notes.
7
<PAGE> 8
LIBBEY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Dollars in thousands, except per share data
(unaudited)
1. LONG-TERM DEBT
The Company and its Canadian subsidiary have an unsecured agreement ("Bank
Credit Agreement" or "Agreement") with a group of banks which provides for a
Revolving Credit and Swing Line Facility ("Facility") permitting borrowings up
to an aggregate total of $380 million, maturing May 1, 2002. Swing Line
borrowings are limited to $25 million with interest calculated at the prime rate
minus the Commitment Fee Percentage. Revolving Credit borrowings bear interest
at the Company's option at either the prime rate minus the Commitment Fee
Percentage, or a Eurodollar rate plus the Applicable Eurodollar Margin. The
Commitment Fee Percentage and Applicable Eurodollar Margin will vary depending
on the Company's performance against certain financial ratios. The Commitment
Fee Percentage and the Applicable Eurodollar Margin were 0.125% and 0.225%,
respectively, at June 30, 1998. The Company may also elect to borrow under a
Negotiated Rate Loan alternative of the Revolving Credit and Swing Line Facility
at floating rates of interest, up to a maximum of $190 million. The Revolving
Credit and Swing Line Facility also provides for the issuance of $35 million of
letters of credit, with such usage applied against the $380 million limit. At
June 30, 1998 the Company had $6.0 million in letters of credit outstanding
under the Facility.
The Company has entered into interest rate protection agreements ("Rate
Agreements") with respect to $175 million of debt under its Bank Credit
Agreement as a means to manage its exposure to fluctuating interest rates. The
Rate Agreements effectively convert this portion of the Company's Bank Credit
Agreement borrowings from variable rate debt to a fixed rate basis, thus
reducing the impact of interest rate changes on future income. The average
interest rate for the Company's borrowings related to the Rate Agreements at
June 30, 1998 was 5.94% for an average remaining period of 1.9 years. The
remaining debt not covered by the Rate Agreements has fluctuating interest rates
with a weighted average rate of 6.4% at June 30, 1998.
The interest rate differential to be received or paid under the Rate Agreements
is being recognized over the life of the Rate Agreements as an adjustment to
interest expense. Should the counterparts to these Rate Agreements fail to
perform, the Company would no longer be protected from interest rate
fluctuations by these Rate Agreements. However, the Company does not anticipate
nonperformance by the counterparts.
8
<PAGE> 9
The Company must pay a commitment fee ("Commitment Fee Percentage") on the total
credit provided under the Bank Credit Agreement. No compensating balances are
required by the Agreement. The Agreement requires the maintenance of certain
financial ratios, restricts the incurrence of indebtedness and other contingent
financial obligations, and restricts certain types of business activities and
investments.
2. ACQUISITION
On August 29, 1997, the Company completed a series of transactions with Vitro
S.A. (collectively the "Vitro Transactions") for a cash purchase price of
approximately $100 million and the assumption of certain liabilities, financed
through borrowings under the Bank Credit Agreement. The primary components of
the Vitro Transactions included the Company becoming: (i) a 49% equity owner in
Vitrocrisa; (ii) the exclusive distributor of Vitrocrisa's glass tableware
products in the U.S. and Canada and Vitrocrisa becoming the exclusive
distributor of Libbey's glass tableware products in Latin America; (iii) the
owner of substantially all of the assets and certain liabilities of the business
formerly known as WorldCrisa, renamed World Tableware; and (iv) the owner of a
49% interest in the business of Crisa Industrial, L.L.C., which distributes
industrial glassware in the U.S. and Canada for Vitrocrisa. As a result of the
Vitro Transactions, the Company consolidates the financial results of World
Tableware and includes in its financial results sales of Vitrocrisa's glass
tableware in the U.S. and Canada pursuant to the distribution agreement
described above.
The equity interests in Vitrocrisa and Crisa Industrial, L.L.C. were recorded as
equity investments of $82.2 million, which exceeded the underlying equity in net
assets by approximately $66.0 million. This amount is being amortized over 40
years as a charge to equity earnings. The acquisition of World Tableware was
accounted for under the purchase method of accounting for financial reporting
purposes, and a preliminary allocation of the purchase price to the underlying
net assets acquired has been made. The excess of the aggregate purchase price
over the fair value of assets acquired of approximately $12.4 million was
recorded as goodwill. The operating results of World Tableware and the equity
earnings of Vitrocrisa and Crisa Industrial, L.L.C. have been included in the
consolidated financial statements since the date of acquisition.
9
<PAGE> 10
The following unaudited pro forma results of operations assume the acquisition
occurred as of January 1, 1996 (in thousands, except per-share amounts):
<TABLE>
<CAPTION>
Quarter ended June 30,
1998 1997
---- ----
<S> <C> <C>
Net revenues $114,424 $120,252
Net income $ 13,747 $ 10,851
Net income per share
Basic $ 0.78 $ 0.72
Diluted $ 0.76 $ 0.70
Six Months ended June 30,
1998 1997
---- ----
Net revenues $205,281 $214,361
Net income $ 19,852 $ 15,412
Net income per share
Basic $ 1.13 $ 1.02
Diluted $ 1.10 $ 0.99
</TABLE>
3. CASH FLOW INFORMATION
Interest paid in cash aggregated $6,345 and $6,392 for the first six months of
1998 and 1997, respectively. Income taxes paid in cash aggregated $6,489 and
$5,484 for the first six months of 1998 and 1997, respectively.
4. NET INCOME PER SHARE OF COMMON STOCK
Basic net income per share of common stock is computed using the weighted
average number of shares of common stock outstanding. Diluted net income per
share of common stock is computed using the weighted average number of shares of
common stock outstanding and includes common share equivalents.
10
<PAGE> 11
The following table sets forth the computation of basic and diluted earnings per
share (dollars in thousands, except per-share amounts):
<TABLE>
<CAPTION>
Quarter ended June 30, 1998 1997
- ---------------------- ---- ----
<S> <C> <C>
Numerator for diluted earnings
per share--net income which
is available to common
shareholders $ 13,747 $ 10,132
Denominator for basic earnings
per share--weighted-average
shares outstanding 17,607,457 15,141,599
Effect of dilutive
securities--employee stock
options 455,679 433,515
----------- -----------
Denominator for diluted earnings
per share--adjusted
weighted-average shares and
assumed conversions 18,063,136 15,586,603
Net income per share:
Basic $ 0.78 $ 0.67
Diluted $ 0.76 $ 0.65
</TABLE>
<TABLE>
<CAPTION>
Six Months ended June 30, 1998 1997
- ------------------------- ---- ----
<S> <C> <C>
Numerator for diluted earnings
per share--net income which
is available to common $ 19,852 $ 14,778
shareholders
Denominator for basic earnings
per share--weighted-average
shares outstanding 17,596,621 15,110,010
Effect of dilutive
securities--employee stock
options 447,573 427,389
----------- -----------
Denominator for diluted earnings
per share--adjusted
weighted-average shares and
assumed conversions 18,044,194 15,537,399
Net income per share:
Basic $ 1.13 $ 0.98
Diluted $ 1.10 $ 0.95
</TABLE>
5. NEW ACCOUNTING STANDARDS
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("Statement 130"). Statement
130 establishes new rules for the reporting and display of comprehensive income
and its components. The
11
<PAGE> 12
Company's components of comprehensive income are net income and foreign currency
translation adjustments. During the second quarter of 1998 and 1997, total
comprehensive income amounted to $13,276 and $10,163 respectively. For the first
six months of 1998 and 1997, comprehensive income amounted to $19,484 and
$14,720 respectively.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 "Disclosure about Segments of an
Enterprise and Related Information" ("Statement 131"), which is effective for
periods beginning after December 31, 1997. Statement 131 need not, however be
applied to interim financial statements in the initial year of its application.
The Company has not determined the impact of FAS 131.
In February 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 132 "Employers' Disclosures about Pensions
and Other Postretirement Benefits" ("Statement 132"), which is effective for
financial statements for fiscal years beginning after December 15, 1997.
Statement 132 establishes revised standards for disclosures about pensions and
other postretirement benefits. The Company has not determined the impact of
Statement 132.
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - SECOND QUARTER 1998 COMPARED WITH SECOND
QUARTER 1997
<TABLE>
<CAPTION>
Three months ended
June 30,
-----------------------------
(dollars in thousands)
1998 1997
---- ----
<S> <C> <C>
Net sales $113,673 $103,954
Gross profit 34,104 32,060
As a percentage of sales 30.0% 30.8%
Income from operations $22,060 $20,049
As a percentage of sales 19.4% 19.3%
Earnings before interest and
income taxes $25,612 $20,029
As a percentage of sales 22.5% 19.3%
Net income $13,747 $10,132
As a percentage of sales 12.1% 9.7%
</TABLE>
Net sales for the second quarter of 1998 of $113.7 million increased 9.3% from
net sales of $104.0 million reported in the comparable period in 1997.
Incremental sales from the Company's August 1997 acquisition of World Tableware
and distribution agreement with Vitrocrisa, the Company's new joint venture in
Mexico, were the factors in increasing sales. The Company's glassware area sales
were up modestly, as the solid increase in sales to foodservice customers and
the inclusion of Crisa glass sales more than offset lower export sales. Export
sales were down 42%, decreasing to $4.9 million from $8.5 million in the
year-ago period reflecting, in part, the economic conditions in the Far East. In
addition, the Company is aware of the potential of increased competition from
foreign suppliers endeavoring to sell glass tableware into the United States
market, including the foodservice channel of distribution. The Company is in the
process of assessing the effect, if any, of such increased competition on the
Company.
Gross profit increased 6.4% to $34.1 million in the second quarter of 1998 from
$32.1 million in the second quarter of 1997, and decreased as a percentage of
sales to 30.0% from 30.8%. Profit margins decreased as a result of the effect of
the acquisitions.
13
<PAGE> 14
Income from operations increased 10.0% to $22.1 million from $20.0 million in
the year-ago period. Operating income as a percentage of sales increased to
19.4% from 19.3% in the comparable year-ago period. Selling, general and
administrative expenses were at 1997 levels as expenses related to the recent
acquisitions were offset by reduced spending in the Company's glassware
operations.
Earnings before interest and income taxes (EBIT) increased 27.9% to $25.6
million from $20.0 million in the second quarter last year. The addition of
equity earnings of $3.7 million from the Company's new joint venture in Mexico
was the principal contributor.
Net income increased by $3.6 million due to items discussed above and a decrease
in the Company's effective tax rate from 38.9% to 38.5% and lower interest
expense.
RESULTS OF OPERATIONS - SIX MONTHS 1998 COMPARED WITH SIX MONTHS 1997
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------------------
(dollars in thousands)
1998 1997
---- ----
<S> <C> <C>
Net sales $203,761 $182,433
Gross profit 56,832 53,764
As a percentage of sales 27.9% 29.5%
Income from operations $32,848 $30,927
As a percentage of sales 16.1% 17.0%
Earnings before interest and
income taxes $38,963 $30,971
As a percentage of sales 19.1% 17.0%
Net income $19,852 $14,778
As a percentage of sales 9.7% 8.1%
</TABLE>
Net sales for the first six months of 1998 of $203.8 million increased 11.7%
from net sales of $182.4 million reported in the comparable period in 1997.
Incremental sales from the Company's August 1997 acquisition of World Tableware
and distribution agreement with Vitrocrisa, the Company's new joint venture in
Mexico, were the factors in increasing sales. The Company's glassware area
experienced a sales increase compared to last year principally as a result of
the inclusion of Crisa
14
<PAGE> 15
glass. Export sales were down 27.4%, decreasing to $9.9 million from $13.6
million in the year-ago period reflecting the economic conditions in the Far
East.
Gross profit increased 5.7% to $56.8 million in the first six months of 1998
from $53.8 million in the first six months of 1997, and decreased as a
percentage of sales to 27.9% from 29.5%. Profit margins decreased as a result of
greater sales of lower-margin products and higher distribution costs associated
with the acquisitions.
Income from operations increased 6.2% to $32.8 million from $30.9 million in the
year-ago period. Operating income as a percentage of sales decreased to 16.1%
from 17.0% in the comparable year-ago period, as a result of higher
distributions expenses and increases in selling, general and administrative
expenses related to recent acquisitions.
Earnings before interest and income taxes (EBIT) increased 25.8% to $39.0
million from $31.0 million in the first six months last year. The addition of
equity earnings of $6.0 million from the Company's new joint venture in Mexico
was the principal contributor.
Net income increased by $5.1 million due to items discussed above and a decrease
in the Company's effective tax rate from 39.0% to 38.5% and slightly lower
interest expense.
CAPITAL RESOURCES AND LIQUIDITY
- -------------------------------
The Company had total debt of $197.3 million at June 30, 1998, compared to
$210.7 million at December 31, 1997. Seasonal increases in accounts receivable
and inventory in 1998 were less than 1997 reducing the borrowings necessary to
fund working capital. In addition, Libbey received a dividend from its
investment in Vitrocrisa of $14.2 million late in the first quarter. The Company
had additional debt capacity at June 30, 1998 under the Bank Credit Agreement of
$188.2 million. Of Libbey's outstanding indebtedness, $22.3 million is subject
to fluctuating interest rates at June 30, 1998. A change of one percentage point
in such rates would result in a change in interest expense of approximately $0.2
million on an annual basis.
The Company is not aware of any trends, demands, commitments, or uncertainties
which will result or which are reasonably likely to result in a material change
in Libbey's liquidity. The Company believes that its cash from operations and
available borrowings under the Bank Credit Agreement will be sufficient to fund
its operating requirements, capital expenditures and all other obligations
(including debt service and dividends) throughout the remaining term of the Bank
Credit Agreement.
15
<PAGE> 16
In addition, the Company anticipates refinancing the Bank Credit Agreement at or
prior to the maturity date of May 1, 2002 to meet the Company's longer term
funding requirements.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 30, 1998 at the annual meeting of stockholders, Messrs. Peter
C. Howell and Richard I. Reynolds were elected as members of Class II
of the board of directors for three year terms expiring on the date of
the 2001 annual meeting.
The results of the voting were:
<TABLE>
<CAPTION>
Directors
Name For Withheld
---- --- --------
<S> <C> <C>
Mr. Howell 16,230,871 219,009
Mr. Reynolds 16,234,653 215,227
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a.) Exhibits
Exhibit
Number Description
- ------ -----------
10.35 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and L. Frederick Ashton.
10.36 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Kenneth A. Boerger.
10.37 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Dave F. Brown.
10.38 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Rob A. Bules.
10.39 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Robert A. Dunton.
16
<PAGE> 17
10.40 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Terry E. Hartman.
10.41 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and William M. Herb.
10.42 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Daniel P. Ibele.
10.43 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Pete D. Kasper.
10.44 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and John F. Meier.
10.45 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Timothy T. Paige.
10.46 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and John P. Pranckun.
10.47 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Willie B. Purvis.
10.48 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Richard I. Reynolds.
10.49 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Scott M. Sellick.
10.50 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Arthur H. Smith.
10.51 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Kenneth G. Wilkes.
10.52 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and John A. Zarb.
10.53 Change of Control Agreement dated as of May 27, 1998
between Libbey Inc. and Wayne J. Zitkus.
27 Other Financial Information
17
<PAGE> 18
(b.) A form 8-K was filed during the second quarter, dated April 30,
1998 with respect to an authorization by the Board of Directors to
repurchase up to 875,000 shares of the Company's common stock in
open market and negotiated purchases.
18
<PAGE> 19
SIGNATURES
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.
LIBBEY INC.
Date August 12, 1998
By /s/ Kenneth G. Wilkes
------------------------------------
Kenneth G. Wilkes,
Vice President, Chief Financial
Officer and Treasurer
(Principal Accounting Officer)
19
<PAGE> 20
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
--- -----------
10.35 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and L. Frederick Ashton.
10.36 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Kenneth A. Boerger.
10.37 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Dave F. Brown.
10.38 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Rob A. Bules.
10.39 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Robert A. Dunton.
10.40 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Terry E. Hartman.
10.41 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and William M. Herb.
10.42 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Daniel P. Ibele.
10.43 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Pete D. Kasper.
10.44 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and John F. Meier
10.45 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Timothy T. Paige.
10.46 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and John P. Pranckun.
10.47 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Willie B. Purvis.
10.48 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Richard I. Reynolds.
20
<PAGE> 21
EXHIBIT
NO. DESCRIPTION
--- -----------
10.49 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Scott M. Sellick.
10.50 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Arthur H. Smith.
10.51 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Kenneth G. Wilkes.
10.52 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and John A. Zarb.
10.53 Change of Control Agreement dated as of May 27,
1998 between Libbey Inc. and Wayne J. Zitkus.
27 Other Financial Information
21
<PAGE> 1
Exhibit 10.35
[LIBBEY LOGO]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. L. F. Ashton
28609 Stonecroft
Perrysburg, Ohio 43551
Dear Dutch,
Libbey Inc. (the "Corporation") considers it essential to the best
interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation hereby
agrees that after this letter agreement (this "Agreement") has been fully
executed, you shall receive the severance benefits set forth in this Agreement
in the event your employment with the Corporation is terminated under the
circumstances described below subsequent to a Change in Control (as defined in
Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 2001; provided, however, that
commencing on January 1, 2002 and on each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than September 30 of the preceding year, the Corporation shall have given
notice that it does not wish to extend this Agreement; provided, further, that
if a Change in Control (as defined in Section 2), occurs during the original or
any extended term of this Agreement, the term of this Agreement shall continue
in effect for a period of not less than thirty-six (36) months beyond the month
in which such Change in Control occurred.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless
there has been a Change in Control. For purposes of this Agreement, a Change in
Control shall be deemed to occur if:
<PAGE> 2
Page Two
(a) any Person (as defined below) is or becomes the Beneficial Owner
(as defined below), directly or indirectly, of securities of the Corporation
representing twenty percent (20%) or more of the combined voting power of the
Corporation's then outstanding securities. For purposes of this Agreement, (A)
the term "Person" is used as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"); provided,
however, that the term shall not include the Corporation, any trustee or other
fiduciary holding securities under an employee benefit plan of the Corporation,
and any corporation owned, directly or indirectly, by the shareholders of the
Corporation, in substantially the same proportions as their ownership of stock
of the Corporation, and (B) the term "Beneficial Owner" shall have the meaning
given to such term in Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Corporation to effect a transaction described in Sections 2(a), (c) or (d))
whose election by the Board or nomination for election by the Corporation's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
(hereinafter referred to as "Continuing Directors"), cease for any reason to
constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation (or other entity),
other than a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 66 2/3% of the combined voting power of the
voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition by
the Corporation of all or substantially all of the Corporation's assets; or
<PAGE> 3
Page Three
(e) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing ten percent (10%) or
more of the combined voting power of the Corporation's then outstanding
securities (a "10% Owner") and (A) the identity of the Chief Executive Officer
of the Corporation is changed during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease for any
reason to serve on the Board during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter; provided, however, that this subsection (e) shall not apply to
any Person who is a 10% Owner as of the date hereof so long as such Person does
not increase such beneficial ownership by five percent (5%) or more over the
percentage so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the events
described in Section 2 constituting a Change in Control shall have occurred, you
shall be entitled to the benefits provided in Section 4(ii) upon the subsequent
termination of your employment, provided that such termination occurs during the
term of this Agreement and within the two (2) year period immediately following
the date of such Change in Control, unless such termination is (a) because of
your death or Disability (as defined in Section 3(ii)), (b) by the Corporation
for Cause (as defined in Section 3(iii)), or (c) by you other than (1) for Good
Reason (as defined in Section 3(iv)), or (2) in a Covered Resignation (as
defined in Section 3(v)). In the event that you are entitled to such benefits,
such benefits shall be paid notwithstanding the subsequent expiration of the
term of this Agreement. In the event your employment with the Corporation is
terminated for any reason and subsequently a Change in Control occurs, you shall
not be entitled to any benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to physical or
mental illness, you shall have been absent from the full-time performance of
your duties with the Corporation for six (6) consecutive months, and within
thirty (30) days after written notice of termination is given you shall not have
returned to the full-time performance of your duties, your employment may be
terminated for "Disability."
<PAGE> 4
Page Four
(iii) CAUSE. Termination by the Corporation of your employment for
"Cause" shall mean termination (a) upon your willful and continued failure to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) either (x) for Good Reason, or (y) in
connection with a Covered Resignation, after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (b) upon your willful and continued failure
to substantially follow and comply with the specific and lawful directives of
the Board, as reasonably determined by the Board (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after your issuance of a Notice of Termination for
Good Reason or in connection with a Covered Resignation), after a written demand
for substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a Change in Control
of any of the following circumstances unless, in the case of Sections 3(iv)(a),
(e), (f), (g), (h) or (i), such circumstances
<PAGE> 5
Page Five
are fully corrected (provided such circumstances are capable of correction)
prior to the Date of Termination (as defined in Section 3(vii)) specified in the
Notice of Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent with the
position in the Corporation that you held immediately prior to the Change in
Control, a significant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other action by
the Corporation that results in a material diminution in your position,
authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base salary as in
effect on the date hereof or as the same may be increased from time to time;
(c) the relocation of the Corporation's offices at which you are
principally employed immediately prior to the date of the Change in Control
(your "Principal Location") to a location more than thirty (30) miles from such
location, or the Corporation's requiring you, without your written consent, to
be based anywhere other than your Principal Location, except for required travel
on the Corporation's business to an extent substantially consistent with your
present business travel obligations;
(d) the Corporation's failure to pay to you any portion of your
current compensation or to pay to you any portion of an installment of deferred
compensation under any deferred compensation program of the Corporation within
seven (7) days of the date such compensation is due;
(e) the Corporation's failure to continue in effect any material
compensation or benefit plan or practice in which you participate immediately
prior to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such plan,
or the Corporation's failure to continue your participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of your participation
relative to other participants, as existed at the time of the Change in Control;
<PAGE> 6
Page Six
(f) the Corporation's failure to continue to provide you with
benefits substantially similar in the aggregate to those enjoyed by you under
any of the Corporation's life insurance, medical, health and accident,
disability, pension, retirement, or other benefit plans or practices in which
you and your eligible family members were participating at the time of the
Change in Control, the taking of any action by the Corporation which would
directly or indirectly materially reduce any of such benefits, or the failure by
the Corporation to provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at the time
of the Change in Control;
(g) the Corporation's failure to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof;
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(vi) hereof (and, if applicable, the requirements of Section 3(iii)
hereof), which purported termination shall not be effective for purposes of this
Agreement; or
(i) the continuation or repetition, after written notice of
objection from you, of harassing or denigrating treatment of you inconsistent
with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION AND COVERED RESIGNATION. You shall be
entitled to voluntarily terminate your employment for any reason or no reason at
any time after a Change in Control. Any such termination which occurs within the
thirty (30) day period following the first anniversary of the occurrence of a
Change in Control shall constitute a resignation which entitles you to receive
benefits under this Agreement (a "Covered Resignation").
<PAGE> 7
Page Seven
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall mean (a) if
your employment is terminated due to your death, the date of your death; (b) if
your employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such thirty (30) day period), and (c) if your
employment is terminated pursuant to Section 3(iii), Section 3(iv) or Section
3(v) or for any other reason (other than death or Disability), the date
specified in the Notice of Termination (which, in the case of a termination for
Cause shall not be less than thirty (30) days from the date such Notice of
Termination is given, and in the case of a termination for Good Reason or in
connection with a Covered Resignation shall not be less than fifteen (15) nor
more than sixty (60) days from the date such Notice of Termination is given).
Notwithstanding anything to the contrary contained in this Section 3(vii), if
within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION.
Following a Change in Control during the term of this Agreement, you
shall be entitled to the benefits described below upon termination of your
employment, provided that such termination occurs during the term of this
Agreement and within the two (2) year period immediately following the date of
such Change in Control. The benefits to which you are entitled, subject to the
terms and conditions of this Agreement, are:
<PAGE> 8
Page Eight
(i) If your employment shall be terminated by the Corporation for Cause
or by you other than (x) for Good Reason or (y) pursuant to a Covered
Resignation, the Corporation shall pay you your full base salary, when due,
through the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled under any
compensation plan or practice of the Corporation at the time such payments are
due, and the Corporation shall have no further obligations to you under this
Agreement.
(ii) If your employment by the Corporation shall be terminated by you
(x) for Good Reason or (y) pursuant to a Covered Resignation, or by the
Corporation other than for Cause or Disability, then you shall be entitled to
the benefits provided below:
(a) the Corporation shall pay to you your full base salary, when
due, through the Date of Termination at the rate in effect at the time Notice of
Termination is given, at the time specified in Section 4(iii), plus all other
amounts to which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as severance
pay to you, at the time specified in Section 4(iii), a lump-sum severance
payment (together with the payments provided in Section 4(ii)(c) below, the
"Severance Payments") equal to the sum of the following:
(A) three (3) times your annual base
salary as in effect as of the Date of
Termination or immediately prior to
the Change in Control, whichever is
greater; and
(B) three (3) times the greater of (x)
your targeted annual bonus as in
effect as of the Date of Termination
or immediately prior to the Change in
Control, whichever is greater, or (y)
your annual bonus for the year
immediately preceding the Date of
Termination;
<PAGE> 9
Page Nine
(c) notwithstanding any provisions of the Corporation's stock
option plans, incentive plans, or other similar plans, the restricted period
with respect to any restricted stock granted to you thereunder shall lapse and
such shares shall be distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date of
Termination, the Corporation shall, at its sole expense as incurred, provide you
with financial planning services of substantially the same type and scope as
those which the Corporation was providing to you immediately prior to the Date
of Termination, or, if more favorable to you, the date of the Change in Control;
(e) for a period of two (2) years following the Date of
Termination, the Corporation shall, at its sole expense as incurred, provide you
with outplacement services, the scope and provider of which shall be selected by
you in your sole discretion;
(f) for a thirty-six (36) month period after such termination, the
Corporation shall continue to provide you and your eligible family members,
based on the cost sharing arrangement between you and the Corporation on the
date of the Change in Control, with medical and dental health benefits at least
equal to those which would have been provided to you and them if your employment
had not been terminated or, if more favorable to you, as in effect generally at
any time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health benefits
under another employer's plans, the Corporation's obligations under this Section
4(ii)(f) shall be reduced to the extent comparable benefits are actually
received by you during the thirty-six (36) month period following your
termination, and any such benefits actually received by you shall be reported to
the Corporation. In the event you are ineligible under the terms of such benefit
plans or programs to continue to be so covered, the Corporation shall provide
you with substantially equivalent coverage through other sources or will provide
you with a lump-sum payment in such amount that, after all taxes on that amount,
shall be equal to the cost to you of providing yourself such benefit coverage.
At the termination of the benefits coverage under the second preceding sentence,
you, your spouse and your dependents shall be entitled to continuation coverage
pursuant to section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security Act of
1974, as
<PAGE> 10
Page Ten
amended, and under any other applicable law, to the extent required by such
laws, as if you had terminated employment with the Corporation on the date such
benefits coverage terminates. The lump-sum shall be determined on a present
value basis using the interest rate provided in section 1274(b)(2)(B) of the
Code on the Date of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
you or for your benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject to the excise tax imposed by section 4999 of the
Code (the "Excise Tax"), then you shall be entitled to receive from the
Corporation an additional payment (the "Gross-Up Payment") in an amount such
that the net amount of the Payment and the Gross-Up Payment retained by you
after the calculation and deduction of all Excise Taxes (including any interest
or penalties imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including any
interest or penalties imposed with respect to such taxes) on the Gross-Up
Payment provided for in this Section 4(ii)(g), and taking into account any lost
or reduced tax deductions on account of the Gross-Up Payment, shall be equal to
the Payment;
(2) all determinations required to be made under this Section 4(ii)(g),
including whether and when the Gross-Up Payment is required and the amount of
such Gross-Up Payment, and the assumptions to be utilized in arriving at such
determinations shall be made by the Accountants (as defined below) which shall
provide you and the Corporation with detailed supporting calculations with
respect to such Gross-Up Payment within fifteen (15) business days of the
receipt of notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the "Accountants"
shall mean the Corporation's independent certified public accountants serving
immediately prior to the Change in Control. In the event that the Accountants
are also serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, you shall appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accountants hereunder). All
fees and expenses of the Accountants shall be borne solely by the Corporation.
For the purposes of determining whether any of the Payments will be subject to
the Excise Tax and the amount of such Excise Tax, such Payments will be treated
as "parachute payments" within the meaning of section 280G of
<PAGE> 11
Page Eleven
the Code, and all "parachute payments" in excess of the "base amount" (as
defined under section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that in the opinion of the
Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay Federal income taxes at the highest applicable marginal
rate of Federal income taxation for the calendar year in which the Gross-Up
Payment is to be made and to pay any applicable state and local income taxes at
the highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from the deduction of such state or local
taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of your adjusted gross income), and to have
otherwise allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the Gross-Up
Payment in your adjusted gross income. To the extent practicable, any Gross-Up
Payment with respect to any Payment shall be paid by the Corporation at the time
you are entitled to receive the Payment and in no event will any Gross-Up
Payment be paid later than five days after the receipt by you of the
Accountant's determination. Any determination by the Accountants shall be
binding upon the Corporation and you. As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Accountants hereunder, it is possible that the Gross-Up Payment made will
have been an amount less than the Corporation should have paid pursuant to this
Section 4(ii)(g) (the "Underpayment"). In the event that the Corporation
exhausts its remedies pursuant to Section 4(ii)(g)(3) and you are required to
make a payment of any Excise Tax, the Underpayment shall be promptly paid by the
Corporation to or for your benefit; and
<PAGE> 12
Page Twelve
(3) you shall notify the Corporation in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Corporation of the Gross-Up Payment. Such notification shall be given as soon as
practicable after you are informed in writing of such claim and shall apprise
the Corporation of the nature of such claim and the date on which such claim is
requested to be paid. You shall not pay such claim prior to the expiration of
the 30-day period following the date on which you give such notice to the
Corporation (or such shorter period ending on the date that any payment of
taxes, interest and/or penalties with respect to such claim is due). If the
Corporation notifies you in writing prior to the expiration of such period that
it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably requested by
the Corporation relating to such claim;
(B) take such action in connection with contesting such claim as
the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in order to
effectively contest such claim; and
(D) permit the Corporation to participate in any proceedings
relating to such claims;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify you for and hold you harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of all related costs and expenses. Without limiting the foregoing
provisions of this Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner,
<PAGE> 13
Page Thirteen
and you agree 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 Corporation shall determine; provided, however, that if
the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an interest-free
basis, and shall indemnify you for and hold you harmless from, on an after-tax
basis, 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 (including as a result of any
forgiveness by the Corporation of such advance); provided, further, that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of you with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the Corporation
has the power to indemnify (or advance expenses to) you in respect of any
judgments, fines, settlements, loss, cost or expense (including attorneys' fees)
of any nature related to or arising out of your activities as an agent,
employee, officer or director of the Corporation or in any other capacity on
behalf of or at the request of the Corporation, the Corporation shall promptly
on written request, indemnify (and advance expenses to) you to the fullest
extent permitted by applicable law, including but not limited to making such
findings and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the discretion to
take so as to effectuate such indemnification or advancement. Such agreement by
the Corporation shall not be deemed to impair any other obligation of the
Corporation respecting your indemnification otherwise arising out of this or any
other agreement or promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6) years following
the Date of Termination (without reference to whether the term of this Agreement
continues in effect) with directors' and officers' liability insurance insuring
you against insurable events which occur or have occurred while you were a
director or officer of the
<PAGE> 14
Page Fourteen
Corporation, such insurance to have policy limits aggregating not less than the
amount in effect immediately prior to the Change in Control, and otherwise to be
in substantially the same form and to contain substantially the same terms,
conditions and exceptions as the liability issuance policies provided for
officers and directors of the Corporation in force from time to time, provided,
however, that such terms, conditions and exceptions shall not be, in the
aggregate, materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for such
insurance at any time during such period exceed one hundred and fifty percent
(150%) of the per annum rate of premium currently paid by the Corporation for
such insurance, then the Corporation shall provide the maximum coverage that
will then be available at an annual premium equal to one hundred and fifty
percent (150%) of such rate; and
(j) you shall be fully vested in your accrued benefits under any
qualified or nonqualified pension, profit sharing, deferred compensation or
supplemental plans maintained by the Corporation for your benefit, and the
Corporation shall provide you with additional fully vested benefits under such
plans in an amount equal to the benefits which you would have accrued had you
continued your employment with the Corporation for three (3) additional years
following your Date of Termination; provided, however, that to the extent that
the acceleration of vesting or enhanced accrual of such benefits would violate
any applicable law or require the Corporation to accelerate the vesting of the
accrued benefits of all participants in such plan or plans or to provide
additional benefit accruals to such participants, the Corporation shall pay you
a lump-sum payment at the time specified in Section 4(iii) in an amount equal to
the value of such benefits; provided, further, that to the extent that the
present value of all benefits payable to you under this Section 4(ii)(j) is less
than $250,000, the Corporation shall pay you a lump-sum payment at the time
specified in Section 4(iii) in an amount equal to the difference between
$250,000 and the amount of such benefits which are otherwise payable to you
under this Section 4(ii)(j); provided, further, that if you are eligible to
receive grandfathered benefits under the Corporation's pension plan, the
provisions of this Section 4(ii)(j) shall apply to such grandfathered benefits,
without reduction for age, in addition to any other benefits to which you are
entitled under this Section 4(ii)(j).
<PAGE> 15
Page Fifteen
(iii) The payments provided for in Sections 4(ii)(a), (b), (c),
(d) and (j) shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
(iv) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise
nor, except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything contained
herein, in the event of a Change in Control during the term of this Agreement,
all outstanding options ("Options"), if any, granted to you under any of the
Corporation's stock option plans, incentive plans or other similar plans (or
options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be
<PAGE> 16
Page Sixteen
deemed the Date of Termination. Unless expressly provided otherwise,
"Corporation" as used herein shall mean the Corporation as defined in this
Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. NON-COMPETE, CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) NON-COMPETE. In consideration of and in connection with the
benefits provided to you under this Agreement, and in order to protect the
goodwill of the Corporation, you hereby agree that, if your employment is
terminated pursuant to a Covered Resignation, then, for a period of twelve (12)
months commencing on the Date of Termination, you shall not, directly or
indirectly, own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be connected as a director, officer,
employee, partner, consultant or otherwise with any of the following entities
(or any subsidiary of any such entity) other than as a shareholder or beneficial
owner owning 5% or less of the outstanding securities of a public company:
Durand International, the Anchor Hocking unit of Newell Co., Cardinal
International, Inc., the Indiana Glass unit of Lancaster Colony Corporation,
Oneida LTD or any glass tableware manufacturer, seller or importer for Bormioli
Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the
Sisecam group of companies of Turkey including Pasabahce.
<PAGE> 17
Page Seventeen
(ii) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
(iii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from the Corporation
any of its officers or employees or offer employment to any person who, on or
during the six (6) months immediately preceding the date of such solicitation or
offer, is or was an officer or employee of the Corporation; provided, however,
that a general advertisement to which an employee of the Corporation responds
shall in no event be deemed to result in a breach of this Section 8(iii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following the execution and
delivery of this Agreement by you and the Corporation, the Corporation shall
partially fund its obligations to provide benefits hereunder (including, without
limitation, its obligations under Section 4(ii)(g)) by establishing and
irrevocably partially funding a trust for your benefit and the benefit of other
executives of the Corporation with whom
<PAGE> 18
Page Eighteen
the Corporation has entered into agreements similar to this Agreement. The
Corporation shall initially contribute $1000 to such trust. Such trust shall be
a grantor trust described in section 671 of the Code. Upon the occurrence of a
Potential Change in Control (as defined below), the Corporation shall fully fund
its obligations to provide benefits hereunder (including, without limitation,
its obligations under Section 4(ii)(g)) by irrevocably contributing funds to
such trust on your behalf. The amount of such contribution shall equal the then
present value of the Corporation's obligations under Section 4 hereof as
determined by the firms serving as the Corporation's actuaries and accountants
immediately prior to the Change in Control. Such actuaries and accountants shall
be paid by the Corporation. The establishment and funding of such trust shall
not affect the obligation of the Corporation to provide benefits under the terms
of this Agreement. For purposes of this Agreement a "Potential Change in
Control" shall be deemed to occur if:
(a) the Corporation enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces an
intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing ten percent (10%) or
more of the combined voting power of the Corporation's then outstanding
securities, increases such Person's beneficial ownership of such securities by
five percent (5%) or more of the Corporation's then outstanding securities over
the percentage so owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been
<PAGE> 19
Page Nineteen
made by either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Ohio without regard to its conflicts of
law principles. All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions of such courts for the
purpose of any such suit, action, proceeding or judgment. By your execution and
delivery of this Agreement, you appoint the Secretary of the Corporation, at the
Corporation's office in Toledo, Ohio, as your agent upon which process may be
served in any such suit, action or proceeding; and by its execution and delivery
of this Agreement, the Corporation appoints the Secretary of the Corporation, at
its office in Toledo, Ohio, as its agent upon which process may be served in any
such suit, action or proceeding. Service of process upon such applicable agent,
together
<PAGE> 20
Page Twenty
with actual notice of such service given to you or the Corporation, as
applicable, in the manner provided in Section 7 hereof, shall be deemed in every
respect effective service of process upon the applicable party in any suit,
action, proceeding or judgment. Nothing herein shall be deemed to limit the
ability of you or the Corporation to serve any such writs, process or summonses
in any other manner permitted by applicable law. You and the Corporation hereby
irrevocably waive any objections which you or the Corporation, as applicable,
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Ohio, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Notwithstanding the foregoing,
in the event that no court of competent jurisdiction in the State of Ohio will
accept such jurisdiction and venue, then any suit, action or proceeding with
respect to this Agreement, or any judgment entered by any court in respect
thereof, may be brought in any court of competent jurisdiction in the
continental United States which has jurisdiction over such suit, proceeding or
action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
<PAGE> 21
Page Twenty-One
and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein, including, without
limitation, any prior severance agreements, is hereby terminated and cancelled;
provided, however, that the Employment Agreement, dated as of June 24, 1993 by
and between you and the Corporation, as amended, shall remain in full force and
effect and shall, pursuant to the terms and conditions thereof, provide certain
severance benefits to you upon certain terminations of employment. Any of your
rights hereunder shall be in addition to any rights you may otherwise have under
benefit plans or agreements of the Corporation to which you are a party or in
which you are a participant, including, but not limited to, any Corporation
sponsored employee benefit plans and stock options plans. Provisions of this
Agreement shall not in any way abrogate your rights under such other plans and
agreements.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
-------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted as of the,
27th day of May, 1998.
/s/ L. Frederick Ashton
- --------------------------
<PAGE> 1
Exhibit 10.36
[LIBBEY LOGO]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Kenneth Boerger
26693 Greenville Drive
Perrysburg, OH 43551
Dear Ken,
Libbey Inc. (the "Corporation") considers it essential to the best
interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation hereby
agrees that after this letter agreement (this "Agreement") has been fully
executed, you shall receive the severance benefits set forth in this Agreement
in the event your employment with the Corporation is terminated under the
circumstances described below subsequent to a Change in Control (as defined in
Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 2001; provided, however, that
commencing on January 1, 2002 and on each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than September 30 of the preceding year, the Corporation shall have given
notice that it does not wish to extend this Agreement; provided, further, that
if a Change in Control (as defined in Section 2), occurs during the original or
any extended term of this Agreement, the term of this Agreement shall continue
in effect for a period of not less than thirty-six (36) months beyond the month
in which such Change in Control occurred.
<PAGE> 2
Page 2
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless
there has been a Change in Control. For purposes of this Agreement, a Change in
Control shall be deemed to occur if:
(a) any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of
securities of the Corporation representing twenty percent (20%) or more
of the combined voting power of the Corporation's then outstanding
securities. For purposes of this Agreement, (A) the term "Person" is
used as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided,
however, that the term shall not include the Corporation, any trustee
or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by
the shareholders of the Corporation, in substantially the same
proportions as their ownership of stock of the Corporation, and (B) the
term "Beneficial Owner" shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in Sections 2(a), (c) or (d)) whose election by
the Board or nomination for election by the Corporation's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"), cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation
(or other entity), other than a merger or consolidation which would
result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 66 2/3% of the combined voting power of the
voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the
sale or
<PAGE> 3
Page 3
disposition by the Corporation of all or substantially all of the
Corporation's assets; or
(e) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities (a "10% Owner") and (A) the
identity of the Chief Executive Officer of the Corporation is changed
during the period beginning sixty (60) days before the attainment of
the ten percent (10%) beneficial ownership and ending two (2) years
thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease
for any reason to serve on the Board during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter; provided, however, that
this subsection (e) shall not apply to any Person who is a 10% Owner as
of the date hereof so long as such Person does not increase such
beneficial ownership by five percent (5%) or more over the percentage
so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than for Good Reason (as defined in Section 3(iv)). In the event
that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the
event your employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, you shall not be entitled to any
benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment
for
<PAGE> 4
Page 4
"Cause" shall mean termination (a) upon your willful and continued failure to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) for Good Reason), after a written
demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, (b) upon your willful and
continued failure to substantially follow and comply with the specific and
lawful directives of the Board, as reasonably determined by the Board (other
than any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of
Termination (as defined in Section 3(vii)) specified in the Notice of
Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Corporation that you held immediately prior to
the Change in Control, a significant adverse alteration in the nature
or status of your responsibilities or the conditions of your employment
from those in effect
<PAGE> 5
Page 5
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other
action by the Corporation that results in a material diminution in your
position, authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base
salary as in effect on the date hereof or as the same may be increased
from time to time;
(c) the relocation of the Corporation's offices at
which you are principally employed immediately prior to the date of the
Change in Control (your "Principal Location") to a location more than
thirty (30) miles from such location, or the Corporation's requiring
you, without your written consent, to be based anywhere other than your
Principal Location, except for required travel on the Corporation's
business to an extent substantially consistent with your present
business travel obligations;
(d) the Corporation's failure to pay to you any
portion of your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due;
(e) the Corporation's failure to continue in effect
any material compensation or benefit plan or practice in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the Corporation's
failure to continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of
the Change in Control;
(f) the Corporation's failure to continue to provide
you with benefits substantially similar in the aggregate to those
enjoyed by you under any of the Corporation's life insurance, medical,
health and accident, disability, pension, retirement, or other benefit
plans or practices in which you and your eligible family members were
participating at the time of the Change in Control, the taking of any
action by the Corporation which would directly or indirectly materially
reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at
the time of the Change in
<PAGE> 6
Page 6
Control;
(g) the Corporation's failure to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(vi) hereof (and, if applicable, the
requirements of Section 3(iii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(i) the continuation or repetition, after written notice of
objection from you, of harassing or denigrating treatment of you
inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION. You shall be entitled to voluntarily
terminate your employment for any reason or no reason at any time after a Change
in Control.
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall mean (a) if
your employment is terminated due to your death, the date of your death; (b) if
your employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such thirty (30) day period), and (c) if your
employment is terminated pursuant to Section 3(iii), Section 3(iv) or Section
3(v) or for any other reason (other than death or Disability), the date
specified in the Notice of Termination (which, in the
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case of a termination for Cause shall not be less than thirty (30) days from the
date such Notice of Termination is given, and in the case of a termination for
Good Reason shall not be less than fifteen (15) nor more than sixty (60) days
from the date such Notice of Termination is given). Notwithstanding anything to
the contrary contained in this Section 3(vii), if within fifteen (15) days after
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, then the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties, or
otherwise; provided, however, that the Date of Termination shall be extended by
a notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence.
4. COMPENSATION UPON TERMINATION. Following a Change in Control during
the term of this Agreement, you shall be entitled to the benefits described
below upon termination of your employment, provided that such termination occurs
during the term of this Agreement and within the two (2) year period immediately
following the date of such Change in Control. The benefits to which you are
entitled, subject to the terms and conditions of this Agreement, are:
(i) If your employment shall be terminated by the Corporation for
Cause or by you other than for Good Reason, the Corporation shall pay you your
full base salary, when due, through the Date of Termination at the rate in
effect at the time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due, and the Corporation shall have no
further obligations to you under this Agreement.
(ii) If your employment by the Corporation shall be terminated by
you for Good Reason or by the Corporation other than for Cause or Disability,
then you shall be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base salary,
when due, through the Date of Termination at the rate in effect at the
time Notice of Termination is given, at the time specified in Section
4(iii), plus all other amounts to which you are entitled under any
compensation plan or practice of the Corporation at the time such
payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Section 4(iii), a
lump-sum severance payment (together with the payments provided in
Section 4(ii)(c) below, the "Severance
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Payments") equal to the sum of the following:
(A) two (2) times your annual base salary as
in effect as of the Date of Termination or immediately prior
to the Change in Control, whichever is greater; and
(B) two (2) times the greater of (x) your
targeted annual bonus as in effect as of the Date of
Termination or immediately prior to the Change in Control,
whichever is greater, or (y) your annual bonus for the year
immediately preceding the Date of Termination;
(c) notwithstanding any provisions of the
Corporation's stock option plans, incentive plans, or other similar
plans, the restricted period with respect to any restricted stock
granted to you thereunder shall lapse and such shares shall be
distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same
type and scope as those which the Corporation was providing to you
immediately prior to the Date of Termination, or, if more favorable to
you, the date of the Change in Control;
(e) for a period of two (2) years following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by you in your sole discretion;
(f) for a twenty-four (24) month period after such
termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between
you and the Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health
benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four (24) month
period following your termination, and any such benefits actually
received by you shall be reported to the Corporation. In the event you
are ineligible under the terms of such benefit plans or programs to
continue to be so covered, the Corporation shall provide
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you with substantially equivalent coverage through other sources or
will provide you with a lump-sum payment in such amount that, after all
taxes on that amount, shall be equal to the cost to you of providing
yourself such benefit coverage. At the termination of the benefits
coverage under the second preceding sentence, you, your spouse and your
dependents shall be entitled to continuation coverage pursuant to
section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the
extent required by such laws, as if you had terminated employment with
the Corporation on the date such benefits coverage terminates. The
lump-sum shall be determined on a present value basis using the
interest rate provided in section 1274(b)(2)(B) of the Code on the Date
of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to you or for your benefit (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement
or otherwise (the "Payment") would be subject to the excise tax imposed
by section 4999 of the Code (the "Excise Tax"), then you shall be
entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the
Payment and the Gross-Up Payment retained by you after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 4(ii)(g), and taking into
account any lost or reduced tax deductions on account of the Gross-Up
Payment, shall be equal to the Payment;
(2) all determinations required to be made under this
Section 4(ii)(g), including whether and when the Gross-Up Payment is
required and the amount of such Gross-Up Payment, and the assumptions
to be utilized in arriving at such determinations shall be made by the
Accountants (as defined below) which shall provide you and the
Corporation with detailed supporting calculations with respect to such
Gross-Up Payment within fifteen (15) business days of the receipt of
notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the
"Accountants" shall mean the Corporation's independent certified public
accountants serving immediately prior to the Change in Control. In the
event that the Accountants are also serving as accountant or auditor
for the individual, entity or group effecting the Change in Control,
you shall appoint another
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nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as
the Accountants hereunder). All fees and expenses of the Accountants
shall be borne solely by the Corporation. For the purposes of
determining whether any of the Payments will be subject to the Excise
Tax and the amount of such Excise Tax, such Payments will be treated as
"parachute payments" within the meaning of section 280G of the Code,
and all "parachute payments" in excess of the "base amount" (as defined
under section 280G(b)(3) of the Code) shall be treated as subject to
the Excise Tax, unless and except to the extent that in the opinion of
the Accountants such Payments (in whole or in part) either do not
constitute "parachute payments" or represent reasonable compensation
for services actually rendered (within the meaning of section
280G(b)(4) of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise Tax. For
purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if paid in
such year (determined without regard to limitations on deductions based
upon the amount of your adjusted gross income), and to have otherwise
allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in your adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Corporation at the time you are entitled to receive the
Payment and in no event will any Gross-Up Payment be paid later than
five days after the receipt by you of the Accountant's determination.
Any determination by the Accountants shall be binding upon the
Corporation and you. As a result of uncertainty in the application of
section 4999 of the Code at the time of the initial determination by
the Accountants hereunder, it is possible that the Gross-Up Payment
made will have been an amount less than the Corporation should have
paid pursuant to this Section 4(ii)(g) (the "Underpayment"). In the
event that the Corporation exhausts its remedies pursuant to Section
4(ii)(g)(3) and you are required to make a payment of any Excise Tax,
the Underpayment shall be promptly paid by the Corporation to or for
your benefit; and
(3) you shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the
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Corporation of the Gross-Up Payment. Such notification shall be given
as soon as practicable after you are informed in writing of such claim
and shall apprise the Corporation of the nature of such claim and the
date on which such claim is requested to be paid. You shall not pay
such claim prior to the expiration of the 30-day period following the
date on which you give such notice to the Corporation (or such shorter
period ending on the date that any payment of taxes, interest and/or
penalties with respect to such claim is due). If the Corporation
notifies you in writing prior to the expiration of such period that it
desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify you for
and hold you harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related
costs and expenses. Without limiting the foregoing provisions of this
Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you
agree 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 Corporation shall determine; provided,
however, that if the Corporation directs you to pay such claim and sue
for a refund, the Corporation shall advance the amount of such payment
to you, on an interest-
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free basis, and shall indemnify you for and hold you harmless from, on
an after-tax basis, 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
(including as a result of any forgiveness by the Corporation of such
advance); provided, further, that any extension of the statute of
limitations relating to the payment of taxes for the taxable year of
you with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Corporation or in any other capacity on behalf of or at the request of
the Corporation, the Corporation shall promptly on written request,
indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings
and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the
discretion to take so as to effectuate such indemnification or
advancement. Such agreement by the Corporation shall not be deemed to
impair any other obligation of the Corporation respecting your
indemnification otherwise arising out of this or any other agreement or
promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6)
years following the Date of Termination (without reference to whether
the term of this Agreement continues in effect) with directors' and
officers' liability insurance insuring you against insurable events
which occur or have occurred while you were a director or officer of
the Corporation, such insurance to have policy limits aggregating not
less than the amount in effect immediately prior to the Change in
Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such
terms, conditions and exceptions shall not be, in the aggregate,
materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for
such
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insurance at any time during such period exceed one hundred and fifty
percent (150%) of the per annum rate of premium currently paid by the
Corporation for such insurance, then the Corporation shall provide the
maximum coverage that will then be available at an annual premium equal
to one hundred and fifty percent (150%) of such rate; and
(j) you shall be fully vested in your accrued
benefits under any qualified or nonqualified pension, profit sharing,
deferred compensation or supplemental plans maintained by the
Corporation for your benefit, and the Corporation shall provide you
with additional fully vested benefits under such plans in an amount
equal to the benefits which you would have accrued had you continued
your employment with the Corporation for two (2) additional years
following your Date of Termination; provided, however, that to the
extent that the acceleration of vesting or enhanced accrual of such
benefits would violate any applicable law or require the Corporation to
accelerate the vesting of the accrued benefits of all participants in
such plan or plans or to provide additional benefit accruals to such
participants, the Corporation shall pay you a lump-sum payment at the
time specified in Section 4(iii) in an amount equal to the value of
such benefits; provided, further, that to the extent that the present
value of all benefits payable to you under this Section 4(ii)(j) is
less than $250,000, the Corporation shall pay you a lump-sum payment at
the time specified in Section 4(iii) in an amount equal to the
difference between $250,000 and the amount of such benefits which are
otherwise payable to you under this Section 4(ii)(j); provided,
further, that if you are eligible to receive grandfathered benefits
under the Corporation's pension plan, the provisions of this Section
4(ii)(j) shall apply to such grandfathered benefits, without reduction
for age, in addition to any other benefits to which you are entitled
under this Section 4(ii)(j).
(iii) The payments provided for in Sections 4(ii)(a), (b), (c), (d) and
(j) shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
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(iv) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise
nor, except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything
contained herein, in the event of a Change in Control during the term of this
Agreement, all outstanding options ("Options"), if any, granted to you under any
of the Corporation's stock option plans, incentive plans or other similar plans
(or options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
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7. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(ii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from the Corporation
any of its officers or employees or offer employment to any person who, on or
during the six (6) months immediately preceding the date of such solicitation or
offer, is or was an officer or employee of the Corporation; provided,
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however, that a general advertisement to which an employee of the Corporation
responds shall in no event be deemed to result in a breach of this Section
8(ii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following the
execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation with whom the Corporation has
entered into agreements similar to this Agreement. The Corporation shall
initially contribute $1000 to such trust. Such trust shall be a grantor trust
described in section 671 of the Code. Upon the occurrence of a Potential Change
in Control (as defined below), the Corporation shall fully fund its obligations
to provide benefits hereunder (including, without limitation, its obligations
under Section 4(ii)(g)) by irrevocably contributing funds to such trust on your
behalf. The amount of such contribution shall equal the then present value of
the Corporation's obligations under Section 4 hereof as determined by the firms
serving as the Corporation's actuaries and accountants immediately prior to the
Change in Control. Such actuaries and accountants shall be paid by the
Corporation. The establishment and funding of such trust shall not affect the
obligation of the Corporation to provide benefits under the terms of this
Agreement. For purposes of this Agreement a "Potential Change in Control" shall
be deemed to occur if:
(a) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces
an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities, increases such Person's
beneficial ownership of such securities by five percent (5%) or more of
the Corporation's then outstanding securities over the percentage so
owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in
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writing and signed by you and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions of such courts for the
purpose of any such suit, action, proceeding or judgment. By your execution and
delivery of this Agreement, you appoint the Secretary of the Corporation, at the
Corporation's office in Toledo, Ohio, as your agent upon which process may be
served in any such suit, action or proceeding; and by its execution and delivery
of this Agreement, the Corporation appoints the Secretary of the Corporation,
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at its office in Toledo, Ohio, as its agent upon which process may be served in
any such suit, action or proceeding. Service of process upon such applicable
agent, together with actual notice of such service given to you or the
Corporation, as applicable, in the manner provided in Section 7 hereof, shall be
deemed in every respect effective service of process upon the applicable party
in any suit, action, proceeding or judgment. Nothing herein shall be deemed to
limit the ability of you or the Corporation to serve any such writs, process or
summonses in any other manner permitted by applicable law. You and the
Corporation hereby irrevocably waive any objections which you or the
Corporation, as applicable, may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement
brought in any court of competent jurisdiction in the State of Ohio, and hereby
further irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event that no court of competent
jurisdiction in the State of Ohio will accept such jurisdiction and venue, then
any suit, action or proceeding with respect to this Agreement, or any judgment
entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the continental United States which has jurisdiction
over such suit, proceeding or action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
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and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans . Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
-------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted,
this 27th day of May, 1998.
/s/ Kenneth A. Boerger
- ---------------------------
[Executive]
<PAGE> 1
Exhibit 10.37
[LIBBEY LOGO]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Dave Brown
950 Grand Avenue West
Chatham, Ontario CANADA N7L5H6
Dear Dave,
Libbey Inc. (the "Corporation") considers it essential to the best
interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation
hereby agrees that after this letter agreement (this "Agreement") has been fully
executed, you shall receive the severance benefits set forth in this Agreement
in the event your employment with the Corporation is terminated under the
circumstances described below subsequent to a Change in Control (as defined in
Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 2001; provided,
however, that commencing on January 1, 2002 and on each January 1 thereafter,
the term of this Agreement shall automatically be extended for one additional
year unless, not later than September 30 of the preceding year, the Corporation
shall have given notice that it does not wish to extend this Agreement;
provided, further, that if a Change in Control (as defined in Section 2), occurs
during the original or any extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than thirty-six (36)
months beyond the month in which such Change in Control occurred.
<PAGE> 2
Page 2
2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there has been a Change in Control. For purposes of this Agreement, a
Change in Control shall be deemed to occur if:
(a) any Person (as defined below) is or becomes the Beneficial
Owner (as defined below), directly or indirectly, of securities of the
Corporation representing twenty percent (20%) or more of the combined
voting power of the Corporation's then outstanding securities. For
purposes of this Agreement, (A) the term "Person" is used as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"); provided, however, that the term
shall not include the Corporation, any trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation,
and any corporation owned, directly or indirectly, by the shareholders
of the Corporation, in substantially the same proportions as their
ownership of stock of the Corporation, and (B) the term "Beneficial
Owner" shall have the meaning given to such term in Rule 13d-3 under
the Exchange Act;
(b) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in Sections 2(a), (c) or (d)) whose election by
the Board or nomination for election by the Corporation's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"), cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation (or other
entity), other than a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more
than 66 2/3% of the combined voting power of the voting securities of
the Corporation or such surviving entity outstanding immediately after
such merger or consolidation;
(d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
<PAGE> 3
Page 3
disposition by the Corporation of all or substantially all of the
Corporation's assets; or
(e) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities (a "10% Owner") and (A) the
identity of the Chief Executive Officer of the Corporation is changed
during the period beginning sixty (60) days before the attainment of
the ten percent (10%) beneficial ownership and ending two (2) years
thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease
for any reason to serve on the Board during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter; provided, however, that
this subsection (e) shall not apply to any Person who is a 10% Owner as
of the date hereof so long as such Person does not increase such
beneficial ownership by five percent (5%) or more over the percentage
so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than for Good Reason (as defined in Section 3(iv)). In the event
that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the
event your employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, you shall not be entitled to any
benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment
for
<PAGE> 4
Page 4
"Cause" shall mean termination (a) upon your willful and continued failure to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) for Good Reason), after a written
demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, (b) upon your willful and
continued failure to substantially follow and comply with the specific and
lawful directives of the Board, as reasonably determined by the Board (other
than any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of
Termination (as defined in Section 3(vii)) specified in the Notice of
Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Corporation that you held immediately prior to
the Change in Control, a significant adverse alteration in the nature
or status of your responsibilities or the conditions of your employment
from those in effect
<PAGE> 5
Page 5
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other
action by the Corporation that results in a material diminution in your
position, authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base salary as
in effect on the date hereof or as the same may be increased from time
to time;
(c) the relocation of the Corporation's offices at which you
are principally employed immediately prior to the date of the Change in
Control (your "Principal Location") to a location more than thirty (30)
miles from such location, or the Corporation's requiring you, without
your written consent, to be based anywhere other than your Principal
Location, or the headquarters of the Corporation in Toledo, Ohio or a
manufacturing facility of the Corporation except for required travel on
the Corporation's business to an extent substantially consistent with
your present business travel obligations;
(d) the Corporation's failure to pay to you any portion of
your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due;
(e) the Corporation's failure to continue in effect any
material compensation or benefit plan or practice in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the Corporation's
failure to continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of
the Change in Control;
(f) the Corporation's failure to continue to provide you with
benefits substantially similar in the aggregate to those enjoyed by you
under any of the Corporation's life insurance, medical, health and
accident, disability, pension, retirement, or other benefit plans or
practices in which you and your eligible family members were
participating at the time of the Change in Control, the taking of any
action by the Corporation which would directly or indirectly materially
reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are
entitled on the
<PAGE> 6
Page 6
basis of years of service with the Corporation in accordance with the
Corporation's normal vacation policy in effect at the time of the
Change in Control;
(g) the Corporation's failure to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(vi) hereof (and, if applicable, the
requirements of Section 3(iii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(i) the continuation or repetition, after written notice of
objection from you, of harassing or denigrating treatment of you
inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION. You shall be entitled to voluntarily
terminate your employment for any reason or no reason at any time after a Change
in Control.
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall mean
(a) if your employment is terminated due to your death, the date of your death;
(b) if your employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30) day period), and
(c) if your employment is terminated pursuant to Section 3(iii), Section 3(iv)
or Section 3(v) or for any other reason (other
<PAGE> 7
Page 7
than death or Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause shall not be less than thirty
(30) days from the date such Notice of Termination is given, and in the case of
a termination for Good Reason shall not be less than fifteen (15) nor more than
sixty (60) days from the date such Notice of Termination is given).
Notwithstanding anything to the contrary contained in this Section 3(vii), if
within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION. Following a Change in Control
during the term of this Agreement, you shall be entitled to the benefits
described below upon termination of your employment, provided that such
termination occurs during the term of this Agreement and within the two (2) year
period immediately following the date of such Change in Control. The benefits to
which you are entitled, subject to the terms and conditions of this Agreement,
are:
(i) If your employment shall be terminated by the Corporation for
Cause or by you other than for Good Reason, the Corporation shall pay you your
full base salary, when due, through the Date of Termination at the rate in
effect at the time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due, and the Corporation shall have no
further obligations to you under this Agreement.
(ii) If your employment by the Corporation shall be terminated by you
for Good Reason or by the Corporation other than for Cause or Disability, then
you shall be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base salary,
when due, through the Date of Termination at the rate in effect at the
time Notice of Termination is given, at the time specified in Section
4(iii), plus all other amounts to which you are entitled under any
compensation plan or practice of the Corporation at the time such
payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Section 4(iii), a
lump-sum severance payment
<PAGE> 8
Page 8
(together with the payments provided in Section 4(ii)(c) below, the
"Severance Payments") equal to the sum of the following:
(A) two (2) times your annual base salary as in
effect as of the Date of Termination or immediately prior to
the Change in Control, whichever is greater; and
(B) two (2) times the greater of (x) your targeted
annual bonus as in effect as of the Date of Termination or
immediately prior to the Change in Control, whichever is
greater, or (y) your annual bonus for the year immediately
preceding the Date of Termination;
(c) notwithstanding any provisions of the Corporation's stock
option plans, incentive plans, or other similar plans, the restricted
period with respect to any restricted stock granted to you thereunder
shall lapse and such shares shall be distributed to you at the time
specified in Section 4(iii);
(d) for a period of one (1) year following the Date of
Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same
type and scope as those which the Corporation was providing to you
immediately prior to the Date of Termination, or, if more favorable to
you, the date of the Change in Control;
(e) for a period of two (2) years following the Date of
Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by you in your sole discretion;
(f) for a twenty-four (24) month period after such
termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between
you and the Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health
benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four (24) month
period following your termination, and any such benefits actually
received by you shall be reported to the Corporation. In the event you
are ineligible under the terms of such benefit
<PAGE> 9
Page 9
plans or programs to continue to be so covered, the Corporation shall
provide you with substantially equivalent coverage through other
sources or will provide you with a lump-sum payment in such amount
that, after all taxes on that amount, shall be equal to the cost to you
of providing yourself such benefit coverage. At the termination of the
benefits coverage under the second preceding sentence, you, your spouse
and your dependents shall be entitled to continuation coverage pursuant
to section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the
extent required by such laws, as if you had terminated employment with
the Corporation on the date such benefits coverage terminates. The
lump-sum shall be determined on a present value basis using the
interest rate provided in section 1274(b)(2)(B) of the Code on the Date
of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to you or for your benefit (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement
or otherwise (the "Payment") would be subject to the excise tax imposed
by section 4999 of the Code (the "Excise Tax"), then you shall be
entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the
Payment and the Gross-Up Payment retained by you after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 4(ii)(g), and taking into
account any lost or reduced tax deductions on account of the Gross-Up
Payment, shall be equal to the Payment;
(2) all determinations required to be made under this Section
4(ii)(g), including whether and when the Gross-Up Payment is required
and the amount of such Gross-Up Payment, and the assumptions to be
utilized in arriving at such determinations shall be made by the
Accountants (as defined below) which shall provide you and the
Corporation with detailed supporting calculations with respect to such
Gross-Up Payment within fifteen (15) business days of the receipt of
notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the
"Accountants" shall mean the Corporation's independent certified public
accountants serving immediately prior to the Change in Control. In the
event that the Accountants are also serving as accountant or auditor
for the individual,
<PAGE> 10
Page 10
entity or group effecting the Change in Control, you shall appoint
another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accountants hereunder). All fees and expenses of the
Accountants shall be borne solely by the Corporation. For the purposes
of determining whether any of the Payments will be subject to the
Excise Tax and the amount of such Excise Tax, such Payments will be
treated as "parachute payments" within the meaning of section 280G of
the Code, and all "parachute payments" in excess of the "base amount"
(as defined under section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the
opinion of the Accountants such Payments (in whole or in part) either
do not constitute "parachute payments" or represent reasonable
compensation for services actually rendered (within the meaning of
section 280G(b)(4) of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise Tax. For
purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if paid in
such year (determined without regard to limitations on deductions based
upon the amount of your adjusted gross income), and to have otherwise
allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in your adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Corporation at the time you are entitled to receive the
Payment and in no event will any Gross-Up Payment be paid later than
five days after the receipt by you of the Accountant's determination.
Any determination by the Accountants shall be binding upon the
Corporation and you. As a result of uncertainty in the application of
section 4999 of the Code at the time of the initial determination by
the Accountants hereunder, it is possible that the Gross-Up Payment
made will have been an amount less than the Corporation should have
paid pursuant to this Section 4(ii)(g) (the "Underpayment"). In the
event that the Corporation exhausts its remedies pursuant to Section
4(ii)(g)(3) and you are required to make a payment of any Excise Tax,
the Underpayment shall be promptly paid by the Corporation to or for
your benefit; and
<PAGE> 11
Page 11
(3) you shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification
shall be given as soon as practicable after you are informed in writing
of such claim and shall apprise the Corporation of the nature of such
claim and the date on which such claim is requested to be paid. You
shall not pay such claim prior to the expiration of the 30-day period
following the date on which you give such notice to the Corporation (or
such shorter period ending on the date that any payment of taxes,
interest and/or penalties with respect to such claim is due). If the
Corporation notifies you in writing prior to the expiration of such
period that it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify you for
and hold you harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related
costs and expenses. Without limiting the foregoing provisions of this
Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you
agree 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 Corporation shall determine; provided,
however, that if
<PAGE> 12
Page 12
the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an
interest-free basis, and shall indemnify you for and hold you harmless
from, on an after-tax basis, 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 (including as a result of any forgiveness by the Corporation of
such advance); provided, further, that any extension of the statute of
limitations relating to the payment of taxes for the taxable year of
you with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Corporation or in any other capacity on behalf of or at the request of
the Corporation, the Corporation shall promptly on written request,
indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings
and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the
discretion to take so as to effectuate such indemnification or
advancement. Such agreement by the Corporation shall not be deemed to
impair any other obligation of the Corporation respecting your
indemnification otherwise arising out of this or any other agreement or
promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6) years
following the Date of Termination (without reference to whether the
term of this Agreement continues in effect) with directors' and
officers' liability insurance insuring you against insurable events
which occur or have occurred while you were a director or officer of
the Corporation, such insurance to have policy limits aggregating not
less than the amount in effect immediately prior to the Change in
Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such
terms, conditions and exceptions shall not be, in the
<PAGE> 13
Page 13
aggregate, materially less favorable to you than those in effect on the
date hereof; provided, further, that if the aggregate annual premiums
for such insurance at any time during such period exceed one hundred
and fifty percent (150%) of the per annum rate of premium currently
paid by the Corporation for such insurance, then the Corporation shall
provide the maximum coverage that will then be available at an annual
premium equal to one hundred and fifty percent (150%) of such rate; and
(j) you shall be fully vested in your accrued benefits under
any qualified or nonqualified pension, profit sharing, deferred
compensation or supplemental plans maintained by the Corporation for
your benefit, and the Corporation shall provide you with additional
fully vested benefits under such plans in an amount equal to the
benefits which you would have accrued had you continued your employment
with the Corporation for two (2) additional years following your Date
of Termination; provided, however, that to the extent that the
acceleration of vesting or enhanced accrual of such benefits would
violate any applicable law or require the Corporation to accelerate the
vesting of the accrued benefits of all participants in such plan or
plans or to provide additional benefit accruals to such participants,
the Corporation shall pay you a lump-sum payment at the time specified
in Section 4(iii) in an amount equal to the value of such benefits;
provided, further, that to the extent that the present value of all
benefits payable to you under this Section 4(ii)(j) is less than
$250,000, the Corporation shall pay you a lump-sum payment at the time
specified in Section 4(iii) in an amount equal to the difference
between $250,000 and the amount of such benefits which are otherwise
payable to you under this Section 4(ii)(j); provided, further, that if
you are eligible to receive grandfathered benefits under the
Corporation's pension plan, the provisions of this Section 4(ii)(j)
shall apply to such grandfathered benefits, without reduction for age,
in addition to any other benefits to which you are entitled under this
Section 4(ii)(j).
(iii) The payments provided for in Sections 4(ii)(a), (b), (c),
(d) and (j) shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Corporation to
<PAGE> 14
Page 14
you, payable on the fifth day after demand by the Corporation (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code).
(iv) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise
nor, except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything
contained herein, in the event of a Change in Control during the term of this
Agreement, all outstanding options ("Options"), if any, granted to you under any
of the Corporation's stock option plans, incentive plans or other similar plans
(or options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless
<PAGE> 15
Page 15
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(ii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on
<PAGE> 16
Page 16
behalf of any other person, firm or corporation, directly or indirectly solicit
or attempt to solicit away from the Corporation any of its officers or employees
or offer employment to any person who, on or during the six (6) months
immediately preceding the date of such solicitation or offer, is or was an
officer or employee of the Corporation; provided, however, that a general
advertisement to which an employee of the Corporation responds shall in no event
be deemed to result in a breach of this Section 8(ii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following the
execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation with whom the Corporation has
entered into agreements similar to this Agreement. The Corporation shall
initially contribute $1000 to such trust. Such trust shall be a grantor trust
described in section 671 of the Code. Upon the occurrence of a Potential Change
in Control (as defined below), the Corporation shall fully fund its obligations
to provide benefits hereunder (including, without limitation, its obligations
under Section 4(ii)(g)) by irrevocably contributing funds to such trust on your
behalf. The amount of such contribution shall equal the then present value of
the Corporation's obligations under Section 4 hereof as determined by the firms
serving as the Corporation's actuaries and accountants immediately prior to the
Change in Control. Such actuaries and accountants shall be paid by the
Corporation. The establishment and funding of such trust shall not affect the
obligation of the Corporation to provide benefits under the terms of this
Agreement. For purposes of this Agreement a "Potential Change in Control" shall
be deemed to occur if:
(a) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces
an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities, increases such Person's
beneficial ownership of such securities by five percent (5%) or more of
the Corporation's then outstanding securities over the percentage so
owned by such Person on the date hereof; or
<PAGE> 17
Page 17
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions
<PAGE> 18
Page 18
of such courts for the purpose of any such suit, action, proceeding or judgment.
By your execution and delivery of this Agreement, you appoint the Secretary of
the Corporation, at the Corporation's office in Toledo, Ohio, as your agent upon
which process may be served in any such suit, action or proceeding; and by its
execution and delivery of this Agreement, the Corporation appoints the Secretary
of the Corporation, at its office in Toledo, Ohio, as its agent upon which
process may be served in any such suit, action or proceeding. Service of process
upon such applicable agent, together with actual notice of such service given to
you or the Corporation, as applicable, in the manner provided in Section 7
hereof, shall be deemed in every respect effective service of process upon the
applicable party in any suit, action, proceeding or judgment. Nothing herein
shall be deemed to limit the ability of you or the Corporation to serve any such
writs, process or summonses in any other manner permitted by applicable law. You
and the Corporation hereby irrevocably waive any objections which you or the
Corporation, as applicable, may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement
brought in any court of competent jurisdiction in the State of Ohio, and hereby
further irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event that no court of competent
jurisdiction in the State of Ohio will accept such jurisdiction and venue, then
any suit, action or proceeding with respect to this Agreement, or any judgment
entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the continental United States which has jurisdiction
over such suit, proceeding or action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation during
any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed by a
Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was
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Page 19
withheld during the period of the Dispute plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal fees and
expenses incurred by you in connection with any Dispute arising out of or
relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees and expenses, if any, incurred in contesting or
disputing any termination of your employment or in seeking to obtain or enforce
any right or benefit provided by this Agreement, or in connection with any tax
audit or proceeding to the extent attributable to the application of section
4999 of the Code to any payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled; provided, however, that the Employment Agreement,
dated as of May 21, 1993 by and between you and the Corporation, as amended,
shall remain in full force and effect and shall, pursuant to the terms and
conditions thereof, provide certain severance benefits to you upon certain
terminations of employment. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans. Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter, which shall then constitute our agreement on this subject.
<PAGE> 20
Page 20
Sincerely,
LIBBEY INC.
By: John F. Meier
---------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted,
this 27th day of May, 1998.
/s/ David F. Brown
- ---------------------------
[Executive]
<PAGE> 1
Exhibit 10.38
[LIBBEY LOGO]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Rob Bules
5321 Eagle Ridge Lane
Sylvania, OH 43560
Dear Rob,
Libbey Inc. (the "Corporation") considers it essential to the best
interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation hereby
agrees that after this letter agreement (this "Agreement") has been fully
executed, you shall receive the severance benefits set forth in this Agreement
in the event your employment with the Corporation is terminated under the
circumstances described below subsequent to a Change in Control (as defined in
Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 2001; provided, however, that
commencing on January 1, 2002 and on each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than September 30 of the preceding year, the Corporation shall have given
notice that it does not wish to extend this Agreement; provided, further, that
if a Change in Control (as defined in Section 2), occurs during the original or
any extended term of this Agreement, the term of this Agreement shall continue
in effect for a period of not less than thirty-six (36) months beyond the month
in which such Change in Control occurred.
<PAGE> 2
Page 2
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless
there has been a Change in Control. For purposes of this Agreement, a Change in
Control shall be deemed to occur if:
(a) any Person (as defined below) is or becomes the Beneficial
Owner (as defined below), directly or indirectly, of securities of the
Corporation representing twenty percent (20%) or more of the combined
voting power of the Corporation's then outstanding securities. For
purposes of this Agreement, (A) the term "Person" is used as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"); provided, however, that the term
shall not include the Corporation, any trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation,
and any corporation owned, directly or indirectly, by the shareholders
of the Corporation, in substantially the same proportions as their
ownership of stock of the Corporation, and (B) the term "Beneficial
Owner" shall have the meaning given to such term in Rule 13d-3 under
the Exchange Act;
(b) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in Sections 2(a), (c) or (d)) whose election by
the Board or nomination for election by the Corporation's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"), cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation (or other
entity), other than a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more
than 66 2/3% of the combined voting power of the voting securities of
the Corporation or such surviving entity outstanding immediately after
such merger or consolidation;
(d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
<PAGE> 3
Page 3
disposition by the Corporation of all or substantially all of the
Corporation's assets; or
(e) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing ten percent
(10%) or more of the combined voting power of the Corporation's then
outstanding securities (a "10% Owner") and (A) the identity of the
Chief Executive Officer of the Corporation is changed during the period
beginning sixty (60) days before the attainment of the ten percent
(10%) beneficial ownership and ending two (2) years thereafter, or (B)
individuals constituting at least one-third (1/3) of the members of the
Board at the beginning of such period shall cease for any reason to
serve on the Board during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending
two (2) years thereafter; provided, however, that this subsection (e)
shall not apply to any Person who is a 10% Owner as of the date hereof
so long as such Person does not increase such beneficial ownership by
five percent (5%) or more over the percentage so owned by such Person
as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than for Good Reason (as defined in Section 3(iv)). In the event
that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the
event your employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, you shall not be entitled to any
benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment
for
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"Cause" shall mean termination (a) upon your willful and continued failure to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) for Good Reason), after a written
demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, (b) upon your willful and
continued failure to substantially follow and comply with the specific and
lawful directives of the Board, as reasonably determined by the Board (other
than any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of
Termination (as defined in Section 3(vii)) specified in the Notice of
Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent with the
position in the Corporation that you held immediately prior to the
Change in Control, a significant adverse alteration in the nature or
status of your responsibilities or the conditions of your employment
from those in effect
<PAGE> 5
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immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other
action by the Corporation that results in a material diminution in your
position, authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base salary as
in effect on the date hereof or as the same may be increased from time
to time;
(c) the relocation of the Corporation's offices at which you
are principally employed immediately prior to the date of the Change in
Control (your "Principal Location") to a location more than thirty (30)
miles from such location, or the Corporation's requiring you, without
your written consent, to be based anywhere other than your Principal
Location, except for required travel on the Corporation's business to
an extent substantially consistent with your present business travel
obligations;
(d) the Corporation's failure to pay to you any portion of
your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due;
(e) the Corporation's failure to continue in effect any
material compensation or benefit plan or practice in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the Corporation's
failure to continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of
the Change in Control;
(f) the Corporation's failure to continue to provide you with
benefits substantially similar in the aggregate to those enjoyed by you
under any of the Corporation's life insurance, medical, health and
accident, disability, pension, retirement, or other benefit plans or
practices in which you and your eligible family members were
participating at the time of the Change in Control, the taking of any
action by the Corporation which would directly or indirectly materially
reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at
the time of the Change in
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Control;
(g) the Corporation's failure to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(vi) hereof (and, if applicable, the
requirements of Section 3(iii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(i) the continuation or repetition, after written notice of
objection from you, of harassing or denigrating treatment of you
inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION. You shall be entitled to voluntarily
terminate your employment for any reason or no reason at any time after a Change
in Control.
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall mean
(a) if your employment is terminated due to your death, the date of your death;
(b) if your employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30) day period), and
(c) if your employment is terminated pursuant to Section 3(iii), Section 3(iv)
or Section 3(v) or for any other reason (other than death or Disability), the
date specified in the Notice of Termination (which, in the
<PAGE> 7
Page 7
case of a termination for Cause shall not be less than thirty (30) days from the
date such Notice of Termination is given, and in the case of a termination for
Good Reason shall not be less than fifteen (15) nor more than sixty (60) days
from the date such Notice of Termination is given). Notwithstanding anything to
the contrary contained in this Section 3(vii), if within fifteen (15) days after
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, then the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties, or
otherwise; provided, however, that the Date of Termination shall be extended by
a notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence.
4. COMPENSATION UPON TERMINATION. Following a Change in Control during
the term of this Agreement, you shall be entitled to the benefits described
below upon termination of your employment, provided that such termination occurs
during the term of this Agreement and within the two (2) year period immediately
following the date of such Change in Control. The benefits to which you are
entitled, subject to the terms and conditions of this Agreement, are:
(i) If your employment shall be terminated by the Corporation for
Cause or by you other than for Good Reason, the Corporation shall pay you your
full base salary, when due, through the Date of Termination at the rate in
effect at the time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due, and the Corporation shall have no
further obligations to you under this Agreement.
(ii) If your employment by the Corporation shall be terminated by
you for Good Reason or by the Corporation other than for Cause or Disability,
then you shall be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base salary,
when due, through the Date of Termination at the rate in effect at the
time Notice of Termination is given, at the time specified in Section
4(iii), plus all other amounts to which you are entitled under any
compensation plan or practice of the Corporation at the time such
payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Section 4(iii), a
lump-sum severance payment (together with the payments provided in
Section 4(ii)(c) below, the "Severance
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Payments") equal to the sum of the following:
(A) two (2) times your annual base salary as in
effect as of the Date of Termination or immediately prior to
the Change in Control, whichever is greater; and
(B) two (2) times the greater of (x) your targeted
annual bonus as in effect as of the Date of Termination or
immediately prior to the Change in Control, whichever is
greater, or (y) your annual bonus for the year immediately
preceding the Date of Termination;
(c) notwithstanding any provisions of the Corporation's stock
option plans, incentive plans, or other similar plans, the restricted
period with respect to any restricted stock granted to you thereunder
shall lapse and such shares shall be distributed to you at the time
specified in Section 4(iii);
(d) for a period of one (1) year following the Date of
Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same
type and scope as those which the Corporation was providing to you
immediately prior to the Date of Termination, or, if more favorable to
you, the date of the Change in Control;
(e) for a period of two (2) years following the Date of
Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by you in your sole discretion;
(f) for a twenty-four (24) month period after such
termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between
you and the Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health
benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four (24) month
period following your termination, and any such benefits actually
received by you shall be reported to the Corporation. In the event you
are ineligible under the terms of such benefit plans or programs to
continue to be so covered, the Corporation shall provide
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you with substantially equivalent coverage through other sources or
will provide you with a lump-sum payment in such amount that, after all
taxes on that amount, shall be equal to the cost to you of providing
yourself such benefit coverage. At the termination of the benefits
coverage under the second preceding sentence, you, your spouse and your
dependents shall be entitled to continuation coverage pursuant to
section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the
extent required by such laws, as if you had terminated employment with
the Corporation on the date such benefits coverage terminates. The
lump-sum shall be determined on a present value basis using the
interest rate provided in section 1274(b)(2)(B) of the Code on the Date
of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to you or for your benefit (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement
or otherwise (the "Payment") would be subject to the excise tax imposed
by section 4999 of the Code (the "Excise Tax"), then you shall be
entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the
Payment and the Gross-Up Payment retained by you after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 4(ii)(g), and taking into
account any lost or reduced tax deductions on account of the Gross-Up
Payment, shall be equal to the Payment;
(2) all determinations required to be made under this Section
4(ii)(g), including whether and when the Gross-Up Payment is required
and the amount of such Gross-Up Payment, and the assumptions to be
utilized in arriving at such determinations shall be made by the
Accountants (as defined below) which shall provide you and the
Corporation with detailed supporting calculations with respect to such
Gross-Up Payment within fifteen (15) business days of the receipt of
notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the
"Accountants" shall mean the Corporation's independent certified public
accountants serving immediately prior to the Change in Control. In the
event that the Accountants are also serving as accountant or auditor
for the individual, entity or group effecting the Change in Control,
you shall appoint another
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nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as
the Accountants hereunder). All fees and expenses of the Accountants
shall be borne solely by the Corporation. For the purposes of
determining whether any of the Payments will be subject to the Excise
Tax and the amount of such Excise Tax, such Payments will be treated as
"parachute payments" within the meaning of section 280G of the Code,
and all "parachute payments" in excess of the "base amount" (as defined
under section 280G(b)(3) of the Code) shall be treated as subject to
the Excise Tax, unless and except to the extent that in the opinion of
the Accountants such Payments (in whole or in part) either do not
constitute "parachute payments" or represent reasonable compensation
for services actually rendered (within the meaning of section
280G(b)(4) of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise Tax. For
purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if paid in
such year (determined without regard to limitations on deductions based
upon the amount of your adjusted gross income), and to have otherwise
allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in your adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Corporation at the time you are entitled to receive the
Payment and in no event will any Gross-Up Payment be paid later than
five days after the receipt by you of the Accountant's determination.
Any determination by the Accountants shall be binding upon the
Corporation and you. As a result of uncertainty in the application of
section 4999 of the Code at the time of the initial determination by
the Accountants hereunder, it is possible that the Gross-Up Payment
made will have been an amount less than the Corporation should have
paid pursuant to this Section 4(ii)(g) (the "Underpayment"). In the
event that the Corporation exhausts its remedies pursuant to Section
4(ii)(g)(3) and you are required to make a payment of any Excise Tax,
the Underpayment shall be promptly paid by the Corporation to or for
your benefit; and
(3) you shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the
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Corporation of the Gross-Up Payment. Such notification shall be given
as soon as practicable after you are informed in writing of such claim
and shall apprise the Corporation of the nature of such claim and the
date on which such claim is requested to be paid. You shall not pay
such claim prior to the expiration of the 30-day period following the
date on which you give such notice to the Corporation (or such shorter
period ending on the date that any payment of taxes, interest and/or
penalties with respect to such claim is due). If the Corporation
notifies you in writing prior to the expiration of such period that it
desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify you for
and hold you harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related
costs and expenses. Without limiting the foregoing provisions of this
Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you
agree 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 Corporation shall determine; provided,
however, that if the Corporation directs you to pay such claim and sue
for a refund, the Corporation shall advance the amount of such payment
to you, on an interest-
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free basis, and shall indemnify you for and hold you harmless from, on
an after-tax basis, 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
(including as a result of any forgiveness by the Corporation of such
advance); provided, further, that any extension of the statute of
limitations relating to the payment of taxes for the taxable year of
you with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Corporation or in any other capacity on behalf of or at the request of
the Corporation, the Corporation shall promptly on written request,
indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings
and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the
discretion to take so as to effectuate such indemnification or
advancement. Such agreement by the Corporation shall not be deemed to
impair any other obligation of the Corporation respecting your
indemnification otherwise arising out of this or any other agreement or
promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6) years
following the Date of Termination (without reference to whether the
term of this Agreement continues in effect) with directors' and
officers' liability insurance insuring you against insurable events
which occur or have occurred while you were a director or officer of
the Corporation, such insurance to have policy limits aggregating not
less than the amount in effect immediately prior to the Change in
Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such
terms, conditions and exceptions shall not be, in the aggregate,
materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for
such
<PAGE> 13
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insurance at any time during such period exceed one hundred and fifty
percent (150%) of the per annum rate of premium currently paid by the
Corporation for such insurance, then the Corporation shall provide the
maximum coverage that will then be available at an annual premium equal
to one hundred and fifty percent (150%) of such rate; and
(j) you shall be fully vested in your accrued benefits under
any qualified or nonqualified pension, profit sharing, deferred
compensation or supplemental plans maintained by the Corporation for
your benefit, and the Corporation shall provide you with additional
fully vested benefits under such plans in an amount equal to the
benefits which you would have accrued had you continued your employment
with the Corporation for two (2) additional years following your Date
of Termination; provided, however, that to the extent that the
acceleration of vesting or enhanced accrual of such benefits would
violate any applicable law or require the Corporation to accelerate the
vesting of the accrued benefits of all participants in such plan or
plans or to provide additional benefit accruals to such participants,
the Corporation shall pay you a lump-sum payment at the time specified
in Section 4(iii) in an amount equal to the value of such benefits;
provided, further, that to the extent that the present value of all
benefits payable to you under this Section 4(ii)(j) is less than
$250,000, the Corporation shall pay you a lump-sum payment at the time
specified in Section 4(iii) in an amount equal to the difference
between $250,000 and the amount of such benefits which are otherwise
payable to you under this Section 4(ii)(j); provided, further, that if
you are eligible to receive grandfathered benefits under the
Corporation's pension plan, the provisions of this Section 4(ii)(j)
shall apply to such grandfathered benefits, without reduction for age,
in addition to any other benefits to which you are entitled under this
Section 4(ii)(j).
(iii) The payments provided for in Sections 4(ii)(a), (b), (c),
(d) and (j) shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
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(iv) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise
nor, except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything
contained herein, in the event of a Change in Control during the term of this
Agreement, all outstanding options ("Options"), if any, granted to you under any
of the Corporation's stock option plans, incentive plans or other similar plans
(or options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
<PAGE> 15
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7. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(ii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from the Corporation
any of its officers or employees or offer employment to any person who, on or
during the six (6) months immediately preceding the date of such solicitation or
offer, is or was an officer or employee of the Corporation; provided,
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however, that a general advertisement to which an employee of the Corporation
responds shall in no event be deemed to result in a breach of this Section
8(ii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following the
execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation with whom the Corporation has
entered into agreements similar to this Agreement. The Corporation shall
initially contribute $1000 to such trust. Such trust shall be a grantor trust
described in section 671 of the Code. Upon the occurrence of a Potential Change
in Control (as defined below), the Corporation shall fully fund its obligations
to provide benefits hereunder (including, without limitation, its obligations
under Section 4(ii)(g)) by irrevocably contributing funds to such trust on your
behalf. The amount of such contribution shall equal the then present value of
the Corporation's obligations under Section 4 hereof as determined by the firms
serving as the Corporation's actuaries and accountants immediately prior to the
Change in Control. Such actuaries and accountants shall be paid by the
Corporation. The establishment and funding of such trust shall not affect the
obligation of the Corporation to provide benefits under the terms of this
Agreement. For purposes of this Agreement a "Potential Change in Control" shall
be deemed to occur if:
(a) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces
an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities, increases such Person's
beneficial ownership of such securities by five percent (5%) or more of
the Corporation's then outstanding securities over the percentage so
owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in
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writing and signed by you and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions of such courts for the
purpose of any such suit, action, proceeding or judgment. By your execution and
delivery of this Agreement, you appoint the Secretary of the Corporation, at the
Corporation's office in Toledo, Ohio, as your agent upon which process may be
served in any such suit, action or proceeding; and by its execution and delivery
of this Agreement, the Corporation appoints the Secretary of the Corporation,
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at its office in Toledo, Ohio, as its agent upon which process may be served in
any such suit, action or proceeding. Service of process upon such applicable
agent, together with actual notice of such service given to you or the
Corporation, as applicable, in the manner provided in Section 7 hereof, shall be
deemed in every respect effective service of process upon the applicable party
in any suit, action, proceeding or judgment. Nothing herein shall be deemed to
limit the ability of you or the Corporation to serve any such writs, process or
summonses in any other manner permitted by applicable law. You and the
Corporation hereby irrevocably waive any objections which you or the
Corporation, as applicable, may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement
brought in any court of competent jurisdiction in the State of Ohio, and hereby
further irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event that no court of competent
jurisdiction in the State of Ohio will accept such jurisdiction and venue, then
any suit, action or proceeding with respect to this Agreement, or any judgment
entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the continental United States which has jurisdiction
over such suit, proceeding or action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation during
any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed by a
Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal fees
and expenses incurred by you in connection with any Dispute arising out of or
relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
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and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans . Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted,
this 27th day of May, 1998.
/s/ Robert A. Bules Jr.
- ---------------------------
[Executive]
<PAGE> 1
Exhibit 10.39
[LIBBEY LOGO]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Robert Dunton
1228 Capillano Drive
Shreveport, LA 71106
Dear Bob,
Libbey Inc. (the "Corporation") considers it essential to the best
interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation
hereby agrees that after this letter agreement (this "Agreement") has been fully
executed, you shall receive the severance benefits set forth in this Agreement
in the event your employment with the Corporation is terminated under the
circumstances described below subsequent to a Change in Control (as defined in
Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 2001; provided,
however, that commencing on January 1, 2002 and on each January 1 thereafter,
the term of this Agreement shall automatically be extended for one additional
year unless, not later than September 30 of the preceding year, the Corporation
shall have given notice that it does not wish to extend this Agreement;
provided, further, that if a Change in Control (as defined in Section 2), occurs
during the original or any extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than thirty-six (36)
months beyond the month in which such Change in Control occurred.
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Page 2
2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there has been a Change in Control. For purposes of this Agreement, a
Change in Control shall be deemed to occur if:
(a) any Person (as defined below) is or becomes the Beneficial
Owner (as defined below), directly or indirectly, of securities of the
Corporation representing twenty percent (20%) or more of the combined
voting power of the Corporation's then outstanding securities. For
purposes of this Agreement, (A) the term "Person" is used as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"); provided, however, that the term
shall not include the Corporation, any trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation,
and any corporation owned, directly or indirectly, by the shareholders
of the Corporation, in substantially the same proportions as their
ownership of stock of the Corporation, and (B) the term "Beneficial
Owner" shall have the meaning given to such term in Rule 13d-3 under
the Exchange Act;
(b) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in Sections 2(a), (c) or (d)) whose election by
the Board or nomination for election by the Corporation's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"), cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation (or other
entity), other than a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more
than 66 2/3% of the combined voting power of the voting securities of
the Corporation or such surviving entity outstanding immediately after
such merger or consolidation;
(d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
<PAGE> 3
Page 3
disposition by the Corporation of all or substantially all of the
Corporation's assets; or
(e) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing ten percent
(10%) or more of the combined voting power of the Corporation's then
outstanding securities (a "10% Owner") and (A) the identity of the
Chief Executive Officer of the Corporation is changed during the period
beginning sixty (60) days before the attainment of the ten percent
(10%) beneficial ownership and ending two (2) years thereafter, or (B)
individuals constituting at least one-third (1/3) of the members of the
Board at the beginning of such period shall cease for any reason to
serve on the Board during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending
two (2) years thereafter; provided, however, that this subsection (e)
shall not apply to any Person who is a 10% Owner as of the date hereof
so long as such Person does not increase such beneficial ownership by
five percent (5%) or more over the percentage so owned by such Person
as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than for Good Reason (as defined in Section 3(iv)). In the event
that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the
event your employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, you shall not be entitled to any
benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment for
<PAGE> 4
Page 4
"Cause" shall mean termination (a) upon your willful and continued failure to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) for Good Reason), after a written
demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, (b) upon your willful and
continued failure to substantially follow and comply with the specific and
lawful directives of the Board, as reasonably determined by the Board (other
than any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of
Termination (as defined in Section 3(vii)) specified in the Notice of
Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent with the
position in the Corporation that you held immediately prior to the
Change in Control, a significant adverse alteration in the nature or
status of your responsibilities or the conditions of your employment
from those in effect
<PAGE> 5
Page 5
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other
action by the Corporation that results in a material diminution in your
position, authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base salary as
in effect on the date hereof or as the same may be increased from time
to time;
(c) the relocation of the Corporation's offices at which you
are principally employed immediately prior to the date of the Change in
Control (your "Principal Location") to a location more than thirty (30)
miles from such location, or the Corporation's requiring you, without
your written consent, to be based anywhere other than your Principal
Location, or the headquarters of the Corporation in Toledo, Ohio or a
manufacturing facility of the Corporation, except for required travel
on the Corporation's business to an extent substantially consistent
with your present business travel obligations;
(d) the Corporation's failure to pay to you any portion of
your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due;
(e) the Corporation's failure to continue in effect any
material compensation or benefit plan or practice in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the Corporation's
failure to continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of
the Change in Control;
(f) the Corporation's failure to continue to provide you with
benefits substantially similar in the aggregate to those enjoyed by you
under any of the Corporation's life insurance, medical, health and
accident, disability, pension, retirement, or other benefit plans or
practices in which you and your eligible family members were
participating at the time of the Change in Control, the taking of any
action by the Corporation which would directly or indirectly materially
reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Corporation in
accordance with the
<PAGE> 6
Page 6
Corporation's normal vacation policy in effect at the time of the
Change in Control;
(g) the Corporation's failure to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(vi) hereof (and, if applicable, the
requirements of Section 3(iii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(i) the continuation or repetition, after written notice of
objection from you, of harassing or denigrating treatment of you
inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION. You shall be entitled to voluntarily
terminate your employment for any reason or no reason at any time after a Change
in Control.
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall mean
(a) if your employment is terminated due to your death, the date of your death;
(b) if your employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30) day period), and
(c) if your employment is terminated pursuant to Section 3(iii), Section 3(iv)
or Section 3(v) or for any other reason (other
<PAGE> 7
Page 7
than death or Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause shall not be less than thirty
(30) days from the date such Notice of Termination is given, and in the case of
a termination for Good Reason shall not be less than fifteen (15) nor more than
sixty (60) days from the date such Notice of Termination is given).
Notwithstanding anything to the contrary contained in this Section 3(vii), if
within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION. Following a Change in Control
during the term of this Agreement, you shall be entitled to the benefits
described below upon termination of your employment, provided that such
termination occurs during the term of this Agreement and within the two (2) year
period immediately following the date of such Change in Control. The benefits to
which you are entitled, subject to the terms and conditions of this Agreement,
are:
(i) If your employment shall be terminated by the Corporation for
Cause or by you other than for Good Reason, the Corporation shall pay you your
full base salary, when due, through the Date of Termination at the rate in
effect at the time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due, and the Corporation shall have no
further obligations to you under this Agreement.
(ii) If your employment by the Corporation shall be terminated by
you for Good Reason or by the Corporation other than for Cause or Disability,
then you shall be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base salary,
when due, through the Date of Termination at the rate in effect at the
time Notice of Termination is given, at the time specified in Section
4(iii), plus all other amounts to which you are entitled under any
compensation plan or practice of the Corporation at the time such
payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Section 4(iii), a
lump-sum severance payment
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Page 8
(together with the payments provided in Section 4(ii)(c) below, the
"Severance Payments") equal to the sum of the following:
(A) two (2) times your annual base salary as in
effect as of the Date of Termination or immediately prior to
the Change in Control, whichever is greater; and
(B) two (2) times the greater of (x) your targeted
annual bonus as in effect as of the Date of Termination or
immediately prior to the Change in Control, whichever is
greater, or (y) your annual bonus for the year immediately
preceding the Date of Termination;
(c) notwithstanding any provisions of the Corporation's stock
option plans, incentive plans, or other similar plans, the restricted
period with respect to any restricted stock granted to you thereunder
shall lapse and such shares shall be distributed to you at the time
specified in Section 4(iii);
(d) for a period of one (1) year following the Date of
Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same
type and scope as those which the Corporation was providing to you
immediately prior to the Date of Termination, or, if more favorable to
you, the date of the Change in Control;
(e) for a period of two (2) years following the Date of
Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by you in your sole discretion;
(f) for a twenty-four (24) month period after such
termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between
you and the Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health
benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four (24) month
period following your termination, and any such benefits actually
received by you shall be reported to the Corporation. In the event you
are ineligible under the terms of such benefit
<PAGE> 9
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plans or programs to continue to be so covered, the Corporation shall
provide you with substantially equivalent coverage through other
sources or will provide you with a lump-sum payment in such amount
that, after all taxes on that amount, shall be equal to the cost to you
of providing yourself such benefit coverage. At the termination of the
benefits coverage under the second preceding sentence, you, your spouse
and your dependents shall be entitled to continuation coverage pursuant
to section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the
extent required by such laws, as if you had terminated employment with
the Corporation on the date such benefits coverage terminates. The
lump-sum shall be determined on a present value basis using the
interest rate provided in section 1274(b)(2)(B) of the Code on the Date
of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to you or for your benefit (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement
or otherwise (the "Payment") would be subject to the excise tax imposed
by section 4999 of the Code (the "Excise Tax"), then you shall be
entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the
Payment and the Gross-Up Payment retained by you after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 4(ii)(g), and taking into
account any lost or reduced tax deductions on account of the Gross-Up
Payment, shall be equal to the Payment;
(2) all determinations required to be made under this Section
4(ii)(g), including whether and when the Gross-Up Payment is required
and the amount of such Gross-Up Payment, and the assumptions to be
utilized in arriving at such determinations shall be made by the
Accountants (as defined below) which shall provide you and the
Corporation with detailed supporting calculations with respect to such
Gross-Up Payment within fifteen (15) business days of the receipt of
notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the
"Accountants" shall mean the Corporation's independent certified public
accountants serving immediately prior to the Change in Control. In the
event that the Accountants are also serving as accountant or auditor
for the individual,
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entity or group effecting the Change in Control, you shall appoint
another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accountants hereunder). All fees and expenses of the
Accountants shall be borne solely by the Corporation. For the purposes
of determining whether any of the Payments will be subject to the
Excise Tax and the amount of such Excise Tax, such Payments will be
treated as "parachute payments" within the meaning of section 280G of
the Code, and all "parachute payments" in excess of the "base amount"
(as defined under section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the
opinion of the Accountants such Payments (in whole or in part) either
do not constitute "parachute payments" or represent reasonable
compensation for services actually rendered (within the meaning of
section 280G(b)(4) of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise Tax. For
purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if paid in
such year (determined without regard to limitations on deductions based
upon the amount of your adjusted gross income), and to have otherwise
allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in your adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Corporation at the time you are entitled to receive the
Payment and in no event will any Gross-Up Payment be paid later than
five days after the receipt by you of the Accountant's determination.
Any determination by the Accountants shall be binding upon the
Corporation and you. As a result of uncertainty in the application of
section 4999 of the Code at the time of the initial determination by
the Accountants hereunder, it is possible that the Gross-Up Payment
made will have been an amount less than the Corporation should have
paid pursuant to this Section 4(ii)(g) (the "Underpayment"). In the
event that the Corporation exhausts its remedies pursuant to Section
4(ii)(g)(3) and you are required to make a payment of any Excise Tax,
the Underpayment shall be promptly paid by the Corporation to or for
your benefit; and
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(3) you shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification
shall be given as soon as practicable after you are informed in writing
of such claim and shall apprise the Corporation of the nature of such
claim and the date on which such claim is requested to be paid. You
shall not pay such claim prior to the expiration of the 30-day period
following the date on which you give such notice to the Corporation (or
such shorter period ending on the date that any payment of taxes,
interest and/or penalties with respect to such claim is due). If the
Corporation notifies you in writing prior to the expiration of such
period that it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify you for
and hold you harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related
costs and expenses. Without limiting the foregoing provisions of this
Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you
agree 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 Corporation shall determine; provided,
however, that if
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Page 12
the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an
interest-free basis, and shall indemnify you for and hold you harmless
from, on an after-tax basis, 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 (including as a result of any forgiveness by the Corporation of
such advance); provided, further, that any extension of the statute of
limitations relating to the payment of taxes for the taxable year of
you with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Corporation or in any other capacity on behalf of or at the request of
the Corporation, the Corporation shall promptly on written request,
indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings
and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the
discretion to take so as to effectuate such indemnification or
advancement. Such agreement by the Corporation shall not be deemed to
impair any other obligation of the Corporation respecting your
indemnification otherwise arising out of this or any other agreement or
promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6) years
following the Date of Termination (without reference to whether the
term of this Agreement continues in effect) with directors' and
officers' liability insurance insuring you against insurable events
which occur or have occurred while you were a director or officer of
the Corporation, such insurance to have policy limits aggregating not
less than the amount in effect immediately prior to the Change in
Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such
terms, conditions and exceptions shall not be, in the
<PAGE> 13
Page 13
aggregate, materially less favorable to you than those in effect on the
date hereof; provided, further, that if the aggregate annual premiums
for such insurance at any time during such period exceed one hundred
and fifty percent (150%) of the per annum rate of premium currently
paid by the Corporation for such insurance, then the Corporation shall
provide the maximum coverage that will then be available at an annual
premium equal to one hundred and fifty percent (150%) of such rate; and
(j) you shall be fully vested in your accrued benefits under
any qualified or nonqualified pension, profit sharing, deferred
compensation or supplemental plans maintained by the Corporation for
your benefit, and the Corporation shall provide you with additional
fully vested benefits under such plans in an amount equal to the
benefits which you would have accrued had you continued your employment
with the Corporation for two (2) additional years following your Date
of Termination; provided, however, that to the extent that the
acceleration of vesting or enhanced accrual of such benefits would
violate any applicable law or require the Corporation to accelerate the
vesting of the accrued benefits of all participants in such plan or
plans or to provide additional benefit accruals to such participants,
the Corporation shall pay you a lump-sum payment at the time specified
in Section 4(iii) in an amount equal to the value of such benefits;
provided, further, that to the extent that the present value of all
benefits payable to you under this Section 4(ii)(j) is less than
$250,000, the Corporation shall pay you a lump-sum payment at the time
specified in Section 4(iii) in an amount equal to the difference
between $250,000 and the amount of such benefits which are otherwise
payable to you under this Section 4(ii)(j); provided, further, that if
you are eligible to receive grandfathered benefits under the
Corporation's pension plan, the provisions of this Section 4(ii)(j)
shall apply to such grandfathered benefits, without reduction for age,
in addition to any other benefits to which you are entitled under this
Section 4(ii)(j).
(iii) The payments provided for in Sections 4(ii)(a), (b), (c),
(d) and (j) shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to
<PAGE> 14
Page 14
you, payable on the fifth day after demand by the Corporation (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code).
(iv) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise
nor, except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything
contained herein, in the event of a Change in Control during the term of this
Agreement, all outstanding options ("Options"), if any, granted to you under any
of the Corporation's stock option plans, incentive plans or other similar plans
(or options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless
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Page 15
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(ii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on
<PAGE> 16
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behalf of any other person, firm or corporation, directly or indirectly solicit
or attempt to solicit away from the Corporation any of its officers or employees
or offer employment to any person who, on or during the six (6) months
immediately preceding the date of such solicitation or offer, is or was an
officer or employee of the Corporation; provided, however, that a general
advertisement to which an employee of the Corporation responds shall in no event
be deemed to result in a breach of this Section 8(ii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following the
execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation with whom the Corporation has
entered into agreements similar to this Agreement. The Corporation shall
initially contribute $1000 to such trust. Such trust shall be a grantor trust
described in section 671 of the Code. Upon the occurrence of a Potential Change
in Control (as defined below), the Corporation shall fully fund its obligations
to provide benefits hereunder (including, without limitation, its obligations
under Section 4(ii)(g)) by irrevocably contributing funds to such trust on your
behalf. The amount of such contribution shall equal the then present value of
the Corporation's obligations under Section 4 hereof as determined by the firms
serving as the Corporation's actuaries and accountants immediately prior to the
Change in Control. Such actuaries and accountants shall be paid by the
Corporation. The establishment and funding of such trust shall not affect the
obligation of the Corporation to provide benefits under the terms of this
Agreement. For purposes of this Agreement a "Potential Change in Control" shall
be deemed to occur if:
(a) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces
an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities, increases such Person's
beneficial ownership of such securities by five percent (5%) or more of
the Corporation's then outstanding securities over the percentage so
owned by such Person on the date hereof; or
<PAGE> 17
Page 17
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions
<PAGE> 18
Page 18
of such courts for the purpose of any such suit, action, proceeding or judgment.
By your execution and delivery of this Agreement, you appoint the Secretary of
the Corporation, at the Corporation's office in Toledo, Ohio, as your agent upon
which process may be served in any such suit, action or proceeding; and by its
execution and delivery of this Agreement, the Corporation appoints the Secretary
of the Corporation, at its office in Toledo, Ohio, as its agent upon which
process may be served in any such suit, action or proceeding. Service of process
upon such applicable agent, together with actual notice of such service given to
you or the Corporation, as applicable, in the manner provided in Section 7
hereof, shall be deemed in every respect effective service of process upon the
applicable party in any suit, action, proceeding or judgment. Nothing herein
shall be deemed to limit the ability of you or the Corporation to serve any such
writs, process or summonses in any other manner permitted by applicable law. You
and the Corporation hereby irrevocably waive any objections which you or the
Corporation, as applicable, may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement
brought in any court of competent jurisdiction in the State of Ohio, and hereby
further irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event that no court of competent
jurisdiction in the State of Ohio will accept such jurisdiction and venue, then
any suit, action or proceeding with respect to this Agreement, or any judgment
entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the continental United States which has jurisdiction
over such suit, proceeding or action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation during
any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed by a
Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was
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Page 19
withheld during the period of the Dispute plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal fees
and expenses incurred by you in connection with any Dispute arising out of or
relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees and expenses, if any, incurred in contesting or
disputing any termination of your employment or in seeking to obtain or enforce
any right or benefit provided by this Agreement, or in connection with any tax
audit or proceeding to the extent attributable to the application of section
4999 of the Code to any payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans . Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
--------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted,
this 27th day of May, 1998.
/s/ Robert A. Dunton
- ---------------------------
[Executive]
<PAGE> 1
Exhibit 10.40
[LIBBEY LOGO]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Terry Hartman
5587 Curtice Road
Northwood, OH 43619
Dear Terry,
Libbey Inc. (the "Corporation") considers it essential to the best
interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation
hereby agrees that after this letter agreement (this "Agreement") has been fully
executed, you shall receive the severance benefits set forth in this Agreement
in the event your employment with the Corporation is terminated under the
circumstances described below subsequent to a Change in Control (as defined in
Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 2001; provided,
however, that commencing on January 1, 2002 and on each January 1 thereafter,
the term of this Agreement shall automatically be extended for one additional
year unless, not later than September 30 of the preceding year, the Corporation
shall have given notice that it does not wish to extend this Agreement;
provided, further, that if a Change in Control (as defined in Section 2), occurs
during the original or any extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than thirty-six (36)
months beyond the month in which such Change in Control occurred.
<PAGE> 2
Page 2
2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there has been a Change in Control. For purposes of this Agreement, a
Change in Control shall be deemed to occur if:
(a) any Person (as defined below) is or becomes the Beneficial
Owner (as defined below), directly or indirectly, of securities of the
Corporation representing twenty percent (20%) or more of the combined
voting power of the Corporation's then outstanding securities. For
purposes of this Agreement, (A) the term "Person" is used as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"); provided, however, that the term
shall not include the Corporation, any trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation,
and any corporation owned, directly or indirectly, by the shareholders
of the Corporation, in substantially the same proportions as their
ownership of stock of the Corporation, and (B) the term "Beneficial
Owner" shall have the meaning given to such term in Rule 13d-3 under
the Exchange Act;
(b) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in Sections 2(a), (c) or (d)) whose election by
the Board or nomination for election by the Corporation's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"), cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation (or other
entity), other than a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more
than 66 2/3% of the combined voting power of the voting securities of
the Corporation or such surviving entity outstanding immediately after
such merger or consolidation;
(d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
<PAGE> 3
Page 3
disposition by the Corporation of all or substantially all of the
Corporation's assets; or
(e) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing ten percent
(10%) or more of the combined voting power of the Corporation's then
outstanding securities (a "10% Owner") and (A) the identity of the
Chief Executive Officer of the Corporation is changed during the period
beginning sixty (60) days before the attainment of the ten percent
(10%) beneficial ownership and ending two (2) years thereafter, or (B)
individuals constituting at least one-third (1/3) of the members of the
Board at the beginning of such period shall cease for any reason to
serve on the Board during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending
two (2) years thereafter; provided, however, that this subsection (e)
shall not apply to any Person who is a 10% Owner as of the date hereof
so long as such Person does not increase such beneficial ownership by
five percent (5%) or more over the percentage so owned by such Person
as of the date hereof.
3 TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than for Good Reason (as defined in Section 3(iv)). In the event
that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the
event your employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, you shall not be entitled to any
benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment for
<PAGE> 4
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"Cause" shall mean termination (a) upon your willful and continued failure to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) for Good Reason), after a written
demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, (b) upon your willful and
continued failure to substantially follow and comply with the specific and
lawful directives of the Board, as reasonably determined by the Board (other
than any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of
Termination (as defined in Section 3(vii)) specified in the Notice of
Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent with the
position in the Corporation that you held immediately prior to the
Change in Control, a significant adverse alteration in the nature or
status of your responsibilities or the conditions of your employment
from those in effect
<PAGE> 5
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immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other
action by the Corporation that results in a material diminution in your
position, authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base salary as
in effect on the date hereof or as the same may be increased from time
to time;
(c) the relocation of the Corporation's offices at which you
are principally employed immediately prior to the date of the Change in
Control (your "Principal Location") to a location more than thirty (30)
miles from such location, or the Corporation's requiring you, without
your written consent, to be based anywhere other than your Principal
Location, except for required travel on the Corporation's business to
an extent substantially consistent with your present business travel
obligations;
(d) the Corporation's failure to pay to you any portion of
your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due;
(e) the Corporation's failure to continue in effect any
material compensation or benefit plan or practice in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the Corporation's
failure to continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of
the Change in Control;
(f) the Corporation's failure to continue to provide you with
benefits substantially similar in the aggregate to those enjoyed by you
under any of the Corporation's life insurance, medical, health and
accident, disability, pension, retirement, or other benefit plans or
practices in which you and your eligible family members were
participating at the time of the Change in Control, the taking of any
action by the Corporation which would directly or indirectly materially
reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at
the time of the Change in
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Control;
(g) the Corporation's failure to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(vi) hereof (and, if applicable, the
requirements of Section 3(iii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(i) the continuation or repetition, after written notice of
objection from you, of harassing or denigrating treatment of you
inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION. You shall be entitled to voluntarily
terminate your employment for any reason or no reason at any time after a Change
in Control.
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall mean
(a) if your employment is terminated due to your death, the date of your death;
(b) if your employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30) day period), and
(c) if your employment is terminated pursuant to Section 3(iii), Section 3(iv)
or Section 3(v) or for any other reason (other than death or Disability), the
date specified in the Notice of Termination (which, in the
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Page 7
case of a termination for Cause shall not be less than thirty (30) days from the
date such Notice of Termination is given, and in the case of a termination for
Good Reason shall not be less than fifteen (15) nor more than sixty (60) days
from the date such Notice of Termination is given). Notwithstanding anything to
the contrary contained in this Section 3(vii), if within fifteen (15) days after
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, then the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties, or
otherwise; provided, however, that the Date of Termination shall be extended by
a notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence.
4. COMPENSATION UPON TERMINATION. Following a Change in Control during
the term of this Agreement, you shall be entitled to the benefits described
below upon termination of your employment, provided that such termination occurs
during the term of this Agreement and within the two (2) year period immediately
following the date of such Change in Control. The benefits to which you are
entitled, subject to the terms and conditions of this Agreement, are:
(i) If your employment shall be terminated by the Corporation for
Cause or by you other than for Good Reason, the Corporation shall pay you your
full base salary, when due, through the Date of Termination at the rate in
effect at the time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due, and the Corporation shall have no
further obligations to you under this Agreement.
(ii) If your employment by the Corporation shall be terminated by
you for Good Reason or by the Corporation other than for Cause or Disability,
then you shall be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base salary,
when due, through the Date of Termination at the rate in effect at the
time Notice of Termination is given, at the time specified in Section
4(iii), plus all other amounts to which you are entitled under any
compensation plan or practice of the Corporation at the time such
payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Section 4(iii), a
lump-sum severance payment (together with the payments provided in
Section 4(ii)(c) below, the "Severance
<PAGE> 8
Page 8
Payments") equal to the sum of the following:
(A) two (2) times your annual base salary as in
effect as of the Date of Termination or immediately prior to
the Change in Control, whichever is greater; and
(B) two (2) times the greater of (x) your targeted
annual bonus as in effect as of the Date of Termination or
immediately prior to the Change in Control, whichever is
greater, or (y) your annual bonus for the year immediately
preceding the Date of Termination;
(c) notwithstanding any provisions of the Corporation's stock
option plans, incentive plans, or other similar plans, the restricted
period with respect to any restricted stock granted to you thereunder
shall lapse and such shares shall be distributed to you at the time
specified in Section 4(iii);
(d) for a period of one (1) year following the Date of
Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same
type and scope as those which the Corporation was providing to you
immediately prior to the Date of Termination, or, if more favorable to
you, the date of the Change in Control;
(e) for a period of two (2) years following the Date of
Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by you in your sole discretion;
(f) for a twenty-four (24) month period after such
termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between
you and the Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health
benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four (24) month
period following your termination, and any such benefits actually
received by you shall be reported to the Corporation. In the event you
are ineligible under the terms of such benefit plans or programs to
continue to be so covered, the Corporation shall provide
<PAGE> 9
Page 9
you with substantially equivalent coverage through other sources or
will provide you with a lump-sum payment in such amount that, after all
taxes on that amount, shall be equal to the cost to you of providing
yourself such benefit coverage. At the termination of the benefits
coverage under the second preceding sentence, you, your spouse and your
dependents shall be entitled to continuation coverage pursuant to
section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the
extent required by such laws, as if you had terminated employment with
the Corporation on the date such benefits coverage terminates. The
lump-sum shall be determined on a present value basis using the
interest rate provided in section 1274(b)(2)(B) of the Code on the Date
of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to you or for your benefit (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement
or otherwise (the "Payment") would be subject to the excise tax imposed
by section 4999 of the Code (the "Excise Tax"), then you shall be
entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the
Payment and the Gross-Up Payment retained by you after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 4(ii)(g), and taking into
account any lost or reduced tax deductions on account of the Gross-Up
Payment, shall be equal to the Payment;
(2) all determinations required to be made under this Section
4(ii)(g), including whether and when the Gross-Up Payment is required
and the amount of such Gross-Up Payment, and the assumptions to be
utilized in arriving at such determinations shall be made by the
Accountants (as defined below) which shall provide you and the
Corporation with detailed supporting calculations with respect to such
Gross-Up Payment within fifteen (15) business days of the receipt of
notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the
"Accountants" shall mean the Corporation's independent certified public
accountants serving immediately prior to the Change in Control. In the
event that the Accountants are also serving as accountant or auditor
for the individual, entity or group effecting the Change in Control,
you shall appoint another
<PAGE> 10
Page 10
nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as
the Accountants hereunder). All fees and expenses of the Accountants
shall be borne solely by the Corporation. For the purposes of
determining whether any of the Payments will be subject to the Excise
Tax and the amount of such Excise Tax, such Payments will be treated as
"parachute payments" within the meaning of section 280G of the Code,
and all "parachute payments" in excess of the "base amount" (as defined
under section 280G(b)(3) of the Code) shall be treated as subject to
the Excise Tax, unless and except to the extent that in the opinion of
the Accountants such Payments (in whole or in part) either do not
constitute "parachute payments" or represent reasonable compensation
for services actually rendered (within the meaning of section
280G(b)(4) of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise Tax. For
purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if paid in
such year (determined without regard to limitations on deductions based
upon the amount of your adjusted gross income), and to have otherwise
allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in your adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Corporation at the time you are entitled to receive the
Payment and in no event will any Gross-Up Payment be paid later than
five days after the receipt by you of the Accountant's determination.
Any determination by the Accountants shall be binding upon the
Corporation and you. As a result of uncertainty in the application of
section 4999 of the Code at the time of the initial determination by
the Accountants hereunder, it is possible that the Gross-Up Payment
made will have been an amount less than the Corporation should have
paid pursuant to this Section 4(ii)(g) (the "Underpayment"). In the
event that the Corporation exhausts its remedies pursuant to Section
4(ii)(g)(3) and you are required to make a payment of any Excise Tax,
the Underpayment shall be promptly paid by the Corporation to or for
your benefit; and
(3) you shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the
payment by the
<PAGE> 11
Page 11
Corporation of the Gross-Up Payment. Such notification shall be given
as soon as practicable after you are informed in writing of such claim
and shall apprise the Corporation of the nature of such claim and the
date on which such claim is requested to be paid. You shall not pay
such claim prior to the expiration of the 30-day period following the
date on which you give such notice to the Corporation (or such shorter
period ending on the date that any payment of taxes, interest and/or
penalties with respect to such claim is due). If the Corporation
notifies you in writing prior to the expiration of such period that it
desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify you for
and hold you harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related
costs and expenses. Without limiting the foregoing provisions of this
Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you
agree 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 Corporation shall determine; provided,
however, that if the Corporation directs you to pay such claim and sue
for a refund, the Corporation shall advance the amount of such payment
to you, on an interest-
<PAGE> 12
Page 12
free basis, and shall indemnify you for and hold you harmless from, on
an after-tax basis, 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
(including as a result of any forgiveness by the Corporation of such
advance); provided, further, that any extension of the statute of
limitations relating to the payment of taxes for the taxable year of
you with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Corporation or in any other capacity on behalf of or at the request of
the Corporation, the Corporation shall promptly on written request,
indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings
and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the
discretion to take so as to effectuate such indemnification or
advancement. Such agreement by the Corporation shall not be deemed to
impair any other obligation of the Corporation respecting your
indemnification otherwise arising out of this or any other agreement or
promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6) years
following the Date of Termination (without reference to whether the
term of this Agreement continues in effect) with directors' and
officers' liability insurance insuring you against insurable events
which occur or have occurred while you were a director or officer of
the Corporation, such insurance to have policy limits aggregating not
less than the amount in effect immediately prior to the Change in
Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such
terms, conditions and exceptions shall not be, in the aggregate,
materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for
such
<PAGE> 13
Page 13
insurance at any time during such period exceed one hundred and fifty
percent (150%) of the per annum rate of premium currently paid by the
Corporation for such insurance, then the Corporation shall provide the
maximum coverage that will then be available at an annual premium equal
to one hundred and fifty percent (150%) of such rate; and
(j) you shall be fully vested in your accrued benefits under
any qualified or nonqualified pension, profit sharing, deferred
compensation or supplemental plans maintained by the Corporation for
your benefit, and the Corporation shall provide you with additional
fully vested benefits under such plans in an amount equal to the
benefits which you would have accrued had you continued your employment
with the Corporation for two (2) additional years following your Date
of Termination; provided, however, that to the extent that the
acceleration of vesting or enhanced accrual of such benefits would
violate any applicable law or require the Corporation to accelerate the
vesting of the accrued benefits of all participants in such plan or
plans or to provide additional benefit accruals to such participants,
the Corporation shall pay you a lump-sum payment at the time specified
in Section 4(iii) in an amount equal to the value of such benefits;
provided, further, that to the extent that the present value of all
benefits payable to you under this Section 4(ii)(j) is less than
$250,000, the Corporation shall pay you a lump-sum payment at the time
specified in Section 4(iii) in an amount equal to the difference
between $250,000 and the amount of such benefits which are otherwise
payable to you under this Section 4(ii)(j); provided, further, that if
you are eligible to receive grandfathered benefits under the
Corporation's pension plan, the provisions of this Section 4(ii)(j)
shall apply to such grandfathered benefits, without reduction for age,
in addition to any other benefits to which you are entitled under this
Section 4(ii)(j).
(iii) The payments provided for in Sections 4(ii)(a), (b), (c),
(d) and (j) shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
<PAGE> 14
Page 14
(iv) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise
nor, except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything
contained herein, in the event of a Change in Control during the term of this
Agreement, all outstanding options ("Options"), if any, granted to you under any
of the Corporation's stock option plans, incentive plans or other similar plans
(or options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
<PAGE> 15
Page 15
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) CONFIDENTIALITY. You hereby agree that, for the period commencing
on the Date of Termination and terminating on the second anniversary thereof,
you shall not, directly or indirectly, disclose or make available to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever, any Confidential Information (as defined below). You agree that,
upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(ii) NON-SOLICITATION. You hereby agree that, for the period commencing
on the Date of Termination and terminating on the second anniversary thereof,
you shall not, either on your own account or jointly with or as a manager,
agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from the Corporation
any of its officers or employees or offer employment to any person who, on or
during the six (6) months immediately preceding the date of such solicitation or
offer, is or was an officer or employee of the Corporation; provided,
<PAGE> 16
Page 16
however, that a general advertisement to which an employee of the Corporation
responds shall in no event be deemed to result in a breach of this Section
8(ii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following the
execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation with whom the Corporation has
entered into agreements similar to this Agreement. The Corporation shall
initially contribute $1000 to such trust. Such trust shall be a grantor trust
described in section 671 of the Code. Upon the occurrence of a Potential Change
in Control (as defined below), the Corporation shall fully fund its obligations
to provide benefits hereunder (including, without limitation, its obligations
under Section 4(ii)(g)) by irrevocably contributing funds to such trust on your
behalf. The amount of such contribution shall equal the then present value of
the Corporation's obligations under Section 4 hereof as determined by the firms
serving as the Corporation's actuaries and accountants immediately prior to the
Change in Control. Such actuaries and accountants shall be paid by the
Corporation. The establishment and funding of such trust shall not affect the
obligation of the Corporation to provide benefits under the terms of this
Agreement. For purposes of this Agreement a "Potential Change in Control" shall
be deemed to occur if:
(a) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces
an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities, increases such Person's
beneficial ownership of such securities by five percent (5%) or more of
the Corporation's then outstanding securities over the percentage so
owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in
<PAGE> 17
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writing and signed by you and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with respect
to this Agreement, nor any judgment entered by any court in respect thereof, may
be brought in any court, domestic or foreign, or before any similar domestic or
foreign authority, other than in a court of competent jurisdiction in the State
of Ohio, and you and the Corporation hereby irrevocably waive any right which
you or the Corporation, as applicable, may otherwise have had to bring such a
suit, action, proceeding or judgment in any other court, domestic or foreign, or
before any similar domestic or foreign authority. You and the Corporation hereby
submit to the exclusive jurisdictions of such courts for the purpose of any such
suit, action, proceeding or judgment. By your execution and delivery of this
Agreement, you appoint the Secretary of the Corporation, at the Corporation's
office in Toledo, Ohio, as your agent upon which process may be served in any
such suit, action or proceeding; and by its execution and delivery of this
Agreement, the Corporation appoints the Secretary of the Corporation,
<PAGE> 18
Page 18
at its office in Toledo, Ohio, as its agent upon which process may be served in
any such suit, action or proceeding. Service of process upon such applicable
agent, together with actual notice of such service given to you or the
Corporation, as applicable, in the manner provided in Section 7 hereof, shall be
deemed in every respect effective service of process upon the applicable party
in any suit, action, proceeding or judgment. Nothing herein shall be deemed to
limit the ability of you or the Corporation to serve any such writs, process or
summonses in any other manner permitted by applicable law. You and the
Corporation hereby irrevocably waive any objections which you or the
Corporation, as applicable, may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement
brought in any court of competent jurisdiction in the State of Ohio, and hereby
further irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event that no court of competent
jurisdiction in the State of Ohio will accept such jurisdiction and venue, then
any suit, action or proceeding with respect to this Agreement, or any judgment
entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the continental United States which has jurisdiction
over such suit, proceeding or action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation during
any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed by a
Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal fees
and expenses incurred by you in connection with any Dispute arising out of or
relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
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Page 19
and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans . Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Corporation the enclosed copy of this letter,
which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted,
this 27th day of May, 1998.
/s/ Terry E. Hartman
- ---------------------------
[Executive]
<PAGE> 1
Exhibit 10.41
[Libbey Inc. Letterhead]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. William Herb
2404 Gibley Park
Toledo, Ohio 43617
Dear Bill,
Libbey Inc. (the "Corporation") considers it essential to the
best interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the
Corporation hereby agrees that after this letter agreement (this "Agreement")
has been fully executed, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control (as
defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 2001; provided,
however, that commencing on January 1, 2002 and on each January 1 thereafter,
the term of this Agreement shall automatically be extended for one additional
year unless, not later than September 30 of the preceding year, the Corporation
shall have given notice that it does not wish to extend this Agreement;
provided, further, that if a Change in Control (as defined in Section 2), occurs
during the original or any extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than thirty-six (36)
months beyond the month in which such Change in Control occurred.
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2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there has been a Change in Control. For purposes of this Agreement, a
Change in Control shall be deemed to occur if:
(a) any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of
securities of the Corporation representing twenty percent (20%) or more
of the combined voting power of the Corporation's then outstanding
securities. For purposes of this Agreement, (A) the term "Person" is
used as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided,
however, that the term shall not include the Corporation, any trustee
or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by
the shareholders of the Corporation, in substantially the same
proportions as their ownership of stock of the Corporation, and (B) the
term "Beneficial Owner" shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in Sections 2(a), (c) or (d)) whose election by
the Board or nomination for election by the Corporation's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"), cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation
(or other entity), other than a merger or consolidation which would
result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 66 2/3% of the combined voting power of the
voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the
sale or
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disposition by the Corporation of all or substantially all of the
Corporation's assets; or
(e) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities (a "10% Owner") and (A) the
identity of the Chief Executive Officer of the Corporation is changed
during the period beginning sixty (60) days before the attainment of
the ten percent (10%) beneficial ownership and ending two (2) years
thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease
for any reason to serve on the Board during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter; provided, however, that
this subsection (e) shall not apply to any Person who is a 10% Owner as
of the date hereof so long as such Person does not increase such
beneficial ownership by five percent (5%) or more over the percentage
so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than for Good Reason (as defined in Section 3(iv)). In the event
that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the
event your employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, you shall not be entitled to any
benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment
for
<PAGE> 4
Page 4
"Cause" shall mean termination (a) upon your willful and continued failure
to substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) for Good Reason), after a written
demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, (b) upon your willful and
continued failure to substantially follow and comply with the specific and
lawful directives of the Board, as reasonably determined by the Board (other
than any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of
Termination (as defined in Section 3(vii)) specified in the Notice of
Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Corporation that you held immediately prior to
the Change in Control, a significant adverse alteration in the nature
or status of your responsibilities or the conditions of your employment
from those in effect
<PAGE> 5
Page 5
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other
action by the Corporation that results in a material diminution in your
position, authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base
salary as in effect on the date hereof or as the same may be increased
from time to time;
(c) the relocation of the Corporation's offices at
which you are principally employed immediately prior to the date of the
Change in Control (your "Principal Location") to a location more than
thirty (30) miles from such location, or the Corporation's requiring
you, without your written consent, to be based anywhere other than your
Principal Location, or the headquarters of the Corporation in Toledo,
Ohio or a manufacturing facility of the Corporation, except for
required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations;
(d) the Corporation's failure to pay to you any
portion of your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due;
(e) the Corporation's failure to continue in effect
any material compensation or benefit plan or practice in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the Corporation's
failure to continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of
the Change in Control;
(f) the Corporation's failure to continue to provide
you with benefits substantially similar in the aggregate to those
enjoyed by you under any of the Corporation's life insurance, medical,
health and accident, disability, pension, retirement, or other benefit
plans or practices in which you and your eligible family members were
participating at the time of the Change in Control, the taking of any
action by the Corporation which would directly or indirectly materially
reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Corporation in
accordance with the
<PAGE> 6
Page 6
Corporation's normal vacation policy in effect at the time of the
Change in Control;
(g) the Corporation's failure to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(vi) hereof (and, if applicable, the
requirements of Section 3(iii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(i) the continuation or repetition, after written
notice of objection from you, of harassing or denigrating treatment of
you inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION. You shall be entitled to
voluntarily terminate your employment for any reason or no reason at any time
after a Change in Control.
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (a) if your employment is terminated due to your death, the date of your
death; (b) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such thirty (30) day period),
and (c) if your employment is terminated pursuant to Section 3(iii), Section
3(iv) or Section 3(v) or for any other reason (other
<PAGE> 7
Page 7
than death or Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause shall not be less than thirty
(30) days from the date such Notice of Termination is given, and in the case of
a termination for Good Reason shall not be less than fifteen (15) nor more than
sixty (60) days from the date such Notice of Termination is given).
Notwithstanding anything to the contrary contained in this Section 3(vii), if
within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION. Following a Change in
Control during the term of this Agreement, you shall be entitled to the benefits
described below upon termination of your employment, provided that such
termination occurs during the term of this Agreement and within the two (2) year
period immediately following the date of such Change in Control. The benefits to
which you are entitled, subject to the terms and conditions of this Agreement,
are:
(i) If your employment shall be terminated by the
Corporation for Cause or by you other than for Good Reason, the Corporation
shall pay you your full base salary, when due, through the Date of Termination
at the rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due, and the Corporation shall have no
further obligations to you under this Agreement.
(ii) If your employment by the Corporation shall be
terminated by you for Good Reason
or by the Corporation other than for Cause or Disability, then you shall be
entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base
salary, when due, through the Date of Termination at the rate in effect
at the time Notice of Termination is given, at the time specified in
Section 4(iii), plus all other amounts to which you are entitled under
any compensation plan or practice of the Corporation at the time such
payments are due;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Corporation shall
pay as severance pay to you, at the time specified in Section 4(iii), a
lump-sum severance payment
<PAGE> 8
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(together with the payments provided in Section 4(ii)(c) below, the
"Severance Payments") equal to the sum of the following:
(A) two (2) times your annual base salary as
in effect as of the Date of Termination or immediately prior
to the Change in Control, whichever is greater; and
(B) two (2) times the greater of (x) your
targeted annual bonus as in effect as of the Date of
Termination or immediately prior to the Change in Control,
whichever is greater, or (y) your annual bonus for the year
immediately preceding the Date of Termination;
(c) notwithstanding any provisions of the
Corporation's stock option plans, incentive plans, or other similar
plans, the restricted period with respect to any restricted stock
granted to you thereunder shall lapse and such shares shall be
distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same
type and scope as those which the Corporation was providing to you
immediately prior to the Date of Termination, or, if more favorable to
you, the date of the Change in Control;
(e) for a period of two (2) years following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by you in your sole discretion;
(f) for a twenty-four (24) month period after such
termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between
you and the Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health
benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four (24) month
period following your termination, and any such benefits actually
received by you shall be reported to the Corporation. In the event you
are ineligible under the terms of such benefit
<PAGE> 9
Page 9
plans or programs to continue to be so covered, the Corporation shall
provide you with substantially equivalent coverage through other
sources or will provide you with a lump-sum payment in such amount
that, after all taxes on that amount, shall be equal to the cost to you
of providing yourself such benefit coverage. At the termination of the
benefits coverage under the second preceding sentence, you, your spouse
and your dependents shall be entitled to continuation coverage pursuant
to section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the
extent required by such laws, as if you had terminated employment with
the Corporation on the date such benefits coverage terminates. The
lump-sum shall be determined on a present value basis using the
interest rate provided in section 1274(b)(2)(B) of the Code on the Date
of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to you or for your benefit (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement
or otherwise (the "Payment") would be subject to the excise tax imposed
by section 4999 of the Code (the "Excise Tax"), then you shall be
entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the
Payment and the Gross-Up Payment retained by you after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 4(ii)(g), and taking into
account any lost or reduced tax deductions on account of the Gross-Up
Payment, shall be equal to the Payment;
(2) all determinations required to be made under this
Section 4(ii)(g), including whether and when the Gross-Up Payment is
required and the amount of such Gross-Up Payment, and the assumptions
to be utilized in arriving at such determinations shall be made by the
Accountants (as defined below) which shall provide you and the
Corporation with detailed supporting calculations with respect to such
Gross-Up Payment within fifteen (15) business days of the receipt of
notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the
"Accountants" shall mean the Corporation's independent certified public
accountants serving immediately prior to the Change in Control. In the
event that the Accountants are also serving as accountant or auditor
for the individual,
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entity or group effecting the Change in Control, you shall appoint
another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accountants hereunder). All fees and expenses of the
Accountants shall be borne solely by the Corporation. For the purposes
of determining whether any of the Payments will be subject to the
Excise Tax and the amount of such Excise Tax, such Payments will be
treated as "parachute payments" within the meaning of section 280G of
the Code, and all "parachute payments" in excess of the "base amount"
(as defined under section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the
opinion of the Accountants such Payments (in whole or in part) either
do not constitute "parachute payments" or represent reasonable
compensation for services actually rendered (within the meaning of
section 280G(b)(4) of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise Tax. For
purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if paid in
such year (determined without regard to limitations on deductions based
upon the amount of your adjusted gross income), and to have otherwise
allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in your adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Corporation at the time you are entitled to receive the
Payment and in no event will any Gross-Up Payment be paid later than
five days after the receipt by you of the Accountant's determination.
Any determination by the Accountants shall be binding upon the
Corporation and you. As a result of uncertainty in the application of
section 4999 of the Code at the time of the initial determination by
the Accountants hereunder, it is possible that the Gross-Up Payment
made will have been an amount less than the Corporation should have
paid pursuant to this Section 4(ii)(g) (the "Underpayment"). In the
event that the Corporation exhausts its remedies pursuant to Section
4(ii)(g)(3) and you are required to make a payment of any Excise Tax,
the Underpayment shall be promptly paid by the Corporation to or for
your benefit; and
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(3) you shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the Gross-Up Payment. Such
notification shall be given as soon as practicable after you are
informed in writing of such claim and shall apprise the Corporation of
the nature of such claim and the date on which such claim is requested
to be paid. You shall not pay such claim prior to the expiration of the
30-day period following the date on which you give such notice to the
Corporation (or such shorter period ending on the date that any payment
of taxes, interest and/or penalties with respect to such claim is due).
If the Corporation notifies you in writing prior to the expiration of
such period that it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify you for
and hold you harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related
costs and expenses. Without limiting the foregoing provisions of this
Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you
agree 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 Corporation shall determine; provided,
however, that if
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the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an
interest-free basis, and shall indemnify you for and hold you harmless
from, on an after-tax basis, 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 (including as a result of any forgiveness by the Corporation of
such advance); provided, further, that any extension of the statute of
limitations relating to the payment of taxes for the taxable year of
you with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Corporation or in any other capacity on behalf of or at the request of
the Corporation, the Corporation shall promptly on written request,
indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings
and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the
discretion to take so as to effectuate such indemnification or
advancement. Such agreement by the Corporation shall not be deemed to
impair any other obligation of the Corporation respecting your
indemnification otherwise arising out of this or any other agreement or
promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6)
years following the Date of Termination (without reference to whether
the term of this Agreement continues in effect) with directors' and
officers' liability insurance insuring you against insurable events
which occur or have occurred while you were a director or officer of
the Corporation, such insurance to have policy limits aggregating not
less than the amount in effect immediately prior to the Change in
Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such
terms, conditions and exceptions shall not be, in the
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aggregate, materially less favorable to you than those in effect on the
date hereof; provided, further, that if the aggregate annual premiums
for such insurance at any time during such period exceed one hundred
and fifty percent (150%) of the per annum rate of premium currently
paid by the Corporation for such insurance, then the Corporation shall
provide the maximum coverage that will then be available at an annual
premium equal to one hundred and fifty percent (150%) of such rate; and
(j) you shall be fully vested in your accrued
benefits under any qualified or nonqualified pension, profit sharing,
deferred compensation or supplemental plans maintained by the
Corporation for your benefit, and the Corporation shall provide you
with additional fully vested benefits under such plans in an amount
equal to the benefits which you would have accrued had you continued
your employment with the Corporation for two (2) additional years
following your Date of Termination; provided, however, that to the
extent that the acceleration of vesting or enhanced accrual of such
benefits would violate any applicable law or require the Corporation to
accelerate the vesting of the accrued benefits of all participants in
such plan or plans or to provide additional benefit accruals to such
participants, the Corporation shall pay you a lump-sum payment at the
time specified in Section 4(iii) in an amount equal to the value of
such benefits; provided, further, that to the extent that the present
value of all benefits payable to you under this Section 4(ii)(j) is
less than $250,000, the Corporation shall pay you a lump-sum payment at
the time specified in Section 4(iii) in an amount equal to the
difference between $250,000 and the amount of such benefits which are
otherwise payable to you under this Section 4(ii)(j); provided,
further, that if you are eligible to receive grandfathered benefits
under the Corporation's pension plan, the provisions of this Section
4(ii)(j) shall apply to such grandfathered benefits, without reduction
for age, in addition to any other benefits to which you are entitled
under this Section 4(ii)(j).
(iii) The payments provided for in Sections 4(ii)(a), (b),
(c), (d) and (j) shall be made not later than the fifth day following the Date
of Termination; provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to
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you, payable on the fifth day after demand by the Corporation (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code).
(iv) You shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other employment or
otherwise nor, except as provided in Section 4(ii)(f), shall the amount of any
payment or benefit provided for in this Section 4 be reduced by any compensation
earned by you as the result of employment by another employer or
self-employment, by retirement benefits, by offset against any amount claimed to
be owed by you to the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding
anything contained herein, in the event of a Change in Control during the term
of this Agreement, all outstanding options ("Options"), if any, granted to you
under any of the Corporation's stock option plans, incentive plans or other
similar plans (or options substituted therefor covering the stock of a successor
corporation) shall, effective immediately prior to such Change in Control,
become fully vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless
<PAGE> 15
Page 15
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(ii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on
<PAGE> 16
Page 16
behalf of any other person, firm or corporation, directly or indirectly solicit
or attempt to solicit away from the Corporation any of its officers or employees
or offer employment to any person who, on or during the six (6) months
immediately preceding the date of such solicitation or offer, is or was an
officer or employee of the Corporation; provided, however, that a general
advertisement to which an employee of the Corporation responds shall in no event
be deemed to result in a breach of this Section 8(ii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following
the execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation with whom the Corporation has
entered into agreements similar to this Agreement. The Corporation shall
initially contribute $1000 to such trust. Such trust shall be a grantor trust
described in section 671 of the Code. Upon the occurrence of a Potential Change
in Control (as defined below), the Corporation shall fully fund its obligations
to provide benefits hereunder (including, without limitation, its obligations
under Section 4(ii)(g)) by irrevocably contributing funds to such trust on your
behalf. The amount of such contribution shall equal the then present value of
the Corporation's obligations under Section 4 hereof as determined by the firms
serving as the Corporation's actuaries and accountants immediately prior to the
Change in Control. Such actuaries and accountants shall be paid by the
Corporation. The establishment and funding of such trust shall not affect the
obligation of the Corporation to provide benefits under the terms of this
Agreement. For purposes of this Agreement a "Potential Change in Control" shall
be deemed to occur if:
(a) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(b) any Person (including the Corporation) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Person who is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Corporation
representing ten percent (10%) or more of the combined voting power of
the Corporation's then outstanding securities, increases such Person's
beneficial ownership of such securities by five percent (5%) or more of
the Corporation's then outstanding securities over the percentage so
owned by such Person on the date hereof; or
<PAGE> 17
Page 17
(d) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
10. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions
<PAGE> 18
Page 18
of such courts for the purpose of any such suit, action, proceeding or judgment.
By your execution and delivery of this Agreement, you appoint the Secretary of
the Corporation, at the Corporation's office in Toledo, Ohio, as your agent upon
which process may be served in any such suit, action or proceeding; and by its
execution and delivery of this Agreement, the Corporation appoints the Secretary
of the Corporation, at its office in Toledo, Ohio, as its agent upon which
process may be served in any such suit, action or proceeding. Service of process
upon such applicable agent, together with actual notice of such service given to
you or the Corporation, as applicable, in the manner provided in Section 7
hereof, shall be deemed in every respect effective service of process upon the
applicable party in any suit, action, proceeding or judgment. Nothing herein
shall be deemed to limit the ability of you or the Corporation to serve any such
writs, process or summonses in any other manner permitted by applicable law. You
and the Corporation hereby irrevocably waive any objections which you or the
Corporation, as applicable, may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement
brought in any court of competent jurisdiction in the State of Ohio, and hereby
further irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event that no court of competent
jurisdiction in the State of Ohio will accept such jurisdiction and venue, then
any suit, action or proceeding with respect to this Agreement, or any judgment
entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the continental United States which has jurisdiction
over such suit, proceeding or action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was
<PAGE> 19
Page 19
withheld during the period of the Dispute plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees and expenses, if any, incurred in contesting or
disputing any termination of your employment or in seeking to obtain or enforce
any right or benefit provided by this Agreement, or in connection with any tax
audit or proceeding to the extent attributable to the application of section
4999 of the Code to any payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans . Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
If this letter sets forth our agreement on the
subject matter hereof, kindly sign and return to the Corporation the enclosed
copy of this letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
-----------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted,
this 27th day of May, 1998.
/s/ William M. Herb
- ---------------------------
[Executive]
<PAGE> 1
Exhibit 10.42
[Libbey Inc. Letterhead]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Daniel P. Ibele
5347 Fox Run
Toledo, Ohio 43623
Dear Dan,
Libbey Inc. (the "Corporation") considers it essential to the best interests of
its shareholders to foster the continuous employment of key management
personnel. In connection with this, the Corporation's Board of Directors (the
"Board") recognizes that, as is the case with many publicly held corporations,
the possibility of a change in control of the Corporation may exist and that the
uncertainty and questions that it may raise among management could result in the
departure or distraction of management personnel to the detriment of the
Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including yourself, to
their assigned duties without the distraction arising from the possibility of a
change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation hereby agrees
that after this letter agreement (this "Agreement") has been fully executed, you
shall receive the severance benefits set forth in this Agreement in the event
your employment with the Corporation is terminated under the circumstances
described below subsequent to a Change in Control (as defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and shall
continue in effect through December 31, 2001; provided, however, that commencing
on January 1, 2002 and on each January 1 thereafter, the term of this Agreement
shall automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Corporation shall have given notice that
it does not wish to extend this Agreement; provided, further, that if a Change
in Control (as defined in Section 2), occurs during the original or any extended
term of this Agreement, the term of this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there has
been a Change in Control. For purposes of this Agreement, a Change in Control
shall be deemed to occur if:
<PAGE> 2
Page Two
(a) any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of securities of
the Corporation representing twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding securities. For purposes of this
Agreement, (A) the term "Person" is used as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); provided, however, that the term shall not include the Corporation, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by the
shareholders of the Corporation, in substantially the same proportions as their
ownership of stock of the Corporation, and (B) the term "Beneficial Owner" shall
have the meaning given to such term in Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Corporation to effect a transaction described in Sections 2(a), (c) or
(d)) whose election by the Board or nomination for election by the Corporation's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
(hereinafter referred to as "Continuing Directors"), cease for any reason to
constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation (or other
entity), other than a merger or consolidation which would result in the voting
securities of the Corporation outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 66 2/3% of the combined voting
power of the voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets; or
<PAGE> 3
Page Three
(e) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing ten
percent (10%) or more of the combined voting power of the Corporation's then
outstanding securities (a "10% Owner") and (A) the identity of the Chief
Executive Officer of the Corporation is changed during the period beginning
sixty (60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter, or (B) individuals constituting
at least one-third (1/3) of the members of the Board at the beginning of such
period shall cease for any reason to serve on the Board during the period
beginning sixty (60) days before the attainment of the ten percent (10%)
beneficial ownership and ending two (2) years thereafter; provided, however,
that this subsection (e) shall not apply to any Person who is a 10% Owner as of
the date hereof so long as such Person does not increase such beneficial
ownership by five percent (5%) or more over the percentage so owned by such
Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than (1) for Good Reason (as defined in Section 3(iv)), or (2) in a
Covered Resignation (as defined in Section 3(v)). In the event that you are
entitled to such benefits, such benefits shall be paid notwithstanding the
subsequent expiration of the term of this Agreement. In the event your
employment with the Corporation is terminated for any reason and subsequently a
Change in Control occurs, you shall not be entitled to any benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
<PAGE> 4
Page Four
(iii) CAUSE. Termination by the Corporation of your employment
for "Cause" shall mean termination (a) upon your willful and continued failure
to substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) either (x) for Good Reason, or (y) in
connection with a Covered Resignation, after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (b) upon your willful and continued failure
to substantially follow and comply with the specific and lawful directives of
the Board, as reasonably determined by the Board (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after your issuance of a Notice of Termination for
Good Reason or in connection with a Covered Resignation), after a written demand
for substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances
<PAGE> 5
Page Five
are fully corrected (provided such circumstances are capable of correction)
prior to the Date of Termination (as defined in Section 3(vii)) specified in the
Notice of Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Corporation that you held immediately prior to the
Change in Control, a significant adverse alteration in the nature or status of
your responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other action by
the Corporation that results in a material diminution in your position,
authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base
salary as in effect on the date hereof or as the same may be increased from time
to time;
(c) the relocation of the Corporation's offices at
which you are principally employed immediately prior to the date of the Change
in Control (your "Principal Location") to a location more than thirty (30) miles
from such location, or the Corporation's requiring you, without your written
consent, to be based anywhere other than your Principal Location, except for
required travel on the Corporation's business to an extent substantially
consistent with your present business travel obligations;
(d) the Corporation's failure to pay to you any
portion of your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation program of
the Corporation within seven (7) days of the date such compensation is due;
(e) the Corporation's failure to continue in effect
any material compensation or benefit plan or practice in which you participate
immediately prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or the Corporation's failure to continue your
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided and
the level of your participation relative to other participants, as existed at
the time of the Change in Control;
<PAGE> 6
Page Six
(f) the Corporation's failure to continue to provide
you with benefits substantially similar in the aggregate to those enjoyed by you
under any of the Corporation's life insurance, medical, health and accident,
disability, pension, retirement, or other benefit plans or practices in which
you and your eligible family members were participating at the time of the
Change in Control, the taking of any action by the Corporation which would
directly or indirectly materially reduce any of such benefits, or the failure by
the Corporation to provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at the time
of the Change in Control;
(g) the Corporation's failure to obtain a
satisfactory agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination satisfying the requirements
of Section 3(vi) hereof (and, if applicable, the requirements of Section 3(iii)
hereof), which purported termination shall not be effective for purposes of this
Agreement; or
(i) the continuation or repetition, after written
notice of objection from you, of harassing or denigrating treatment of you
inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION AND COVERED RESIGNATION. You shall
be entitled to voluntarily terminate your employment for any reason or no reason
at any time after a Change in Control. Any such termination which occurs within
the thirty (30) day period following the first anniversary of the occurrence of
a Change in Control shall constitute a resignation which entitles you to receive
benefits under this Agreement (a "Covered Resignation").
<PAGE> 7
Page Seven
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (a) if your employment is terminated due to your death, the date of your
death; (b) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such thirty (30) day period),
and (c) if your employment is terminated pursuant to Section 3(iii), Section
3(iv) or Section 3(v) or for any other reason (other than death or Disability),
the date specified in the Notice of Termination (which, in the case of a
termination for Cause shall not be less than thirty (30) days from the date such
Notice of Termination is given, and in the case of a termination for Good Reason
or in connection with a Covered Resignation shall not be less than fifteen (15)
nor more than sixty (60) days from the date such Notice of Termination is
given). Notwithstanding anything to the contrary contained in this Section
3(vii), if within fifteen (15) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, then the Date of Termination shall be
the date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION.
Following a Change in Control during the term of this
Agreement, you shall be entitled to the benefits described below upon
termination of your employment, provided that such termination occurs during the
term of this Agreement and within the two (2) year period immediately following
the date of such Change in Control. The benefits to which you are entitled,
subject to the terms and conditions of this Agreement, are:
<PAGE> 8
Page Eight
(i) If your employment shall be terminated by the
Corporation for Cause or by you other than (x) for Good Reason or (y) pursuant
to a Covered Resignation, the Corporation shall pay you your full base salary,
when due, through the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus all other amounts to which you are entitled
under any compensation plan or practice of the Corporation at the time such
payments are due, and the Corporation shall have no further obligations to you
under this Agreement.
(ii) If your employment by the Corporation shall be
terminated by you (x) for Good Reason or (y) pursuant to a Covered Resignation,
or by the Corporation other than for Cause or Disability, then you shall be
entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base
salary, when due, through the Date of Termination at the rate in effect at the
time Notice of Termination is given, at the time specified in Section 4(iii),
plus all other amounts to which you are entitled under any compensation plan or
practice of the Corporation at the time such payments are due;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Section 4(iii), a lump-sum
severance payment (together with the payments provided in Section 4(ii)(c)
below, the "Severance Payments") equal to the sum of the following:
(A) three (3) times your annual base
salary as in effect as of the Date
of Termination or immediately prior
to the Change in Control, whichever
is greater; and
(B) three (3) times the greater of (x)
your targeted annual bonus as in
effect as of the Date of Termination
or immediately prior to the Change
in Control, whichever is greater, or
(y) your annual bonus for the year
immediately preceding the Date of
Termination;
<PAGE> 9
Page Nine
(c) notwithstanding any provisions of the
Corporation's stock option plans, incentive plans, or other similar plans, the
restricted period with respect to any restricted stock granted to you thereunder
shall lapse and such shares shall be distributed to you at the time specified in
Section 4(iii);
(d) for a period of one (1) year following the Date
of Termination, the Corporation shall, at its sole expense as incurred, provide
you with financial planning services of substantially the same type and scope as
those which the Corporation was providing to you immediately prior to the Date
of Termination, or, if more favorable to you, the date of the Change in Control;
(e) for a period of two (2) years following the Date
of Termination, the Corporation shall, at its sole expense as incurred, provide
you with outplacement services, the scope and provider of which shall be
selected by you in your sole discretion;
(f) for a thirty-six (36) month period after such
termination, the Corporation shall continue to provide you and your eligible
family members, based on the cost sharing arrangement between you and the
Corporation on the date of the Change in Control, with medical and dental health
benefits at least equal to those which would have been provided to you and them
if your employment had not been terminated or, if more favorable to you, as in
effect generally at any time thereafter; provided, however, that if you become
re-employed with another employer and are eligible to receive medical and dental
health benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable benefits
are actually received by you during the thirty-six (36) month period following
your termination, and any such benefits actually received by you shall be
reported to the Corporation. In the event you are ineligible under the terms of
such benefit plans or programs to continue to be so covered, the Corporation
shall provide you with substantially equivalent coverage through other sources
or will provide you with a lump-sum payment in such amount that, after all taxes
on that amount, shall be equal to the cost to you of providing yourself such
benefit coverage. At the termination of the benefits coverage under the second
preceding sentence, you, your spouse and your dependents shall be entitled to
continuation coverage pursuant to section 4980B of the Internal Revenue Code of
1986, as amended (the "Code"), sections 601-608 of the Employee Retirement
Income Security Act of 1974, as
<PAGE> 10
Page Ten
amended, and under any other applicable law, to the extent required by such
laws, as if you had terminated employment with the Corporation on the date such
benefits coverage terminates. The lump-sum shall be determined on a present
value basis using the interest rate provided in section 1274(b)(2)(B) of the
Code on the Date of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
you or for your benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject to the excise tax imposed by section 4999 of the
Code (the "Excise Tax"), then you shall be entitled to receive from the
Corporation an additional payment (the "Gross-Up Payment") in an amount such
that the net amount of the Payment and the Gross-Up Payment retained by you
after the calculation and deduction of all Excise Taxes (including any interest
or penalties imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including any
interest or penalties imposed with respect to such taxes) on the Gross-Up
Payment provided for in this Section 4(ii)(g), and taking into account any lost
or reduced tax deductions on account of the Gross-Up Payment, shall be equal to
the Payment;
(2) all determinations required to be made under this Section
4(ii)(g), including whether and when the Gross-Up Payment is required and the
amount of such Gross-Up Payment, and the assumptions to be utilized in arriving
at such determinations shall be made by the Accountants (as defined below) which
shall provide you and the Corporation with detailed supporting calculations with
respect to such Gross-Up Payment within fifteen (15) business days of the
receipt of notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the "Accountants"
shall mean the Corporation's independent certified public accountants serving
immediately prior to the Change in Control. In the event that the Accountants
are also serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, you shall appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accountants hereunder). All
fees and expenses of the Accountants shall be borne solely by the Corporation.
For the purposes of determining whether any of the Payments will be subject to
the Excise Tax and the amount of such Excise Tax, such Payments will be treated
as "parachute payments" within the meaning of section 280G of
<PAGE> 11
Page Eleven
the Code, and all "parachute payments" in excess of the "base amount" (as
defined under section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that in the opinion of the
Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay Federal income taxes at the highest applicable marginal
rate of Federal income taxation for the calendar year in which the Gross-Up
Payment is to be made and to pay any applicable state and local income taxes at
the highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from the deduction of such state or local
taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of your adjusted gross income), and to have
otherwise allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the Gross-Up
Payment in your adjusted gross income. To the extent practicable, any Gross-Up
Payment with respect to any Payment shall be paid by the Corporation at the time
you are entitled to receive the Payment and in no event will any Gross-Up
Payment be paid later than five days after the receipt by you of the
Accountant's determination. Any determination by the Accountants shall be
binding upon the Corporation and you. As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Accountants hereunder, it is possible that the Gross-Up Payment made will
have been an amount less than the Corporation should have paid pursuant to this
Section 4(ii)(g) (the "Underpayment"). In the event that the Corporation
exhausts its remedies pursuant to Section 4(ii)(g)(3) and you are required to
make a payment of any Excise Tax, the Underpayment shall be promptly paid by the
Corporation to or for your benefit; and
<PAGE> 12
Page Twelve
(3) you shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Corporation of the Gross-Up Payment. Such notification shall be given as
soon as practicable after you are informed in writing of such claim and shall
apprise the Corporation of the nature of such claim and the date on which such
claim is requested to be paid. You shall not pay such claim prior to the
expiration of the 30-day period following the date on which you give such notice
to the Corporation (or such shorter period ending on the date that any payment
of taxes, interest and/or penalties with respect to such claim is due). If the
Corporation notifies you in writing prior to the expiration of such period that
it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify you for and hold you harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of all related costs and expenses. Without limiting the foregoing
provisions of this Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner,
<PAGE> 13
Page Thirteen
and you agree 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 Corporation shall determine; provided, however, that if
the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an interest-free
basis, and shall indemnify you for and hold you harmless from, on an after-tax
basis, 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 (including as a result of any
forgiveness by the Corporation of such advance); provided, further, that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of you with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in respect
of any judgments, fines, settlements, loss, cost or expense (including
attorneys' fees) of any nature related to or arising out of your activities as
an agent, employee, officer or director of the Corporation or in any other
capacity on behalf of or at the request of the Corporation, the Corporation
shall promptly on written request, indemnify (and advance expenses to) you to
the fullest extent permitted by applicable law, including but not limited to
making such findings and determinations and taking any and all such actions as
the Corporation may, under applicable law, be permitted to have the discretion
to take so as to effectuate such indemnification or advancement. Such agreement
by the Corporation shall not be deemed to impair any other obligation of the
Corporation respecting your indemnification otherwise arising out of this or any
other agreement or promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6) years
following the Date of Termination (without reference to whether the term of this
Agreement continues in effect) with directors' and officers' liability insurance
insuring you against insurable events which occur or have occurred while you
were a director or officer of the
<PAGE> 14
Page Fourteen
Corporation, such insurance to have policy limits aggregating not less than the
amount in effect immediately prior to the Change in Control, and otherwise to be
in substantially the same form and to contain substantially the same terms,
conditions and exceptions as the liability issuance policies provided for
officers and directors of the Corporation in force from time to time, provided,
however, that such terms, conditions and exceptions shall not be, in the
aggregate, materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for such
insurance at any time during such period exceed one hundred and fifty percent
(150%) of the per annum rate of premium currently paid by the Corporation for
such insurance, then the Corporation shall provide the maximum coverage that
will then be available at an annual premium equal to one hundred and fifty
percent (150%) of such rate; and
(j) you shall be fully vested in your accrued benefits under
any qualified or nonqualified pension, profit sharing, deferred compensation or
supplemental plans maintained by the Corporation for your benefit, and the
Corporation shall provide you with additional fully vested benefits under such
plans in an amount equal to the benefits which you would have accrued had you
continued your employment with the Corporation for three (3) additional years
following your Date of Termination; provided, however, that to the extent that
the acceleration of vesting or enhanced accrual of such benefits would violate
any applicable law or require the Corporation to accelerate the vesting of the
accrued benefits of all participants in such plan or plans or to provide
additional benefit accruals to such participants, the Corporation shall pay you
a lump-sum payment at the time specified in Section 4(iii) in an amount equal to
the value of such benefits; provided, further, that to the extent that the
present value of all benefits payable to you under this Section 4(ii)(j) is less
than $250,000, the Corporation shall pay you a lump-sum payment at the time
specified in Section 4(iii) in an amount equal to the difference between
$250,000 and the amount of such benefits which are otherwise payable to you
under this Section 4(ii)(j); provided, further, that if you are eligible to
receive grandfathered benefits under the Corporation's pension plan, the
provisions of this Section 4(ii)(j) shall apply to such grandfathered benefits,
without reduction for age, in addition to any other benefits to which you are
entitled under this Section 4(ii)(j).
<PAGE> 15
Page Fifteen
(iii) The payments provided for in Sections 4(ii)(a), (b),
(c), (d) and (j) shall be made not later than the fifth day following the Date
of Termination; provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
(iv) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise
nor, except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything contained
herein, in the event of a Change in Control during the term of this Agreement,
all outstanding options ("Options"), if any, granted to you under any of the
Corporation's stock option plans, incentive plans or other similar plans (or
options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be
<PAGE> 16
Page Sixteen
deemed the Date of Termination. Unless expressly provided otherwise,
"Corporation" as used herein shall mean the Corporation as defined in this
Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. NON- COMPETE, CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) NON-COMPETE. In consideration of and in connection with
the benefits provided to you under this Agreement, and in order to protect the
goodwill of the Corporation, you hereby agree that, if your employment is
terminated pursuant to a Covered Resignation, then, for a period of twelve (12)
months commencing on the Date of Termination, you shall not, directly or
indirectly, own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be connected as a director, officer,
employee, partner, consultant or otherwise with any of the following entities
(or any subsidiary of any such entity) other than as a shareholder or beneficial
owner owning 5% or less of the outstanding securities of a public company:
Durand International, the Anchor Hocking unit of Newell Co., Cardinal
International, Inc., the Indiana Glass unit of Lancaster Colony Corporation,
Oneida LTD or any glass tableware manufacturer, seller or importer for Bormioli
Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the
Sisecam group of companies of Turkey including Pasabahce.
<PAGE> 17
Page Seventeen
(ii) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the (iii)
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(iii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from the Corporation
any of its officers or employees or offer employment to any person who, on or
during the six (6) months immediately preceding the date of such solicitation or
offer, is or was an officer or employee of the Corporation; provided, however,
that a general advertisement to which an employee of the Corporation responds
shall in no event be deemed to result in a breach of this Section 8(iii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following the execution and
delivery of this Agreement by you and the Corporation, the Corporation shall
partially fund its obligations to provide benefits hereunder (including, without
limitation, its obligations under Section 4(ii)(g)) by establishing and
irrevocably partially funding a trust for your benefit and the benefit of other
executives of the Corporation with whom
<PAGE> 18
Page Eighteen
the Corporation has entered into agreements similar to this Agreement. The
Corporation shall initially contribute $1000 to such trust. Such trust shall be
a grantor trust described in section 671 of the Code. Upon the occurrence of a
Potential Change in Control (as defined below), the Corporation shall fully fund
its obligations to provide benefits hereunder (including, without limitation,
its obligations under Section 4(ii)(g)) by irrevocably contributing funds to
such trust on your behalf. The amount of such contribution shall equal the then
present value of the Corporation's obligations under Section 4 hereof as
determined by the firms serving as the Corporation's actuaries and accountants
immediately prior to the Change in Control. Such actuaries and accountants shall
be paid by the Corporation. The establishment and funding of such trust shall
not affect the obligation of the Corporation to provide benefits under the terms
of this Agreement. For purposes of this Agreement a "Potential Change in
Control" shall be deemed to occur if:
(a) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces
an intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing ten
percent (10%) or more of the combined voting power of the Corporation's then
outstanding securities, increases such Person's beneficial ownership of such
securities by five percent (5%) or more of the Corporation's then outstanding
securities over the percentage so owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been
<PAGE> 19
Page Nineteen
made by either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Ohio without regard to its conflicts of
law principles. All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions of such courts for the
purpose of any such suit, action, proceeding or judgment. By your execution and
delivery of this Agreement, you appoint the Secretary of the Corporation, at the
Corporation's office in Toledo, Ohio, as your agent upon which process may be
served in any such suit, action or proceeding; and by its execution and delivery
of this Agreement, the Corporation appoints the Secretary of the Corporation, at
its office in Toledo, Ohio, as its agent upon which process may be served in any
such suit, action or proceeding. Service of process upon such applicable agent,
together
<PAGE> 20
Page Twenty
with actual notice of such service given to you or the Corporation, as
applicable, in the manner provided in Section 7 hereof, shall be deemed in every
respect effective service of process upon the applicable party in any suit,
action, proceeding or judgment. Nothing herein shall be deemed to limit the
ability of you or the Corporation to serve any such writs, process or summonses
in any other manner permitted by applicable law. You and the Corporation hereby
irrevocably waive any objections which you or the Corporation, as applicable,
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Ohio, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Notwithstanding the foregoing,
in the event that no court of competent jurisdiction in the State of Ohio will
accept such jurisdiction and venue, then any suit, action or proceeding with
respect to this Agreement, or any judgment entered by any court in respect
thereof, may be brought in any court of competent jurisdiction in the
continental United States which has jurisdiction over such suit, proceeding or
action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
<PAGE> 21
Page Twenty-One
and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein, including, without
limitation, any prior severance agreements, is hereby terminated and cancelled;
provided, however, that the Employment Agreement, dated as of September 1, 1997
by and between you and the Corporation, as amended, shall remain in full force
and effect and shall, pursuant to the terms and conditions thereof, provide
certain severance benefits to you upon certain terminations of employment. Any
of your rights hereunder shall be in addition to any rights you may otherwise
have under benefit plans or agreements of the Corporation to which you are a
party or in which you are a participant, including, but not limited to, any
Corporation sponsored employee benefit plans and stock options plans. Provisions
of this Agreement shall not in any way abrogate your rights under such other
plans and agreements.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
----------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted as of the,
27th day of May, 1998.
/s/ Daniel P Ibele
- --------------------------
<PAGE> 1
Exhibit 10.43
[Libbey Inc. Letterhead]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Pete Kasper
4714 Swathmore Place
Sylvania, OH 43560
Dear Pete,
Libbey Inc. (the "Corporation") considers it essential to the
best interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the
Corporation hereby agrees that after this letter agreement (this "Agreement")
has been fully executed, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control (as
defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 2001; provided,
however, that commencing on January 1, 2002 and on each January 1 thereafter,
the term of this Agreement shall automatically be extended for one additional
year unless, not later than September 30 of the preceding year, the Corporation
shall have given notice that it does not wish to extend this Agreement;
provided, further, that if a Change in Control (as defined in Section 2), occurs
during the original or any extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than thirty-six (36)
months beyond the month in which such Change in Control occurred.
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2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there has been a Change in Control. For purposes of this Agreement, a
Change in Control shall be deemed to occur if:
(a) any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of
securities of the Corporation representing twenty percent (20%) or more
of the combined voting power of the Corporation's then outstanding
securities. For purposes of this Agreement, (A) the term "Person" is
used as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided,
however, that the term shall not include the Corporation, any trustee
or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by
the shareholders of the Corporation, in substantially the same
proportions as their ownership of stock of the Corporation, and (B) the
term "Beneficial Owner" shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in Sections 2(a), (c) or (d)) whose election by
the Board or nomination for election by the Corporation's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"), cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation
(or other entity), other than a merger or consolidation which would
result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 66 2/3% of the combined voting power of the
voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the
sale or
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disposition by the Corporation of all or substantially all of the
Corporation's assets; or
(e) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities (a "10% Owner") and (A) the
identity of the Chief Executive Officer of the Corporation is changed
during the period beginning sixty (60) days before the attainment of
the ten percent (10%) beneficial ownership and ending two (2) years
thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease
for any reason to serve on the Board during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter; provided, however, that
this subsection (e) shall not apply to any Person who is a 10% Owner as
of the date hereof so long as such Person does not increase such
beneficial ownership by five percent (5%) or more over the percentage
so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than for Good Reason (as defined in Section 3(iv)). In the event
that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the
event your employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, you shall not be entitled to any
benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment
for
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"Cause" shall mean termination (a) upon your willful and continued failure
to substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) for Good Reason), after a written
demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, (b) upon your willful and
continued failure to substantially follow and comply with the specific and
lawful directives of the Board, as reasonably determined by the Board (other
than any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of
Termination (as defined in Section 3(vii)) specified in the Notice of
Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Corporation that you held immediately prior to
the Change in Control, a significant adverse alteration in the nature
or status of your responsibilities or the conditions of your employment
from those in effect
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immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other
action by the Corporation that results in a material diminution in your
position, authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base
salary as in effect on the date hereof or as the same may be increased
from time to time;
(c) the relocation of the Corporation's offices at
which you are principally employed immediately prior to the date of the
Change in Control (your "Principal Location") to a location more than
thirty (30) miles from such location, or the Corporation's requiring
you, without your written consent, to be based anywhere other than your
Principal Location, except for required travel on the Corporation's
business to an extent substantially consistent with your present
business travel obligations;
(d) the Corporation's failure to pay to you any
portion of your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due;
(e) the Corporation's failure to continue in effect
any material compensation or benefit plan or practice in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the Corporation's
failure to continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of
the Change in Control;
(f) the Corporation's failure to continue to provide
you with benefits substantially similar in the aggregate to those
enjoyed by you under any of the Corporation's life insurance, medical,
health and accident, disability, pension, retirement, or other benefit
plans or practices in which you and your eligible family members were
participating at the time of the Change in Control, the taking of any
action by the Corporation which would directly or indirectly
materially reduce any of such benefits, or the failure by the
Corporation to provide you with the number of paid vacation days
to which you are entitled on the basis of years of service with the
Corporation in accordance with the Corporation's normal vacation
policy in effect at the time of the Change in
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Control;
(g) the Corporation's failure to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(vi) hereof (and, if applicable, the
requirements of Section 3(iii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(i) the continuation or repetition, after written
notice of objection from you, of harassing or denigrating treatment of
you inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION. You shall be entitled to
voluntarily terminate your employment for any reason or no reason at any time
after a Change in Control.
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (a) if your employment is terminated due to your death, the date of your
death; (b) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such thirty (30) day period),
and (c) if your employment is terminated pursuant to Section 3(iii), Section
3(iv) or Section 3(v) or for any other reason (other than death or Disability),
the date specified in the Notice of Termination (which, in the
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case of a termination for Cause shall not be less than thirty (30) days from the
date such Notice of Termination is given, and in the case of a termination for
Good Reason shall not be less than fifteen (15) nor more than sixty (60) days
from the date such Notice of Termination is given). Notwithstanding anything to
the contrary contained in this Section 3(vii), if within fifteen (15) days after
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, then the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties, or
otherwise; provided, however, that the Date of Termination shall be extended by
a notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence.
4. COMPENSATION UPON TERMINATION. Following a Change in
Control during the term of this Agreement, you shall be entitled to the benefits
described below upon termination of your employment, provided that such
termination occurs during the term of this Agreement and within the two (2) year
period immediately following the date of such Change in Control. The benefits to
which you are entitled, subject to the terms and conditions of this Agreement,
are:
(i) If your employment shall be terminated by the
Corporation for Cause or by you other than for Good Reason, the Corporation
shall pay you your full base salary, when due, through the Date of Termination
at the rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due, and the Corporation shall have no
further obligations to you under this Agreement.
(ii) If your employment by the Corporation shall be
terminated by you for Good Reason or by the Corporation other than for Cause or
Disability, then you shall be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base
salary, when due, through the Date of Termination at the rate in effect
at the time Notice of Termination is given, at the time specified in
Section 4(iii), plus all other amounts to which you are entitled under
any compensation plan or practice of the Corporation at the time such
payments are due;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Corporation shall
pay as severance pay to you, at the time specified in Section 4(iii), a
lump-sum severance payment (together with the payments provided in
Section 4(ii)(c) below, the "Severance
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Payments") equal to the sum of the following:
(A) two (2) times your annual base salary as
in effect as of the Date of Termination or immediately prior
to the Change in Control, whichever is greater; and
(B) two (2) times the greater of (x) your
targeted annual bonus as in effect as of the Date of
Termination or immediately prior to the Change in Control,
whichever is greater, or (y) your annual bonus for the year
immediately preceding the Date of Termination;
(c) notwithstanding any provisions of the
Corporation's stock option plans, incentive plans, or other similar
plans, the restricted period with respect to any restricted stock
granted to you thereunder shall lapse and such shares shall be
distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same
type and scope as those which the Corporation was providing to you
immediately prior to the Date of Termination, or, if more favorable to
you, the date of the Change in Control;
(e) for a period of two (2) years following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by you in your sole discretion;
(f) for a twenty-four (24) month period after such
termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between
you and the Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health
benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four (24) month
period following your termination, and any such benefits actually
received by you shall be reported to the Corporation. In the event you
are ineligible under the terms of such benefit plans or programs to
continue to be so covered, the Corporation shall provide
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you with substantially equivalent coverage through other sources or
will provide you with a lump-sum payment in such amount that, after all
taxes on that amount, shall be equal to the cost to you of providing
yourself such benefit coverage. At the termination of the benefits
coverage under the second preceding sentence, you, your spouse and your
dependents shall be entitled to continuation coverage pursuant to
section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the
extent required by such laws, as if you had terminated employment with
the Corporation on the date such benefits coverage terminates. The
lump-sum shall be determined on a present value basis using the
interest rate provided in section 1274(b)(2)(B) of the Code on the Date
of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to you or for your benefit (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement
or otherwise (the "Payment") would be subject to the excise tax imposed
by section 4999 of the Code (the "Excise Tax"), then you shall be
entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the
Payment and the Gross-Up Payment retained by you after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 4(ii)(g), and taking into
account any lost or reduced tax deductions on account of the Gross-Up
Payment, shall be equal to the Payment;
(2) all determinations required to be made under this
Section 4(ii)(g), including whether and when the Gross-Up Payment is
required and the amount of such Gross-Up Payment, and the assumptions
to be utilized in arriving at such determinations shall be made by the
Accountants (as defined below) which shall provide you and the
Corporation with detailed supporting calculations with respect to such
Gross-Up Payment within fifteen (15) business days of the receipt of
notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the
"Accountants" shall mean the Corporation's independent certified public
accountants serving immediately prior to the Change in Control. In the
event that the Accountants are also serving as accountant or auditor
for the individual, entity or group effecting the Change in Control,
you shall appoint another
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nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as
the Accountants hereunder). All fees and expenses of the Accountants
shall be borne solely by the Corporation. For the purposes of
determining whether any of the Payments will be subject to the Excise
Tax and the amount of such Excise Tax, such Payments will be treated as
"parachute payments" within the meaning of section 280G of the Code,
and all "parachute payments" in excess of the "base amount" (as defined
under section 280G(b)(3) of the Code) shall be treated as subject to
the Excise Tax, unless and except to the extent that in the opinion of
the Accountants such Payments (in whole or in part) either do not
constitute "parachute payments" or represent reasonable compensation
for services actually rendered (within the meaning of section
280G(b)(4) of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise Tax. For
purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if paid in
such year (determined without regard to limitations on deductions based
upon the amount of your adjusted gross income), and to have otherwise
allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in your adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Corporation at the time you are entitled to receive the
Payment and in no event will any Gross-Up Payment be paid later than
five days after the receipt by you of the Accountant's determination.
Any determination by the Accountants shall be binding upon the
Corporation and you. As a result of uncertainty in the application of
section 4999 of the Code at the time of the initial determination by
the Accountants hereunder, it is possible that the Gross-Up Payment
made will have been an amount less than the Corporation should have
paid pursuant to this Section 4(ii)(g) (the "Underpayment"). In the
event that the Corporation exhausts its remedies pursuant to Section
4(ii)(g)(3) and you are required to make a payment of any Excise Tax,
the Underpayment shall be promptly paid by the Corporation to or for
your benefit; and
(3) you shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the
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Corporation of the Gross-Up Payment. Such notification shall be given
as soon as practicable after you are informed in writing of such claim
and shall apprise the Corporation of the nature of such claim and the
date on which such claim is requested to be paid. You shall not pay
such claim prior to the expiration of the 30-day period following the
date on which you give such notice to the Corporation (or such shorter
period ending on the date that any payment of taxes, interest and/or
penalties with respect to such claim is due). If the Corporation
notifies you in writing prior to the expiration of such period that it
desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify you for
and hold you harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related
costs and expenses. Without limiting the foregoing provisions of this
Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you
agree 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 Corporation shall determine; provided,
however, that if the Corporation directs you to pay such claim and sue
for a refund, the Corporation shall advance the amount of such payment
to you, on an interest-
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free basis, and shall indemnify you for and hold you harmless from, on
an after-tax basis, 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
(including as a result of any forgiveness by the Corporation of such
advance); provided, further, that any extension of the statute of
limitations relating to the payment of taxes for the taxable year of
you with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Corporation or in any other capacity on behalf of or at the request of
the Corporation, the Corporation shall promptly on written request,
indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings
and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the
discretion to take so as to effectuate such indemnification or
advancement. Such agreement by the Corporation shall not be deemed to
impair any other obligation of the Corporation respecting your
indemnification otherwise arising out of this or any other agreement or
promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6)
years following the Date of Termination (without reference to whether
the term of this Agreement continues in effect) with directors' and
officers' liability insurance insuring you against insurable events
which occur or have occurred while you were a director or officer of
the Corporation, such insurance to have policy limits aggregating not
less than the amount in effect immediately prior to the Change in
Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such
terms, conditions and exceptions shall not be, in the aggregate,
materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for
such
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insurance at any time during such period exceed one hundred and fifty
percent (150%) of the per annum rate of premium currently paid by the
Corporation for suchinsurance, then the Corporation shall provide the
maximum coverage that will then be available at an annual premium
equal to one hundred and fifty percent (150%) of such rate; and
(j) you shall be fully vested in your accrued
benefits under any qualified or nonqualified pension, profit sharing,
deferred compensation or supplemental plans maintained by the
Corporation for your benefit, and the Corporation shall provide you
with additional fully vested benefits under such plans in an amount
equal to the benefits which you would have accrued had you continued
your employment with the Corporation for two (2) additional years
following your Date of Termination; provided, however, that to the
extent that the acceleration of vesting or enhanced accrual of such
benefits would violate any applicable law or require the Corporation to
accelerate the vesting of the accrued benefits of all participants in
such plan or plans or to provide additional benefit accruals to such
participants, the Corporation shall pay you a lump-sum payment at the
time specified in Section 4(iii) in an amount equal to the value of
such benefits; provided, further, that to the extent that the present
value of all benefits payable to you under this Section 4(ii)(j) is
less than $250,000, the Corporation shall pay you a lump-sum payment at
the time specified in Section 4(iii) in an amount equal to the
difference between $250,000 and the amount of such benefits which are
otherwise payable to you under this Section 4(ii)(j); provided,
further, that if you are eligible to receive grandfathered benefits
under the Corporation's pension plan, the provisions of this Section
4(ii)(j) shall apply to such grandfathered benefits, without reduction
for age, in addition to any other benefits to which you are entitled
under this Section 4(ii)(j).
(iii) The payments provided for in Sections 4(ii)(a), (b),
(c), (d) and (j) shall be made not later than the fifth day following the Date
of Termination; provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
<PAGE> 14
Page 14
(iv) You shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other employment or
otherwise nor, except as provided in Section 4(ii)(f), shall the amount of any
payment or benefit provided for in this Section 4 be reduced by any compensation
earned by you as the result of employment by another employer or
self-employment, by retirement benefits, by offset against any amount claimed to
be owed by you to the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding
anything contained herein, in the event of a Change in Control during the term
of this Agreement, all outstanding options ("Options"), if any, granted to you
under any of the Corporation's stock option plans, incentive plans or other
similar plans (or options substituted therefor covering the stock of a successor
corporation) shall, effective immediately prior to such Change in Control,
become fully vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
<PAGE> 15
Page 15
7. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(ii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from the Corporation
any of its officers or employees or offer employment to any person who, on or
during the six (6) months immediately preceding the date of such solicitation or
offer, is or was an officer or employee of the Corporation; provided,
<PAGE> 16
Page 16
however, that a general advertisement to which an employee of the Corporation
responds shall in no event be deemed to result in a breach of this Section
8(ii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following
the execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation with whom the Corporation has
entered into agreements similar to this Agreement. The Corporation shall
initially contribute $1000 to such trust. Such trust shall be a grantor trust
described in section 671 of the Code. Upon the occurrence of a Potential Change
in Control (as defined below), the Corporation shall fully fund its obligations
to provide benefits hereunder (including, without limitation, its obligations
under Section 4(ii)(g)) by irrevocably contributing funds to such trust on your
behalf. The amount of such contribution shall equal the then present value of
the Corporation's obligations under Section 4 hereof as determined by the firms
serving as the Corporation's actuaries and accountants immediately prior to the
Change in Control. Such actuaries and accountants shall be paid by the
Corporation. The establishment and funding of such trust shall not affect the
obligation of the Corporation to provide benefits under the terms of this
Agreement. For purposes of this Agreement a "Potential Change in Control" shall
be deemed to occur if:
(a) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(b) any Person (including the Corporation) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Person who is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Corporation
representing ten percent (10%) or more of the combined voting power of
the Corporation's then outstanding securities, increases such Person's
beneficial ownership of such securities by five percent (5%) or more of
the Corporation's then outstanding securities over the percentage so
owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
10. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in
<PAGE> 17
Page 17
writing and signed by you and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions of such courts for the
purpose of any such suit, action, proceeding or judgment. By your execution and
delivery of this Agreement, you appoint the Secretary of the Corporation, at the
Corporation's office in Toledo, Ohio, as your agent upon which process may be
served in any such suit, action or proceeding; and by its execution and delivery
of this Agreement, the Corporation appoints the Secretary of the Corporation,
<PAGE> 18
Page 18
at its office in Toledo, Ohio, as its agent upon which process may be served in
any such suit, action or proceeding. Service of process upon such applicable
agent, together with actual notice of such service given to you or the
Corporation, as applicable, in the manner provided in Section 7 hereof, shall be
deemed in every respect effective service of process upon the applicable party
in any suit, action, proceeding or judgment. Nothing herein shall be deemed to
limit the ability of you or the Corporation to serve any such writs, process or
summonses in any other manner permitted by applicable law. You and the
Corporation hereby irrevocably waive any objections which you or the
Corporation, as applicable, may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement
brought in any court of competent jurisdiction in the State of Ohio, and hereby
further irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event that no court of competent
jurisdiction in the State of Ohio will accept such jurisdiction and venue, then
any suit, action or proceeding with respect to this Agreement, or any judgment
entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the continental United States which has jurisdiction
over such suit, proceeding or action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
<PAGE> 19
Page 19
and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans . Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
If this letter sets forth our agreement on the
subject matter hereof, kindly sign and return to the Corporation the enclosed
copy of this letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
--------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted,
this 27th day of May, 1998.
/s/ Pete Kasper
- ---------------------------
[Executive]
<PAGE> 1
[Libbey Inc. Letterhead]
Exhibit 10.44
May 27, 1998
Arthur H. Smith
Vice President,
General Counsel & Secretary
Mr. John F. Meier
6051 Miakonda Trail
Sylvania, Ohio 43560
Dear John,
Libbey Inc. (the "Corporation") considers it essential to the best interests of
its shareholders to foster the continuous employment of key management
personnel. In connection with this, the Corporation's Board of Directors (the
"Board") recognizes that, as is the case with many publicly held corporations,
the possibility of a change in control of the Corporation may exist and that the
uncertainty and questions that it may raise among management could result in the
departure or distraction of management personnel to the detriment of the
Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including yourself, to
their assigned duties without the distraction arising from the possibility of a
change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation hereby agrees
that after this letter agreement (this "Agreement") has been fully executed, you
shall receive the severance benefits set forth in this Agreement in the event
your employment with the Corporation is terminated under the circumstances
described below subsequent to a Change in Control (as defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and shall
continue in effect through December 31, 2001; provided, however, that commencing
on January 1, 2002 and on each January 1 thereafter, the term of this Agreement
shall automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Corporation shall have given notice that
it does not wish to extend this Agreement; provided, further, that if a Change
in Control (as defined in Section 2), occurs during the original or any extended
term of this Agreement, the term of this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there has
been a Change in Control. For purposes of this Agreement, a Change in Control
shall be deemed to occur if:
<PAGE> 2
Page Two
(a) any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of securities of
the Corporation representing twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding securities. For purposes of this
Agreement, (A) the term "Person" is used as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); provided, however, that the term shall not include the Corporation, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by the
shareholders of the Corporation, in substantially the same proportions as their
ownership of stock of the Corporation, and (B) the term "Beneficial Owner" shall
have the meaning given to such term in Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Corporation to effect a transaction described in Sections 2(a), (c) or
(d)) whose election by the Board or nomination for election by the Corporation's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
(hereinafter referred to as "Continuing Directors"), cease for any reason to
constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation (or other
entity), other than a merger or consolidation which would result in the voting
securities of the Corporation outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 66 2/3% of the combined voting
power of the voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets; or
<PAGE> 3
Page Three
(e) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing ten
percent (10%) or more of the combined voting power of the Corporation's then
outstanding securities (a "10% Owner") and (A) the identity of the Chief
Executive Officer of the Corporation is changed during the period beginning
sixty (60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter, or (B) individuals constituting
at least one-third (1/3) of the members of the Board at the beginning of such
period shall cease for any reason to serve on the Board during the period
beginning sixty (60) days before the attainment of the ten percent (10%)
beneficial ownership and ending two (2) years thereafter; provided, however,
that this subsection (e) shall not apply to any Person who is a 10% Owner as of
the date hereof so long as such Person does not increase such beneficial
ownership by five percent (5%) or more over the percentage so owned by such
Person as of the date hereof.
1. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than (1) for Good Reason (as defined in Section 3(iv)), or (2) in a
Covered Resignation (as defined in Section 3(v)). In the event that you are
entitled to such benefits, such benefits shall be paid notwithstanding the
subsequent expiration of the term of this Agreement. In the event your
employment with the Corporation is terminated for any reason and subsequently a
Change in Control occurs, you shall not be entitled to any benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
<PAGE> 4
Page Four
(iii) CAUSE. Termination by the Corporation of your employment
for "Cause" shall mean termination (a) upon your willful and continued failure
to substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) either (x) for Good Reason, or (y) in
connection with a Covered Resignation, after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (b) upon your willful and continued failure
to substantially follow and comply with the specific and lawful directives of
the Board, as reasonably determined by the Board (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after your issuance of a Notice of Termination for
Good Reason or in connection with a Covered Resignation), after a written demand
for substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances
<PAGE> 5
Page Five
are fully corrected (provided such circumstances are capable of correction)
prior to the Date of Termination (as defined in Section 3(vii)) specified in the
Notice of Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Corporation that you held immediately prior to the
Change in Control, a significant adverse alteration in the nature or status of
your responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other action by
the Corporation that results in a material diminution in your position,
authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base
salary as in effect on the date hereof or as the same may be increased from time
to time;
(c) the relocation of the Corporation's offices at
which you are principally employed immediately prior to the date of the Change
in Control (your "Principal Location") to a location more than thirty (30) miles
from such location, or the Corporation's requiring you, without your written
consent, to be based anywhere other than your Principal Location, except for
required travel on the Corporation's business to an extent substantially
consistent with your present business travel obligations;
(d) the Corporation's failure to pay to you any
portion of your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation program of
the Corporation within seven (7) days of the date such compensation is due;
(e) the Corporation's failure to continue in effect
any material compensation or benefit plan or practice in which you participate
immediately prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or the Corporation's failure to continue your
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided and
the level of your participation relative to other participants, as existed at
the time of the Change in Control;
<PAGE> 6
Page Six
(f) the Corporation's failure to continue to provide
you with benefits substantially similar in the aggregate to those enjoyed by you
under any of the Corporation's life insurance, medical, health and accident,
disability, pension, retirement, or other benefit plans or practices in which
you and your eligible family members were participating at the time of the
Change in Control, the taking of any action by the Corporation which would
directly or indirectly materially reduce any of such benefits, or the failure by
the Corporation to provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at the time
of the Change in Control;
(g) the Corporation's failure to obtain a
satisfactory agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination satisfying the requirements
of Section 3(vi) hereof (and, if applicable, the requirements of Section 3(iii)
hereof), which purported termination shall not be effective for purposes of this
Agreement; or
(i) the continuation or repetition, after written
notice of objection from you, of harassing or denigrating treatment of you
inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION AND COVERED RESIGNATION. You shall
be entitled to voluntarily terminate your employment for any reason or no reason
at any time after a Change in Control. Any such termination which occurs within
the thirty (30) day period following the first anniversary of the occurrence of
a Change in Control shall constitute a resignation which entitles you to receive
benefits under this Agreement (a "Covered Resignation").
<PAGE> 7
Page Seven
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (a) if your employment is terminated due to your death, the date of your
death; (b) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such thirty (30) day period),
and (c) if your employment is terminated pursuant to Section 3(iii), Section
3(iv) or Section 3(v) or for any other reason (other than death or Disability),
the date specified in the Notice of Termination (which, in the case of a
termination for Cause shall not be less than thirty (30) days from the date such
Notice of Termination is given, and in the case of a termination for Good Reason
or in connection with a Covered Resignation shall not be less than fifteen (15)
nor more than sixty (60) days from the date such Notice of Termination is
given). Notwithstanding anything to the contrary contained in this Section
3(vii), if within fifteen (15) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, then the Date of Termination shall be
the date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION.
Following a Change in Control during the term of this
Agreement, you shall be entitled to the benefits described below upon
termination of your employment, provided that such termination occurs during the
term of this Agreement and within the two (2) year period immediately following
the date of such Change in Control. The benefits to which you are entitled,
subject to the terms and conditions of this Agreement, are:
<PAGE> 8
Page Eight
(i) If your employment shall be terminated by the
Corporation for Cause or by you other than (x) for Good Reason or (y) pursuant
to a Covered Resignation, the Corporation shall pay you your full base salary,
when due, through the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus all other amounts to which you are entitled
under any compensation plan or practice of the Corporation at the time such
payments are due, and the Corporation shall have no further obligations to you
under this Agreement.
(ii) If your employment by the Corporation shall be
terminated by you (x) for Good Reason or (y) pursuant to a Covered Resignation,
or by the Corporation other than for Cause or Disability, then you shall be
entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base
salary, when due, through the Date of Termination at the rate in effect at the
time Notice of Termination is given, at the time specified in Section 4(iii),
plus all other amounts to which you are entitled under any compensation plan or
practice of the Corporation at the time such payments are due;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Section 4(iii), a lump-sum
severance payment (together with the payments provided in Section 4(ii)(c)
below, the "Severance Payments") equal to the sum of the following:
(A) three (3) times your annual base
salary as in effect as of the Date
of Termination or immediately prior
to the Change in Control, whichever
is greater; and
(B) three (3) times the greater of (x)
your targeted annual bonus as in
effect as of the Date of Termination
or immediately prior to the Change
in Control, whichever is greater, or
(y) your annual bonus for the year
immediately preceding the Date of
Termination;
<PAGE> 9
Page Nine
(c) notwithstanding any provisions of the
Corporation's stock option plans, incentive plans, or other similar plans, the
restricted period with respect to any restricted stock granted to you thereunder
shall lapse and such shares shall be distributed to you at the time specified in
Section 4(iii);
(d) for a period of one (1) year following the Date
of Termination, the Corporation shall, at its sole expense as incurred, provide
you with financial planning services of substantially the same type and scope as
those which the Corporation was providing to you immediately prior to the Date
of Termination, or, if more favorable to you, the date of the Change in Control;
(e) for a period of two (2) years following the Date
of Termination, the Corporation shall, at its sole expense as incurred, provide
you with outplacement services, the scope and provider of which shall be
selected by you in your sole discretion;
(f) for a thirty-six (36) month period after such
termination, the Corporation shall continue to provide you and your eligible
family members, based on the cost sharing arrangement between you and the
Corporation on the date of the Change in Control, with medical and dental health
benefits at least equal to those which would have been provided to you and them
if your employment had not been terminated or, if more favorable to you, as in
effect generally at any time thereafter; provided, however, that if you become
re-employed with another employer and are eligible to receive medical and dental
health benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable benefits
are actually received by you during the thirty-six (36) month period following
your termination, and any such benefits actually received by you shall be
reported to the Corporation. In the event you are ineligible under the terms of
such benefit plans or programs to continue to be so covered, the Corporation
shall provide you with substantially equivalent coverage through other sources
or will provide you with a lump-sum payment in such amount that, after all taxes
on that amount, shall be equal to the cost to you of providing yourself such
benefit coverage. At the termination of the benefits coverage under the second
preceding sentence, you, your spouse and your dependents shall be entitled to
continuation coverage pursuant to section 4980B of the Internal Revenue Code of
1986, as amended (the "Code"), sections 601-608 of the Employee Retirement
Income Security Act of 1974, as
<PAGE> 10
Page Ten
amended, and under any other applicable law, to the extent required by such
laws, as if you had terminated employment with the Corporation on the date such
benefits coverage terminates. The lump-sum shall be determined on a present
value basis using the interest rate provided in section 1274(b)(2)(B) of the
Code on the Date of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
you or for your benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject to the excise tax imposed by section 4999 of the
Code (the "Excise Tax"), then you shall be entitled to receive from the
Corporation an additional payment (the "Gross-Up Payment") in an amount such
that the net amount of the Payment and the Gross-Up Payment retained by you
after the calculation and deduction of all Excise Taxes (including any interest
or penalties imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including any
interest or penalties imposed with respect to such taxes) on the Gross-Up
Payment provided for in this Section 4(ii)(g), and taking into account any lost
or reduced tax deductions on account of the Gross-Up Payment, shall be equal to
the Payment;
(2) all determinations required to be made under this Section
4(ii)(g), including whether and when the Gross-Up Payment is required and the
amount of such Gross-Up Payment, and the assumptions to be utilized in arriving
at such determinations shall be made by the Accountants (as defined below) which
shall provide you and the Corporation with detailed supporting calculations with
respect to such Gross-Up Payment within fifteen (15) business days of the
receipt of notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the "Accountants"
shall mean the Corporation's independent certified public accountants serving
immediately prior to the Change in Control. In the event that the Accountants
are also serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, you shall appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accountants hereunder). All
fees and expenses of the Accountants shall be borne solely by the Corporation.
For the purposes of determining whether any of the Payments will be subject to
the Excise Tax and the amount of such Excise Tax, such Payments will be treated
as "parachute payments" within the meaning of section 280G of
<PAGE> 11
Page Eleven
the Code, and all "parachute payments" in excess of the "base amount" (as
defined under section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that in the opinion of the
Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay Federal income taxes at the highest applicable marginal
rate of Federal income taxation for the calendar year in which the Gross-Up
Payment is to be made and to pay any applicable state and local income taxes at
the highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from the deduction of such state or local
taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of your adjusted gross income), and to have
otherwise allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the Gross-Up
Payment in your adjusted gross income. To the extent practicable, any Gross-Up
Payment with respect to any Payment shall be paid by the Corporation at the time
you are entitled to receive the Payment and in no event will any Gross-Up
Payment be paid later than five days after the receipt by you of the
Accountant's determination. Any determination by the Accountants shall be
binding upon the Corporation and you. As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Accountants hereunder, it is possible that the Gross-Up Payment made will
have been an amount less than the Corporation should have paid pursuant to this
Section 4(ii)(g) (the "Underpayment"). In the event that the Corporation
exhausts its remedies pursuant to Section 4(ii)(g)(3) and you are required to
make a payment of any Excise Tax, the Underpayment shall be promptly paid by the
Corporation to or for your benefit; and
<PAGE> 12
Page Twelve
(3) you shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Corporation of the Gross-Up Payment. Such notification shall be given as
soon as practicable after you are informed in writing of such claim and shall
apprise the Corporation of the nature of such claim and the date on which such
claim is requested to be paid. You shall not pay such claim prior to the
expiration of the 30-day period following the date on which you give such notice
to the Corporation (or such shorter period ending on the date that any payment
of taxes, interest and/or penalties with respect to such claim is due). If the
Corporation notifies you in writing prior to the expiration of such period that
it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify you for and hold you harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of all related costs and expenses. Without limiting the foregoing
provisions of this Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner,
<PAGE> 13
Page Thirteen
and you agree 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 Corporation shall determine; provided, however, that if
the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an interest-free
basis, and shall indemnify you for and hold you harmless from, on an after-tax
basis, 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 (including as a result of any
forgiveness by the Corporation of such advance); provided, further, that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of you with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in respect
of any judgments, fines, settlements, loss, cost or expense (including
attorneys' fees) of any nature related to or arising out of your activities as
an agent, employee, officer or director of the Corporation or in any other
capacity on behalf of or at the request of the Corporation, the Corporation
shall promptly on written request, indemnify (and advance expenses to) you to
the fullest extent permitted by applicable law, including but not limited to
making such findings and determinations and taking any and all such actions as
the Corporation may, under applicable law, be permitted to have the discretion
to take so as to effectuate such indemnification or advancement. Such agreement
by the Corporation shall not be deemed to impair any other obligation of the
Corporation respecting your indemnification otherwise arising out of this or any
other agreement or promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6) years
following the Date of Termination (without reference to whether the term of this
Agreement continues in effect) with directors' and officers' liability insurance
insuring you against insurable events which occur or have occurred while you
were a director or officer of the
<PAGE> 14
Page Fourteen
Corporation, such insurance to have policy limits aggregating not less than the
amount in effect immediately prior to the Change in Control, and otherwise to be
in substantially the same form and to contain substantially the same terms,
conditions and exceptions as the liability issuance policies provided for
officers and directors of the Corporation in force from time to time, provided,
however, that such terms, conditions and exceptions shall not be, in the
aggregate, materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for such
insurance at any time during such period exceed one hundred and fifty percent
(150%) of the per annum rate of premium currently paid by the Corporation for
such insurance, then the Corporation shall provide the maximum coverage that
will then be available at an annual premium equal to one hundred and fifty
percent (150%) of such rate; and
(j) you shall be fully vested in your accrued benefits under
any qualified or nonqualified pension, profit sharing, deferred compensation or
supplemental plans maintained by the Corporation for your benefit, and the
Corporation shall provide you with additional fully vested benefits under such
plans in an amount equal to the benefits which you would have accrued had you
continued your employment with the Corporation for three (3) additional years
following your Date of Termination; provided, however, that to the extent that
the acceleration of vesting or enhanced accrual of such benefits would violate
any applicable law or require the Corporation to accelerate the vesting of the
accrued benefits of all participants in such plan or plans or to provide
additional benefit accruals to such participants, the Corporation shall pay you
a lump-sum payment at the time specified in Section 4(iii) in an amount equal to
the value of such benefits; provided, further, that to the extent that the
present value of all benefits payable to you under this Section 4(ii)(j) is less
than $250,000, the Corporation shall pay you a lump-sum payment at the time
specified in Section 4(iii) in an amount equal to the difference between
$250,000 and the amount of such benefits which are otherwise payable to you
under this Section 4(ii)(j); provided, further, that if you are eligible to
receive grandfathered benefits under the Corporation's pension plan, the
provisions of this Section 4(ii)(j) shall apply to such grandfathered benefits,
without reduction for age, in addition to any other benefits to which you are
entitled under this Section 4(ii)(j).
<PAGE> 15
Page Fifteen
(iii) The payments provided for in Sections 4(ii)(a), (b),
(c), (d) and (j) shall be made not later than the fifth day following the Date
of Termination; provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
(iv) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise
nor, except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything contained
herein, in the event of a Change in Control during the term of this Agreement,
all outstanding options ("Options"), if any, granted to you under any of the
Corporation's stock option plans, incentive plans or other similar plans (or
options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be
<PAGE> 16
Page Sixteen
deemed the Date of Termination. Unless expressly provided otherwise,
"Corporation" as used herein shall mean the Corporation as defined in this
Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. NON- COMPETE, CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) NON-COMPETE. In consideration of and in connection with
the benefits provided to you under this Agreement, and in order to protect the
goodwill of the Corporation, you hereby agree that, if your employment is
terminated pursuant to a Covered Resignation, then, for a period of twelve (12)
months commencing on the Date of Termination, you shall not, directly or
indirectly, own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be connected as a director, officer,
employee, partner, consultant or otherwise with any of the following entities
(or any subsidiary of any such entity) other than as a shareholder or beneficial
owner owning 5% or less of the outstanding securities of a public company:
Durand International, the Anchor Hocking unit of Newell Co., Cardinal
International, Inc., the Indiana Glass unit of Lancaster Colony Corporation,
Oneida LTD or any glass tableware manufacturer, seller or importer for Bormioli
Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the
Sisecam group of companies of Turkey including Pasabahce.
<PAGE> 17
Page Seventeen
(ii) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(iii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from the Corporation
any of its officers or employees or offer employment to any person who, on or
during the six (6) months immediately preceding the date of such solicitation or
offer, is or was an officer or employee of the Corporation; provided, however,
that a general advertisement to which an employee of the Corporation responds
shall in no event be deemed to result in a breach of this Section 8(iii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following the execution and
delivery of this Agreement by you and the Corporation, the Corporation shall
partially fund its obligations to provide benefits hereunder (including, without
limitation, its obligations under Section 4(ii)(g)) by establishing and
irrevocably partially funding a trust for your benefit and the benefit of other
executives of the Corporation with whom
<PAGE> 18
Page Eighteen
the Corporation has entered into agreements similar to this Agreement. The
Corporation shall initially contribute $1000 to such trust. Such trust shall be
a grantor trust described in section 671 of the Code. Upon the occurrence of a
Potential Change in Control (as defined below), the Corporation shall fully fund
its obligations to provide benefits hereunder (including, without limitation,
its obligations under Section 4(ii)(g)) by irrevocably contributing funds to
such trust on your behalf. The amount of such contribution shall equal the then
present value of the Corporation's obligations under Section 4 hereof as
determined by the firms serving as the Corporation's actuaries and accountants
immediately prior to the Change in Control. Such actuaries and accountants shall
be paid by the Corporation. The establishment and funding of such trust shall
not affect the obligation of the Corporation to provide benefits under the terms
of this Agreement. For purposes of this Agreement a "Potential Change in
Control" shall be deemed to occur if:
(a) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces
an intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing ten
percent (10%) or more of the combined voting power of the Corporation's then
outstanding securities, increases such Person's beneficial ownership of such
securities by five percent (5%) or more of the Corporation's then outstanding
securities over the percentage so owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been
<PAGE> 19
Page Nineteen
made by either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Ohio without regard to its conflicts of
law principles. All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions of such courts for the
purpose of any such suit, action, proceeding or judgment. By your execution and
delivery of this Agreement, you appoint the Secretary of the Corporation, at the
Corporation's office in Toledo, Ohio, as your agent upon which process may be
served in any such suit, action or proceeding; and by its execution and delivery
of this Agreement, the Corporation appoints the Secretary of the Corporation, at
its office in Toledo, Ohio, as its agent upon which process may be served in any
such suit, action or proceeding. Service of process upon such applicable agent,
together
<PAGE> 20
Page Twenty
with actual notice of such service given to you or the Corporation, as
applicable, in the manner provided in Section 7 hereof, shall be deemed in every
respect effective service of process upon the applicable party in any suit,
action, proceeding or judgment. Nothing herein shall be deemed to limit the
ability of you or the Corporation to serve any such writs, process or summonses
in any other manner permitted by applicable law. You and the Corporation hereby
irrevocably waive any objections which you or the Corporation, as applicable,
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Ohio, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Notwithstanding the foregoing,
in the event that no court of competent jurisdiction in the State of Ohio will
accept such jurisdiction and venue, then any suit, action or proceeding with
respect to this Agreement, or any judgment entered by any court in respect
thereof, may be brought in any court of competent jurisdiction in the
continental United States which has jurisdiction over such suit, proceeding or
action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
<PAGE> 21
Page Twenty-One
and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein, including, without
limitation, any prior severance agreements, is hereby terminated and cancelled;
provided, however, that the Employment Agreement, dated as of June 24, 1993 by
and between you and the Corporation, as amended, shall remain in full force and
effect and shall, pursuant to the terms and conditions thereof, provide certain
severance benefits to you upon certain terminations of employment. Any of your
rights hereunder shall be in addition to any rights you may otherwise have under
benefit plans or agreements of the Corporation to which you are a party or in
which you are a participant, including, but not limited to, any Corporation
sponsored employee benefit plans and stock options plans. Provisions of this
Agreement shall not in any way abrogate your rights under such other plans and
agreements.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ Arthur H. Smith
-------------------------------
Its:Vice President, General Counsel
and Secretary
Agreed and Accepted as of the,
27th day of May, 1998.
/s/ John F. Meier
- --------------------------
<PAGE> 1
Exhibit 10.45
[Libbey Letterhead]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Timothy T. Paige
3804 Sulphur Springs Road
Toledo, Ohio 43606
Dear Tim,
Libbey Inc. (the "Corporation") considers it essential to the best interests of
its shareholders to foster the continuous employment of key management
personnel. In connection with this, the Corporation's Board of Directors (the
"Board") recognizes that, as is the case with many publicly held corporations,
the possibility of a change in control of the Corporation may exist and that the
uncertainty and questions that it may raise among management could result in the
departure or distraction of management personnel to the detriment of the
Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including yourself, to
their assigned duties without the distraction arising from the possibility of a
change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation hereby agrees
that after this letter agreement (this "Agreement") has been fully executed, you
shall receive the severance benefits set forth in this Agreement in the event
your employment with the Corporation is terminated under the circumstances
described below subsequent to a Change in Control (as defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and shall
continue in effect through December 31, 2001; provided, however, that commencing
on January 1, 2002 and on each January 1 thereafter, the term of this Agreement
shall automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Corporation shall have given notice that
it does not wish to extend this Agreement; provided, further, that if a Change
in Control (as defined in Section 2), occurs during the original or any extended
term of this Agreement, the term of this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there has
been a Change in Control. For purposes of this Agreement, a Change in Control
shall be deemed to occur if:
<PAGE> 2
Page Two
(a) any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of securities of
the Corporation representing twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding securities. For purposes of this
Agreement, (A) the term "Person" is used as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); provided, however, that the term shall not include the Corporation, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by the
shareholders of the Corporation, in substantially the same proportions as their
ownership of stock of the Corporation, and (B) the term "Beneficial Owner" shall
have the meaning given to such term in Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Corporation to effect a transaction described in Sections 2(a), (c) or
(d)) whose election by the Board or nomination for election by the Corporation's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
(hereinafter referred to as "Continuing Directors"), cease for any reason to
constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation (or other entity),
other than a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 66 2/3% of the combined voting power of the
voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets; or
<PAGE> 3
Page Three
(e) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Corporation representing ten percent (10%)
or more of the combined voting power of the Corporation's then outstanding
securities (a "10% Owner") and (A) the identity of the Chief Executive Officer
of the Corporation is changed during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease for any
reason to serve on the Board during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter; provided, however, that this subsection (e) shall not apply to
any Person who is a 10% Owner as of the date hereof so long as such Person does
not increase such beneficial ownership by five percent (5%) or more over the
percentage so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of
the events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than (1) for Good Reason (as defined in Section 3(iv)), or (2) in a
Covered Resignation (as defined in Section 3(v)). In the event that you are
entitled to such benefits, such benefits shall be paid notwithstanding the
subsequent expiration of the term of this Agreement. In the event your
employment with the Corporation is terminated for any reason and subsequently a
Change in Control occurs, you shall not be entitled to any benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
<PAGE> 4
Page Four
(iii) CAUSE. Termination by the Corporation of your
employment for "Cause" shall mean termination (a) upon your willful and
continued failure to substantially perform your duties with the Corporation
(other than any such failure resulting from your incapacity due to physical or
mental illness or any such actual or anticipated failure after your issuance of
a Notice of Termination (as defined in Section 3(vi)) either (x) for Good
Reason, or (y) in connection with a Covered Resignation, after a written demand
for substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, (b) upon your willful and continued failure
to substantially follow and comply with the specific and lawful directives of
the Board, as reasonably determined by the Board (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after your issuance of a Notice of Termination for
Good Reason or in connection with a Covered Resignation), after a written demand
for substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances
<PAGE> 5
Page Five
are fully corrected (provided such circumstances are capable of correction)
prior to the Date of Termination (as defined in Section 3(vii)) specified in the
Notice of Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent with
the position in the Corporation that you held immediately prior to the Change in
Control, a significant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other action by
the Corporation that results in a material diminution in your position,
authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base salary
as in effect on the date hereof or as the same may be increased from time to
time;
(c) the relocation of the Corporation's offices at which you
are principally employed immediately prior to the date of the Change in Control
(your "Principal Location") to a location more than thirty (30) miles from such
location, or the Corporation's requiring you, without your written consent, to
be based anywhere other than your Principal Location, except for required travel
on the Corporation's business to an extent substantially consistent with your
present business travel obligations;
(d) the Corporation's failure to pay to you any portion of
your current compensation or to pay to you any portion of an installment of
deferred compensation under any deferred compensation program of the Corporation
within seven (7) days of the date such compensation is due;
(e) the Corporation's failure to continue in effect any
material compensation or benefit plan or practice in which you participate
immediately prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or the Corporation's failure to continue your
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided and
the level of your participation relative to other participants, as existed at
the time of the Change in Control;
<PAGE> 6
Page Six
(f) the Corporation's failure to continue to provide you
with benefits substantially similar in the aggregate to those enjoyed by you
under any of the Corporation's life insurance, medical, health and accident,
disability, pension, retirement, or other benefit plans or practices in which
you and your eligible family members were participating at the time of the
Change in Control, the taking of any action by the Corporation which would
directly or indirectly materially reduce any of such benefits, or the failure by
the Corporation to provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at the time
of the Change in Control;
(g) the Corporation's failure to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof;
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(vi) hereof (and, if applicable, the requirements of Section 3(iii)
hereof), which purported termination shall not be effective for purposes of this
Agreement; or
(i) the continuation or repetition, after written notice of
objection from you, of harassing or denigrating treatment of you inconsistent
with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION AND COVERED RESIGNATION. You shall
be entitled to voluntarily terminate your employment for any reason or no reason
at any time after a Change in Control. Any such termination which occurs within
the thirty (30) day period following the first anniversary of the occurrence of
a Change in Control shall constitute a resignation which entitles you to receive
benefits under this Agreement (a "Covered Resignation").
<PAGE> 7
Page Seven
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (a) if your employment is terminated due to your death, the date of your
death; (b) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such thirty (30) day period),
and (c) if your employment is terminated pursuant to Section 3(iii), Section
3(iv) or Section 3(v) or for any other reason (other than death or Disability),
the date specified in the Notice of Termination (which, in the case of a
termination for Cause shall not be less than thirty (30) days from the date such
Notice of Termination is given, and in the case of a termination for Good Reason
or in connection with a Covered Resignation shall not be less than fifteen (15)
nor more than sixty (60) days from the date such Notice of Termination is
given). Notwithstanding anything to the contrary contained in this Section
3(vii), if within fifteen (15) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, then the Date of Termination shall be
the date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION.
Following a Change in Control during the term of this
Agreement, you shall be entitled to the benefits described below upon
termination of your employment, provided that such termination occurs during the
term of this Agreement and within the two (2) year period immediately following
the date of such Change in Control. The benefits to which you are entitled,
subject to the terms and conditions of this Agreement, are:
<PAGE> 8
Page Eight
(i) If your employment shall be terminated by the
Corporation for Cause or by you other than (x) for Good Reason or (y) pursuant
to a Covered Resignation, the Corporation shall pay you your full base salary,
when due, through the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus all other amounts to which you are entitled
under any compensation plan or practice of the Corporation at the time such
payments are due, and the Corporation shall have no further obligations to you
under this Agreement.
(ii) If your employment by the Corporation shall be
terminated by you (x) for Good Reason or (y) pursuant to a Covered Resignation,
or by the Corporation other than for Cause or Disability, then you shall be
entitled to the benefits provided below:
(a) the Corporation shall pay to you your full
base salary, when due, through the Date of Termination at the rate in effect at
the time Notice of Termination is given, at the time specified in Section
4(iii), plus all other amounts to which you are entitled under any compensation
plan or practice of the Corporation at the time such payments are due;
(b) in lieu of any further salary payments to
you for periods subsequent to the Date of Termination, the Corporation shall pay
as severance pay to you, at the time specified in Section 4(iii), a lump-sum
severance payment (together with the payments provided in Section 4(ii)(c)
below, the "Severance Payments") equal to the sum of the following:
(A) three (3) times your annual base
salary as in effect as of the Date
of Termination or immediately prior
to the Change in Control, whichever
is greater; and
(B) three (3) times the greater of (x)
your targeted annual bonus as in
effect as of the Date of Termination
or immediately prior to the Change
in Control, whichever is greater, or
(y) your annual bonus for the year
immediately preceding the Date of
Termination;
<PAGE> 9
Page Nine
(c) notwithstanding any provisions of the
Corporation's stock option plans, incentive plans, or other similar plans, the
restricted period with respect to any restricted stock granted to you thereunder
shall lapse and such shares shall be distributed to you at the time specified in
Section 4(iii);
(d) for a period of one (1) year following the
Date of Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same type and
scope as those which the Corporation was providing to you immediately prior to
the Date of Termination, or, if more favorable to you, the date of the Change in
Control;
(e) for a period of two (2) years following the
Date of Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which shall be
selected by you in your sole discretion;
(f) for a thirty-six (36) month period after
such termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between you and
the Corporation on the date of the Change in Control, with medical and dental
health benefits at least equal to those which would have been provided to you
and them if your employment had not been terminated or, if more favorable to
you, as in effect generally at any time thereafter; provided, however, that if
you become re-employed with another employer and are eligible to receive medical
and dental health benefits under another employer's plans, the Corporation's
obligations under this Section 4(ii)(f) shall be reduced to the extent
comparable benefits are actually received by you during the thirty-six (36)
month period following your termination, and any such benefits actually received
by you shall be reported to the Corporation. In the event you are ineligible
under the terms of such benefit plans or programs to continue to be so covered,
the Corporation shall provide you with substantially equivalent coverage through
other sources or will provide you with a lump-sum payment in such amount that,
after all taxes on that amount, shall be equal to the cost to you of providing
yourself such benefit coverage. At the termination of the benefits coverage
under the second preceding sentence, you, your spouse and your dependents shall
be entitled to continuation coverage pursuant to section 4980B of the Internal
Revenue Code of 1986, as amended (the "Code"), sections 601-608 of the Employee
Retirement Income Security Act of 1974, as
<PAGE> 10
Page Ten
amended, and under any other applicable law, to the extent required by such
laws, as if you had terminated employment with the Corporation on the date such
benefits coverage terminates. The lump-sum shall be determined on a present
value basis using the interest rate provided in section 1274(b)(2)(B) of the
Code on the Date of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
you or for your benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject to the excise tax imposed by section 4999 of the
Code (the "Excise Tax"), then you shall be entitled to receive from the
Corporation an additional payment (the "Gross-Up Payment") in an amount such
that the net amount of the Payment and the Gross-Up Payment retained by you
after the calculation and deduction of all Excise Taxes (including any interest
or penalties imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including any
interest or penalties imposed with respect to such taxes) on the Gross-Up
Payment provided for in this Section 4(ii)(g), and taking into account any lost
or reduced tax deductions on account of the Gross-Up Payment, shall be equal to
the Payment;
(2) all determinations required to be made under this Section
4(ii)(g), including whether and when the Gross-Up Payment is required and the
amount of such Gross-Up Payment, and the assumptions to be utilized in arriving
at such determinations shall be made by the Accountants (as defined below) which
shall provide you and the Corporation with detailed supporting calculations with
respect to such Gross-Up Payment within fifteen (15) business days of the
receipt of notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the "Accountants"
shall mean the Corporation's independent certified public accountants serving
immediately prior to the Change in Control. In the event that the Accountants
are also serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, you shall appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accountants hereunder). All
fees and expenses of the Accountants shall be borne solely by the Corporation.
For the purposes of determining whether any of the Payments will be subject to
the Excise Tax and the amount of such Excise Tax, such Payments will be treated
as "parachute payments" within the meaning of section 280G of
<PAGE> 11
Page Eleven
the Code, and all "parachute payments" in excess of the "base amount" (as
defined under section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that in the opinion of the
Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay Federal income taxes at the highest applicable marginal
rate of Federal income taxation for the calendar year in which the Gross-Up
Payment is to be made and to pay any applicable state and local income taxes at
the highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from the deduction of such state or local
taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of your adjusted gross income), and to have
otherwise allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the Gross-Up
Payment in your adjusted gross income. To the extent practicable, any Gross-Up
Payment with respect to any Payment shall be paid by the Corporation at the time
you are entitled to receive the Payment and in no event will any Gross-Up
Payment be paid later than five days after the receipt by you of the
Accountant's determination. Any determination by the Accountants shall be
binding upon the Corporation and you. As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Accountants hereunder, it is possible that the Gross-Up Payment made will
have been an amount less than the Corporation should have paid pursuant to this
Section 4(ii)(g) (the "Underpayment"). In the event that the Corporation
exhausts its remedies pursuant to Section 4(ii)(g)(3) and you are required to
make a payment of any Excise Tax, the Underpayment shall be promptly paid by the
Corporation to or for your benefit; and
<PAGE> 12
Page Twelve
(3) you shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Corporation of the Gross-Up Payment. Such notification shall be given as
soon as practicable after you are informed in writing of such claim and shall
apprise the Corporation of the nature of such claim and the date on which such
claim is requested to be paid. You shall not pay such claim prior to the
expiration of the 30-day period following the date on which you give such notice
to the Corporation (or such shorter period ending on the date that any payment
of taxes, interest and/or penalties with respect to such claim is due). If the
Corporation notifies you in writing prior to the expiration of such period that
it desires to contest such claim, you shall:
(A) give the Corporation any information
reasonably requested by the Corporation relating to such claim;
(B) take such action in connection with
contesting such claim as the Corporation 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
Corporation;
(C) cooperate with the Corporation in good faith
in order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify you for and hold you harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of all related costs and expenses. Without limiting the foregoing
provisions of this Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner,
<PAGE> 13
Page Thirteen
and you agree 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 Corporation shall determine; provided, however, that if
the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an interest-free
basis, and shall indemnify you for and hold you harmless from, on an after-tax
basis, 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 (including as a result of any
forgiveness by the Corporation of such advance); provided, further, that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of you with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in respect
of any judgments, fines, settlements, loss, cost or expense (including
attorneys' fees) of any nature related to or arising out of your activities as
an agent, employee, officer or director of the Corporation or in any other
capacity on behalf of or at the request of the Corporation, the Corporation
shall promptly on written request, indemnify (and advance expenses to) you to
the fullest extent permitted by applicable law, including but not limited to
making such findings and determinations and taking any and all such actions as
the Corporation may, under applicable law, be permitted to have the discretion
to take so as to effectuate such indemnification or advancement. Such agreement
by the Corporation shall not be deemed to impair any other obligation of the
Corporation respecting your indemnification otherwise arising out of this or any
other agreement or promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6) years
following the Date of Termination (without reference to whether the term of this
Agreement continues in effect) with directors' and officers' liability insurance
insuring you against insurable events which occur or have occurred while you
were a director or officer of the
<PAGE> 14
Page Fourteen
Corporation, such insurance to have policy limits aggregating not less than the
amount in effect immediately prior to the Change in Control, and otherwise to be
in substantially the same form and to contain substantially the same terms,
conditions and exceptions as the liability issuance policies provided for
officers and directors of the Corporation in force from time to time, provided,
however, that such terms, conditions and exceptions shall not be, in the
aggregate, materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for such
insurance at any time during such period exceed one hundred and fifty percent
(150%) of the per annum rate of premium currently paid by the Corporation for
such insurance, then the Corporation shall provide the maximum coverage that
will then be available at an annual premium equal to one hundred and fifty
percent (150%) of such rate; and
(j) you shall be fully vested in your accrued benefits under
any qualified or nonqualified pension, profit sharing, deferred compensation or
supplemental plans maintained by the Corporation for your benefit, and the
Corporation shall provide you with additional fully vested benefits under such
plans in an amount equal to the benefits which you would have accrued had you
continued your employment with the Corporation for three (3) additional years
following your Date of Termination; provided, however, that to the extent that
the acceleration of vesting or enhanced accrual of such benefits would violate
any applicable law or require the Corporation to accelerate the vesting of the
accrued benefits of all participants in such plan or plans or to provide
additional benefit accruals to such participants, the Corporation shall pay you
a lump-sum payment at the time specified in Section 4(iii) in an amount equal to
the value of such benefits; provided, further, that to the extent that the
present value of all benefits payable to you under this Section 4(ii)(j) is less
than $250,000, the Corporation shall pay you a lump-sum payment at the time
specified in Section 4(iii) in an amount equal to the difference between
$250,000 and the amount of such benefits which are otherwise payable to you
under this Section 4(ii)(j); provided, further, that if you are eligible to
receive grandfathered benefits under the Corporation's pension plan, the
provisions of this Section 4(ii)(j) shall apply to such grandfathered benefits,
without reduction for age, in addition to any other benefits to which you are
entitled under this Section 4(ii)(j).
<PAGE> 15
Page Fifteen
(iii) The payments provided for in Sections 4(ii)(a), (b),
(c), (d) and (j) shall be made not later than the fifth day following the Date
of Termination; provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
(iv) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise
nor, except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything contained
herein, in the event of a Change in Control during the term of this Agreement,
all outstanding options ("Options"), if any, granted to you under any of the
Corporation's stock option plans, incentive plans or other similar plans (or
options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be
<PAGE> 16
Page Sixteen
deemed the Date of Termination. Unless expressly provided otherwise,
"Corporation" as used herein shall mean the Corporation as defined in this
Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. NON- COMPETE, CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) NON-COMPETE. In consideration of and in connection with
the benefits provided to you under this Agreement, and in order to protect the
goodwill of the Corporation, you hereby agree that, if your employment is
terminated pursuant to a Covered Resignation, then, for a period of twelve (12)
months commencing on the Date of Termination, you shall not, directly or
indirectly, own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be connected as a director, officer,
employee, partner, consultant or otherwise with any of the following entities
(or any subsidiary of any such entity) other than as a shareholder or beneficial
owner directly or indirectly owning 5% or less of the outstanding securities of
a public company: Durand International, the Anchor Hocking unit of Newell Co.,
Cardinal International, Inc., the Indiana Glass unit of Lancaster Colony
Corporation, Oneida LTD or any glass tableware manufacturer, seller or importer
for Bormioli Rocco Casa SpA, for the Kedaung group of companies of Indonesia or
for the Sisecam group of companies of Turkey including Pasabahce.
<PAGE> 17
Page Seventeen
(ii) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the (iii)
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(iii) NON-SOLICITATION. You hereby agree that, for the
period commencing on the Date of Termination and terminating on the third
anniversary thereof, you shall not, either on your own account or jointly with
or as a manager, agent, officer, employee, consultant, partner, joint venturer,
owner or shareholder or otherwise on behalf of any other person, firm or
corporation, directly or indirectly solicit or attempt to solicit away from the
Corporation any of its officers or employees or offer employment to any person
who, on or during the six (6) months immediately preceding the date of such
solicitation or offer, is or was an officer or employee of the Corporation;
provided, however, that a general advertisement to which an employee of the
Corporation responds shall in no event be deemed to result in a breach of this
Section 8(iii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following the execution and
delivery of this Agreement by you and the Corporation, the Corporation shall
partially fund its obligations to provide benefits hereunder (including, without
limitation, its obligations under Section 4(ii)(g)) by establishing and
irrevocably partially funding a trust for your benefit and the benefit of other
executives of the Corporation with whom
<PAGE> 18
Page Eighteen
the Corporation has entered into agreements similar to this Agreement. The
Corporation shall initially contribute $1000 to such trust. Such trust shall be
a grantor trust described in section 671 of the Code. Upon the occurrence of a
Potential Change in Control (as defined below), the Corporation shall fully fund
its obligations to provide benefits hereunder (including, without limitation,
its obligations under Section 4(ii)(g)) by irrevocably contributing funds to
such trust on your behalf. The amount of such contribution shall equal the then
present value of the Corporation's obligations under Section 4 hereof as
determined by the firms serving as the Corporation's actuaries and accountants
immediately prior to the Change in Control. Such actuaries and accountants shall
be paid by the Corporation. The establishment and funding of such trust shall
not affect the obligation of the Corporation to provide benefits under the terms
of this Agreement. For purposes of this Agreement a "Potential Change in
Control" shall be deemed to occur if:
(a) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces
an intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing ten
percent (10%) or more of the combined voting power of the Corporation's then
outstanding securities, increases such Person's beneficial ownership of such
securities by five percent (5%) or more of the Corporation's then outstanding
securities over the percentage so owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been
<PAGE> 19
Page Nineteen
made by either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Ohio without regard to its conflicts of
law principles. All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions of such courts for the
purpose of any such suit, action, proceeding or judgment. By your execution and
delivery of this Agreement, you appoint the Secretary of the Corporation, at the
Corporation's office in Toledo, Ohio, as your agent upon which process may be
served in any such suit, action or proceeding; and by its execution and delivery
of this Agreement, the Corporation appoints the Secretary of the Corporation, at
its office in Toledo, Ohio, as its agent upon which process may be served in any
such suit, action or proceeding. Service of process upon such applicable agent,
together
<PAGE> 20
Page Twenty
with actual notice of such service given to you or the Corporation, as
applicable, in the manner provided in Section 7 hereof, shall be deemed in every
respect effective service of process upon the applicable party in any suit,
action, proceeding or judgment. Nothing herein shall be deemed to limit the
ability of you or the Corporation to serve any such writs, process or summonses
in any other manner permitted by applicable law. You and the Corporation hereby
irrevocably waive any objections which you or the Corporation, as applicable,
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Ohio, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Notwithstanding the foregoing,
in the event that no court of competent jurisdiction in the State of Ohio will
accept such jurisdiction and venue, then any suit, action or proceeding with
respect to this Agreement, or any judgment entered by any court in respect
thereof, may be brought in any court of competent jurisdiction in the
continental United States which has jurisdiction over such suit, proceeding or
action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
<PAGE> 21
Page Twenty-One
and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein, including, without
limitation, any prior severance agreements, is hereby terminated and cancelled;
provided, however, that the Employment Agreement, dated as of January 1, 1997 by
and between you and the Corporation, as amended, shall remain in full force and
effect and shall, pursuant to the terms and conditions thereof, provide certain
severance benefits to you upon certain terminations of employment. Any of your
rights hereunder shall be in addition to any rights you may otherwise have under
benefit plans or agreements of the Corporation to which you are a party or in
which you are a participant, including, but not limited to, any Corporation
sponsored employee benefit plans and stock options plans. Provisions of this
Agreement shall not in any way abrogate your rights under such other plans and
agreements.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
----------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted as of the,
27 day of May, 1998.
/s/ Timothy T. Page
- --------------------------
<PAGE> 1
[Libbey Letterhead]
Exhibit 10.46
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. John P. Pranckun
2801 Darlington
Plano, Texas 75093
Dear John ,
Libbey Inc. (the "Corporation") considers it essential to the
best interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the
Corporation hereby agrees that after this letter agreement (this "Agreement")
has been fully executed, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control (as
defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 2001; provided,
however, that commencing on January 1, 2002 and on each January 1 thereafter,
the term of this Agreement shall automatically be extended for one additional
year unless, not later than September 30 of the preceding year, the Corporation
shall have given notice that it does not wish to extend this Agreement;
provided, further, that if a Change in Control (as defined in Section 2), occurs
during the original or any extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than thirty-six (36)
months beyond the month in which such Change in Control occurred.
<PAGE> 2
Page 2
2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there has been a Change in Control. For purposes of this Agreement, a
Change in Control shall be deemed to occur if:
(a) any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of
securities of the Corporation representing twenty percent (20%) or more
of the combined voting power of the Corporation's then outstanding
securities. For purposes of this Agreement, (A) the term "Person" is
used as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided,
however, that the term shall not include the Corporation, any trustee
or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by
the shareholders of the Corporation, in substantially the same
proportions as their ownership of stock of the Corporation, and (B) the
term "Beneficial Owner" shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in Sections 2(a), (c) or (d)) whose election by
the Board or nomination for election by the Corporation's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"), cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation
(or other entity), other than a merger or consolidation which would
result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 66 2/3% of the combined voting power of
the voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the
sale or
<PAGE> 3
Page 3
disposition by the Corporation of all or substantially all of
the Corporation's assets; or
(e) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities (a "10% Owner") and (A) the
identity of the Chief Executive Officer of the Corporation is changed
during the period beginning sixty (60) days before the attainment of
the ten percent (10%) beneficial ownership and ending two (2) years
thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease
for any reason to serve on the Board during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter; provided, however, that
this subsection (e) shall not apply to any Person who is a 10% Owner as
of the date hereof so long as such Person does not increase such
beneficial ownership by five percent (5%) or more over the percentage
so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than for Good Reason (as defined in Section 3(iv)). In the event
that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the
event your employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, you shall not be entitled to any
benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment
for
<PAGE> 4
Page 4
"Cause" shall mean termination (a) upon your willful and continued failure
to substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) for Good Reason), after a written
demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, (b) upon your willful and
continued failure to substantially follow and comply with the specific and
lawful directives of the Board, as reasonably determined by the Board (other
than any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of
Termination (as defined in Section 3(vii)) specified in the Notice of
Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Corporation that you held immediately prior to
the Change in Control, a significant adverse alteration in the nature
or status of your responsibilities or the conditions of your employment
from those in effect
<PAGE> 5
Page 5
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other
action by the Corporation that results in a material diminution in your
position, authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base
salary as in effect on the date hereof or as the same may be increased
from time to time;
(c) the relocation of the Corporation's offices at
which you are principally employed immediately prior to the date of the
Change in Control (your "Principal Location") to a location more than
thirty (30) miles from such location, or the Corporation's requiring
you, without your written consent, to be based anywhere other than your
Principal Location, or the headquarters of the Corporation in Toledo,
Ohio or a manufacturing facility of the Corporation, except for
required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations;
(d) the Corporation's failure to pay to you any
portion of your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due;
(e) the Corporation's failure to continue in effect
any material compensation or benefit plan or practice in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the Corporation's
failure to continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of
the Change in Control;
(f) the Corporation's failure to continue to provide
you with benefits substantially similar in the aggregate to those
enjoyed by you under any of the Corporation's life insurance, medical,
health and accident, disability, pension, retirement, or other benefit
plans or practices in which you and your eligible family members were
participating at the time of the Change in Control, the taking of any
action by the Corporation which would directly or indirectly materially
reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Corporation in
accordance with the
<PAGE> 6
Page 6
Corporation's normal vacation policy in effect at the time of the
Change in Control;
(g) the Corporation's failure to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(vi) hereof (and, if applicable, the
requirements of Section 3(iii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(i) the continuation or repetition, after written
notice of objection from you, of harassing or denigrating treatment of
you inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION. You shall be entitled to
voluntarily terminate your employment for any reason or no reason at any time
after a Change in Control.
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (a) if your employment is terminated due to your death, the date of your
death; (b) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such thirty (30) day period),
and (c) if your employment is terminated pursuant to Section 3(iii), Section
3(iv) or Section 3(v) or for any other reason (other
<PAGE> 7
Page 7
than death or Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause shall not be less than thirty
(30) days from the date such Notice of Termination is given, and in the case of
a termination for Good Reason shall not be less than fifteen (15) nor more than
sixty (60) days from the date such Notice of Termination is given).
Notwithstanding anything to the contrary contained in this Section 3(vii), if
within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION. Following a Change in
Control during the term of this Agreement, you shall be entitled to the benefits
described below upon termination of your employment, provided that such
termination occurs during the term of this Agreement and within the two (2) year
period immediately following the date of such Change in Control. The benefits to
which you are entitled, subject to the terms and conditions of this Agreement,
are:
(i) If your employment shall be terminated by the
Corporation for Cause or by you other than for Good Reason, the Corporation
shall pay you your full base salary, when due, through the Date of Termination
at the rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due, and the Corporation shall have no
further obligations to you under this Agreement.
(ii) If your employment by the Corporation shall be
terminated by you for Good Reason or by the Corporation other than for Cause or
Disability, then you shall be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base
salary, when due, through the Date of Termination at the rate in effect
at the time Notice of Termination is given, at the time specified in
Section 4(iii), plus all other amounts to which you are entitled under
any compensation plan or practice of the Corporation at the time such
payments are due;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Corporation shall
pay as severance pay to you, at the time specified in Section 4(iii), a
lump-sum severance payment
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(together with the payments provided in Section 4(ii)(c) below, the
"Severance Payments") equal to the sum of the following:
(A) two (2) times your annual base salary as
in effect as of the Date of Termination or immediately prior
to the Change in Control, whichever is greater; and
(B) two (2) times the greater of (x) your
targeted annual bonus as in effect as of the Date of
Termination or immediately prior to the Change in Control,
whichever is greater, or (y) your annual bonus for the year
immediately preceding the Date of Termination;
(c) notwithstanding any provisions of the
Corporation's stock option plans, incentive plans, or other similar
plans, the restricted period with respect to any restricted stock
granted to you thereunder shall lapse and such shares shall be
distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same
type and scope as those which the Corporation was providing to you
immediately prior to the Date of Termination, or, if more favorable to
you, the date of the Change in Control;
(e) for a period of two (2) years following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by you in your sole discretion;
(f) for a twenty-four (24) month period after such
termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between
you and the Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health
benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four (24) month
period following your termination, and any such benefits actually
received by you shall be reported to the Corporation. In the event you
are ineligible under the terms of such benefit
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plans or programs to continue to be so covered, the Corporation shall
provide you with substantially equivalent coverage through other
sources or will provide you with a lump-sum payment in such amount
that, after all taxes on that amount, shall be equal to the cost to you
of providing yourself such benefit coverage. At the termination of the
benefits coverage under the second preceding sentence, you, your spouse
and your dependents shall be entitled to continuation coverage pursuant
to section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the
extent required by such laws, as if you had terminated employment with
the Corporation on the date such benefits coverage terminates. The
lump-sum shall be determined on a present value basis using the
interest rate provided in section 1274(b)(2)(B) of the Code on the Date
of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to you or for your benefit (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement
or otherwise (the "Payment") would be subject to the excise tax imposed
by section 4999 of the Code (the "Excise Tax"), then you shall be
entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the
Payment and the Gross-Up Payment retained by you after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 4(ii)(g), and taking into
account any lost or reduced tax deductions on account of the Gross-Up
Payment, shall be equal to the Payment;
(2) all determinations required to be made under this
Section 4(ii)(g), including whether and when the Gross-Up Payment is
required and the amount of such Gross-Up Payment, and the assumptions
to be utilized in arriving at such determinations shall be made by the
Accountants (as defined below) which shall provide you and the
Corporation with detailed supporting calculations with respect to such
Gross-Up Payment within fifteen (15) business days of the receipt of
notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the
"Accountants" shall mean the Corporation's independent certified public
accountants serving immediately prior to the Change in Control. In the
event that the Accountants are also serving as accountant or auditor
for the individual,
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entity or group effecting the Change in Control, you shall appoint
another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accountants hereunder). All fees and expenses of the
Accountants shall be borne solely by the Corporation. For the purposes
of determining whether any of the Payments will be subject to the
Excise Tax and the amount of such Excise Tax, such Payments will be
treated as "parachute payments" within the meaning of section 280G of
the Code, and all "parachute payments" in excess of the "base amount"
(as defined under section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the
opinion of the Accountants such Payments (in whole or in part) either
do not constitute "parachute payments" or represent reasonable
compensation for services actually rendered (within the meaning of
section 280G(b)(4) of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise Tax. For
purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if paid in
such year (determined without regard to limitations on deductions based
upon the amount of your adjusted gross income), and to have otherwise
allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in your adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Corporation at the time you are entitled to receive the
Payment and in no event will any Gross-Up Payment be paid later than
five days after the receipt by you of the Accountant's determination.
Any determination by the Accountants shall be binding upon the
Corporation and you. As a result of uncertainty in the application of
section 4999 of the Code at the time of the initial determination by
the Accountants hereunder, it is possible that the Gross-Up Payment
made will have been an amount less than the Corporation should have
paid pursuant to this Section 4(ii)(g) (the "Underpayment"). In the
event that the Corporation exhausts its remedies pursuant to Section
4(ii)(g)(3) and you are required to make a payment of any Excise Tax,
the Underpayment shall be promptly paid by the Corporation to or for
your benefit; and
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(3) you shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the Gross-Up Payment. Such
notification shall be given as soon as practicable after you are
informed in writing of such claim and shall apprise the Corporation of
the nature of such claim and the date on which such claim is requested
to be paid. You shall not pay such claim prior to the expiration of the
30-day period following the date on which you give such notice to the
Corporation (or such shorter period ending on the date that any payment
of taxes, interest and/or penalties with respect to such claim is due).
If the Corporation notifies you in writing prior to the expiration of
such period that it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify you for
and hold you harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related
costs and expenses. Without limiting the foregoing provisions of this
Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you
agree 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 Corporation shall determine; provided,
however, that if
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the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an
interest-free basis, and shall indemnify you for and hold you harmless
from, on an after-tax basis, 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 (including as a result of any forgiveness by the Corporation of
such advance); provided, further, that any extension of the statute of
limitations relating to the payment of taxes for the taxable year of
you with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Corporation or in any other capacity on behalf of or at the request of
the Corporation, the Corporation shall promptly on written request,
indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings
and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the
discretion to take so as to effectuate such indemnification or
advancement. Such agreement by the Corporation shall not be deemed to
impair any other obligation of the Corporation respecting your
indemnification otherwise arising out of this or any other agreement or
promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6)
years following the Date of Termination (without reference to whether
the term of this Agreement continues in effect) with directors' and
officers' liability insurance insuring you against insurable events
which occur or have occurred while you were a director or officer of
the Corporation, such insurance to have policy limits aggregating not
less than the amount in effect immediately prior to the Change in
Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such
terms, conditions and exceptions shall not be, in the
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aggregate, materially less favorable to you than those in effect on the
date hereof; provided, further, that if the aggregate annual premiums
for such insurance at any time during such period exceed one hundred
and fifty percent (150%) of the per annum rate of premium currently
paid by the Corporation for such insurance, then the Corporation shall
provide the maximum coverage that will then be available at an annual
premium equal to one hundred and fifty percent (150%) of such rate; and
(j) you shall be fully vested in your accrued
benefits under any qualified or nonqualified pension, profit sharing,
deferred compensation or supplemental plans maintained by the
Corporation for your benefit, and the Corporation shall provide you
with additional fully vested benefits under such plans in an amount
equal to the benefits which you would have accrued had you continued
your employment with the Corporation for two (2) additional years
following your Date of Termination; provided, however, that to the
extent that the acceleration of vesting or enhanced accrual of such
benefits would violate any applicable law or require the Corporation to
accelerate the vesting of the accrued benefits of all participants in
such plan or plans or to provide additional benefit accruals to such
participants, the Corporation shall pay you a lump-sum payment at the
time specified in Section 4(iii) in an amount equal to the value of
such benefits; provided, further, that to the extent that the present
value of all benefits payable to you under this Section 4(ii)(j) is
less than $250,000, the Corporation shall pay you a lump-sum payment at
the time specified in Section 4(iii) in an amount equal to the
difference between $250,000 and the amount of such benefits which are
otherwise payable to you under this Section 4(ii)(j); provided,
further, that if you are eligible to receive grandfathered benefits
under the Corporation's pension plan, the provisions of this Section
4(ii)(j) shall apply to such grandfathered benefits, without reduction
for age, in addition to any other benefits to which you are entitled
under this Section 4(ii)(j).
(iii) The payments provided for in Sections 4(ii)(a),
(b), (c), (d) and (j) shall be made not later than the fifth day following the
Date of Termination; provided, however, that if the amounts of such payments
cannot be finally determined on or before such day, the Corporation shall pay to
you on such day an estimate, as determined in good faith by the Corporation, of
the minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to
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you, payable on the fifth day after demand by the Corporation (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code).
(ii) You shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other employment or
otherwise nor, except as provided in Section 4(ii)(f), shall the amount of any
payment or benefit provided for in this Section 4 be reduced by any compensation
earned by you as the result of employment by another employer or
self-employment, by retirement benefits, by offset against any amount claimed to
be owed by you to the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding
anything contained herein, in the event of a Change in Control during the term
of this Agreement, all outstanding options ("Options"), if any, granted to you
under any of the Corporation's stock option plans, incentive plans or other
similar plans (or options substituted therefor covering the stock of a successor
corporation) shall, effective immediately prior to such Change in Control,
become fully vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless
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otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(ii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on
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behalf of any other person, firm or corporation, directly or indirectly solicit
or attempt to solicit away from the Corporation any of its officers or employees
or offer employment to any person who, on or during the six (6) months
immediately preceding the date of such solicitation or offer, is or was an
officer or employee of the Corporation; provided, however, that a general
advertisement to which an employee of the Corporation responds shall in no event
be deemed to result in a breach of this Section 8(ii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following
the execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation with whom the Corporation has
entered into agreements similar to this Agreement. The Corporation shall
initially contribute $1000 to such trust. Such trust shall be a grantor trust
described in section 671 of the Code. Upon the occurrence of a Potential Change
in Control (as defined below), the Corporation shall fully fund its obligations
to provide benefits hereunder (including, without limitation, its obligations
under Section 4(ii)(g)) by irrevocably contributing funds to such trust on your
behalf. The amount of such contribution shall equal the then present value of
the Corporation's obligations under Section 4 hereof as determined by the firms
serving as the Corporation's actuaries and accountants immediately prior to the
Change in Control. Such actuaries and accountants shall be paid by the
Corporation. The establishment and funding of such trust shall not affect the
obligation of the Corporation to provide benefits under the terms of this
Agreement. For purposes of this Agreement a "Potential Change in Control" shall
be deemed to occur if:
(a) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(b) any Person (including the Corporation) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Person who is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Corporation
representing ten percent (10%) or more of the combined voting power of
the Corporation's then outstanding securities, increases such Person's
beneficial ownership of such securities by five percent (5%) or more of
the Corporation's then outstanding securities over the percentage so
owned by such Person on the date hereof; or
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(d) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
10. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions
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of such courts for the purpose of any such suit, action, proceeding or judgment.
By your execution and delivery of this Agreement, you appoint the Secretary of
the Corporation, at the Corporation's office in Toledo, Ohio, as your agent upon
which process may be served in any such suit, action or proceeding; and by its
execution and delivery of this Agreement, the Corporation appoints the Secretary
of the Corporation, at its office in Toledo, Ohio, as its agent upon which
process may be served in any such suit, action or proceeding. Service of process
upon such applicable agent, together with actual notice of such service given to
you or the Corporation, as applicable, in the manner provided in Section 7
hereof, shall be deemed in every respect effective service of process upon the
applicable party in any suit, action, proceeding or judgment. Nothing herein
shall be deemed to limit the ability of you or the Corporation to serve any such
writs, process or summonses in any other manner permitted by applicable law. You
and the Corporation hereby irrevocably waive any objections which you or the
Corporation, as applicable, may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement
brought in any court of competent jurisdiction in the State of Ohio, and hereby
further irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event that no court of competent
jurisdiction in the State of Ohio will accept such jurisdiction and venue, then
any suit, action or proceeding with respect to this Agreement, or any judgment
entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the continental United States which has jurisdiction
over such suit, proceeding or action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was
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withheld during the period of the Dispute plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees and expenses, if any, incurred in contesting or
disputing any termination of your employment or in seeking to obtain or enforce
any right or benefit provided by this Agreement, or in connection with any tax
audit or proceeding to the extent attributable to the application of section
4999 of the Code to any payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans . Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
If this letter sets forth our agreement on the
subject matter hereof, kindly sign and return to the Corporation the enclosed
copy of this letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
-------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted,
this 27 day of May, 1998.
/s/ John P. Pranckun
- ---------------------------
[Executive]
<PAGE> 1
[Libbey Letterhead]
Exhibit 10.47
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Willie Purvis
28892 Greystone
Mission Viejo, CA 92692
Dear Willie,
Libbey Inc. (the "Corporation") considers it essential to the
best interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the
Corporation hereby agrees that after this letter agreement (this "Agreement")
has been fully executed, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control (as
defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 2001; provided,
however, that commencing on January 1, 2002 and on each January 1 thereafter,
the term of this Agreement shall automatically be extended for one additional
year unless, not later than September 30 of the preceding year, the Corporation
shall have given notice that it does not wish to extend this Agreement;
provided, further, that if a Change in Control (as defined in Section 2), occurs
during the original or any extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than thirty-six (36)
months beyond the month in which such Change in Control occurred.
<PAGE> 2
Page 2
2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there has been a Change in Control. For purposes of this Agreement, a
Change in Control shall be deemed to occur if:
(a) any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of
securities of the Corporation representing twenty percent (20%) or more
of the combined voting power of the Corporation's then outstanding
securities. For purposes of this Agreement, (A) the term "Person" is
used as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided,
however, that the term shall not include the Corporation, any trustee
or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by
the shareholders of the Corporation, in substantially the same
proportions as their ownership of stock of the Corporation, and (B) the
term "Beneficial Owner" shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in Sections 2(a), (c) or (d)) whose election by
the Board or nomination for election by the Corporation's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"), cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation
(or other entity), other than a merger or consolidation which would
result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 66 2/3% of the combined voting power of the
voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the
sale or
<PAGE> 3
Page 3
disposition by the Corporation of all or substantially all of the
Corporation's assets; or
(e) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities (a "10% Owner") and (A) the
identity of the Chief Executive Officer of the Corporation is changed
during the period beginning sixty (60) days before the attainment of
the ten percent (10%) beneficial ownership and ending two (2) years
thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease
for any reason to serve on the Board during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter; provided, however, that
this subsection (e) shall not apply to any Person who is a 10% Owner as
of the date hereof so long as such Person does not increase such
beneficial ownership by five percent (5%) or more over the percentage
so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than for Good Reason (as defined in Section 3(iv)). In the event
that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the
event your employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, you shall not be entitled to any
benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment
for
<PAGE> 4
Page 4
"Cause" shall mean termination (a) upon your willful and continued failure to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) for Good Reason), after a written
demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, (b) upon your willful and
continued failure to substantially follow and comply with the specific and
lawful directives of the Board, as reasonably determined by the Board (other
than any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of
Termination (as defined in Section 3(vii)) specified in the Notice of
Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Corporation that you held immediately prior to
the Change in Control, a significant adverse alteration in the nature
or status of your responsibilities or the conditions of your employment
from those in effect
<PAGE> 5
Page 5
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other
action by the Corporation that results in a material diminution in your
position, authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base
salary as in effect on the date hereof or as the same may be increased
from time to time;
(c) the relocation of the Corporation's offices at
which you are principally employed immediately prior to the date of the
Change in Control (your "Principal Location") to a location more than
thirty (30) miles from such location, or the Corporation's requiring
you, without your written consent, to be based anywhere other than your
Principal Location, or the headquarters of the Corporation in Toledo,
Ohio or a manufacturing facility of the Corporation, except for
required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations;
(d) the Corporation's failure to pay to you any
portion of your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due;
(e) the Corporation's failure to continue in effect
any material compensation or benefit plan or practice in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the Corporation's
failure to continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of
the Change in Control;
(f) the Corporation's failure to continue to provide
you with benefits substantially similar in the aggregate to those
enjoyed by you under any of the Corporation's life insurance, medical,
health and accident, disability, pension, retirement, or other benefit
plans or practices in which you and your eligible family members were
participating at the time of the Change in Control, the taking of any
action by the Corporation which would directly or indirectly materially
reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Corporation in
accordance with the
<PAGE> 6
Page 6
Corporation's normal vacation policy in effect at the time of the
Change in Control;
(g) the Corporation's failure to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(vi) hereof (and, if applicable, the
requirements of Section 3(iii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(i) the continuation or repetition, after written
notice of objection from you, of harassing or denigrating treatment of
you inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION. You shall be entitled to
voluntarily terminate your employment for any reason or no reason at any time
after a Change in Control.
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (a) if your employment is terminated due to your death, the date of your
death; (b) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such thirty (30) day period),
and (c) if your employment is terminated pursuant to Section 3(iii), Section
3(iv) or Section 3(v) or for any other reason (other
<PAGE> 7
Page 7
than death or Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause shall not be less than thirty
(30) days from the date such Notice of Termination is given, and in the case of
a termination for Good Reason shall not be less than fifteen (15) nor more than
sixty (60) days from the date such Notice of Termination is given).
Notwithstanding anything to the contrary contained in this Section 3(vii), if
within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION. Following a Change in
Control during the term of this Agreement, you shall be entitled to the benefits
described below upon termination of your employment, provided that such
termination occurs during the term of this Agreement and within the two (2) year
period immediately following the date of such Change in Control. The benefits to
which you are entitled, subject to the terms and conditions of this Agreement,
are:
(i) If your employment shall be terminated by the
Corporation for Cause or by you other than for Good Reason, the Corporation
shall pay you your full base salary, when due, through the Date of Termination
at the rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due, and the Corporation shall have no
further obligations to you under this Agreement.
(ii) If your employment by the Corporation shall be
terminated by you for Good Reason or by the Corporation other than for Cause or
Disability, then you shall be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base
salary, when due, through the Date of Termination at the rate in effect
at the time Notice of Termination is given, at the time specified in
Section 4(iii), plus all other amounts to which you are entitled under
any compensation plan or practice of the Corporation at the time such
payments are due;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Corporation shall
pay as severance pay to you, at the time specified in Section 4(iii), a
lump-sum severance payment
<PAGE> 8
Page 8
(together with the payments provided in Section 4(ii)(c) below, the
"Severance Payments") equal to the sum of the following:
(A) two (2) times your annual base salary as
in effect as of the Date of Termination or immediately prior
to the Change in Control, whichever is greater; and
(B) two (2) times the greater of (x) your
targeted annual bonus as in effect as of the Date of
Termination or immediately prior to the Change in Control,
whichever is greater, or (y) your annual bonus for the year
immediately preceding the Date of Termination;
(c) notwithstanding any provisions of the
Corporation's stock option plans, incentive plans, or other similar
plans, the restricted period with respect to any restricted stock
granted to you thereunder shall lapse and such shares shall be
distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same
type and scope as those which the Corporation was providing to you
immediately prior to the Date of Termination, or, if more favorable to
you, the date of the Change in Control;
(e) for a period of two (2) years following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by you in your sole discretion;
(f) for a twenty-four (24) month period after such
termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between
you and the Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health
benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four (24) month
period following your termination, and any such benefits actually
received by you shall be reported to the Corporation. In the event you
are ineligible under the terms of such benefit
<PAGE> 9
Page 9
plans or programs to continue to be so covered, the Corporation shall
provide you with substantially equivalent coverage through other
sources or will provide you with a lump-sum payment in such amount
that, after all taxes on that amount, shall be equal to the cost to you
of providing yourself such benefit coverage. At the termination of the
benefits coverage under the second preceding sentence, you, your spouse
and your dependents shall be entitled to continuation coverage pursuant
to section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the
extent required by such laws, as if you had terminated employment with
the Corporation on the date such benefits coverage terminates. The
lump-sum shall be determined on a present value basis using the
interest rate provided in section 1274(b)(2)(B) of the Code on the Date
of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to you or for your benefit (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement
or otherwise (the "Payment") would be subject to the excise tax imposed
by section 4999 of the Code (the "Excise Tax"), then you shall be
entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the
Payment and the Gross-Up Payment retained by you after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 4(ii)(g), and taking into
account any lost or reduced tax deductions on account of the Gross-Up
Payment, shall be equal to the Payment;
(2) all determinations required to be made under this
Section 4(ii)(g), including whether and when the Gross-Up Payment is
required and the amount of such Gross-Up Payment, and the assumptions
to be utilized in arriving at such determinations shall be made by the
Accountants (as defined below) which shall provide you and the
Corporation with detailed supporting calculations with respect to such
Gross-Up Payment within fifteen (15) business days of the receipt of
notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the
"Accountants" shall mean the Corporation's independent certified public
accountants serving immediately prior to the Change in Control. In the
event that the Accountants are also serving as accountant or auditor
for the individual,
<PAGE> 10
Page 10
entity or group effecting the Change in Control, you shall appoint
another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accountants hereunder). All fees and expenses of the
Accountants shall be borne solely by the Corporation. For the purposes
of determining whether any of the Payments will be subject to the
Excise Tax and the amount of such Excise Tax, such Payments will be
treated as "parachute payments" within the meaning of section 280G of
the Code, and all "parachute payments" in excess of the "base amount"
(as defined under section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the
opinion of the Accountants such Payments (in whole or in part) either
do not constitute "parachute payments" or represent reasonable
compensation for services actually rendered (within the meaning of
section 280G(b)(4) of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise Tax. For
purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if paid in
such year (determined without regard to limitations on deductions based
upon the amount of your adjusted gross income), and to have otherwise
allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in your adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Corporation at the time you are entitled to receive the
Payment and in no event will any Gross-Up Payment be paid later than
five days after the receipt by you of the Accountant's determination.
Any determination by the Accountants shall be binding upon the
Corporation and you. As a result of uncertainty in the application of
section 4999 of the Code at the time of the initial determination by
the Accountants hereunder, it is possible that the Gross-Up Payment
made will have been an amount less than the Corporation should have
paid pursuant to this Section 4(ii)(g) (the "Underpayment"). In the
event that the Corporation exhausts its remedies pursuant to Section
4(ii)(g)(3) and you are required to make a payment of any Excise Tax,
the Underpayment shall be promptly paid by the Corporation to or for
your benefit; and
<PAGE> 11
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(3) you shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the Gross-Up Payment. Such
notification shall be given as soon as practicable after you are
informed in writing of such claim and shall apprise the Corporation of
the nature of such claim and the date on which such claim is requested
to be paid. You shall not pay such claim prior to the expiration of the
30-day period following the date on which you give such notice to the
Corporation (or such shorter period ending on the date that any payment
of taxes, interest and/or penalties with respect to such claim is due).
If the Corporation notifies you in writing prior to the expiration of
such period that it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify you for
and hold you harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related
costs and expenses. Without limiting the foregoing provisions of this
Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you
agree 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 Corporation shall determine; provided,
however, that if
<PAGE> 12
Page 12
the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an
interest-free basis, and shall indemnify you for and hold you harmless
from, on an after-tax basis, 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 (including as a result of any forgiveness by the Corporation of
such advance); provided, further, that any extension of the statute of
limitations relating to the payment of taxes for the taxable year of
you with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Corporation or in any other capacity on behalf of or at the request of
the Corporation, the Corporation shall promptly on written request,
indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings
and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the
discretion to take so as to effectuate such indemnification or
advancement. Such agreement by the Corporation shall not be deemed to
impair any other obligation of the Corporation respecting your
indemnification otherwise arising out of this or any other agreement or
promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6)
years following the Date of Termination (without reference to whether
the term of this Agreement continues in effect) with directors' and
officers' liability insurance insuring you against insurable events
which occur or have occurred while you were a director or officer of
the Corporation, such insurance to have policy limits aggregating not
less than the amount in effect immediately prior to the Change in
Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such
terms, conditions and exceptions shall not be, in the
<PAGE> 13
Page 13
aggregate, materially less favorable to you than those in effect on the
date hereof; provided, further, that if the aggregate annual premiums
for such insurance at any time during such period exceed one hundred
and fifty percent (150%) of the per annum rate of premium currently
paid by the Corporation for such insurance, then the Corporation shall
provide the maximum coverage that will then be available at an annual
premium equal to one hundred and fifty percent (150%) of such rate; and
(j) you shall be fully vested in your accrued
benefits under any qualified or nonqualified pension, profit sharing,
deferred compensation or supplemental plans maintained by the
Corporation for your benefit, and the Corporation shall provide you
with additional fully vested benefits under such plans in an amount
equal to the benefits which you would have accrued had you continued
your employment with the Corporation for two (2) additional years
following your Date of Termination; provided, however, that to the
extent that the acceleration of vesting or enhanced accrual of such
benefits would violate any applicable law or require the Corporation to
accelerate the vesting of the accrued benefits of all participants in
such plan or plans or to provide additional benefit accruals to such
participants, the Corporation shall pay you a lump-sum payment at the
time specified in Section 4(iii) in an amount equal to the value of
such benefits; provided, further, that to the extent that the present
value of all benefits payable to you under this Section 4(ii)(j) is
less than $250,000, the Corporation shall pay you a lump-sum payment at
the time specified in Section 4(iii) in an amount equal to the
difference between $250,000 and the amount of such benefits which are
otherwise payable to you under this Section 4(ii)(j); provided,
further, that if you are eligible to receive grandfathered benefits
under the Corporation's pension plan, the provisions of this Section
4(ii)(j) shall apply to such grandfathered benefits, without reduction
for age, in addition to any other benefits to which you are entitled
under this Section 4(ii)(j).
(iii) The payments provided for in Sections 4(ii)(a), (b),
(c), (d) and (j) shall be made not later than the fifth day following the Date
of Termination; provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to
<PAGE> 14
Page 14
you, payable on the fifth day after demand by the Corporation (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code).
(vi) You shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other employment or
otherwise nor, except as provided in Section 4(ii)(f), shall the amount of any
payment or benefit provided for in this Section 4 be reduced by any compensation
earned by you as the result of employment by another employer or
self-employment, by retirement benefits, by offset against any amount claimed to
be owed by you to the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding
anything contained herein, in the event of a Change in Control during the term
of this Agreement, all outstanding options ("Options"), if any, granted to you
under any of the Corporation's stock option plans, incentive plans or other
similar plans (or options substituted therefor covering the stock of a successor
corporation) shall, effective immediately prior to such Change in Control,
become fully vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless
<PAGE> 15
Page 15
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(ii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on
<PAGE> 16
Page 16
behalf of any other person, firm or corporation, directly or indirectly solicit
or attempt to solicit away from the Corporation any of its officers or employees
or offer employment to any person who, on or during the six (6) months
immediately preceding the date of such solicitation or offer, is or was an
officer or employee of the Corporation; provided, however, that a general
advertisement to which an employee of the Corporation responds shall in no event
be deemed to result in a breach of this Section 8(ii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following
the execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation with whom the Corporation has
entered into agreements similar to this Agreement. The Corporation shall
initially contribute $1000 to such trust. Such trust shall be a grantor trust
described in section 671 of the Code. Upon the occurrence of a Potential Change
in Control (as defined below), the Corporation shall fully fund its obligations
to provide benefits hereunder (including, without limitation, its obligations
under Section 4(ii)(g)) by irrevocably contributing funds to such trust on your
behalf. The amount of such contribution shall equal the then present value of
the Corporation's obligations under Section 4 hereof as determined by the firms
serving as the Corporation's actuaries and accountants immediately prior to the
Change in Control. Such actuaries and accountants shall be paid by the
Corporation. The establishment and funding of such trust shall not affect the
obligation of the Corporation to provide benefits under the terms of this
Agreement. For purposes of this Agreement a "Potential Change in Control" shall
be deemed to occur if:
(a) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(b) any Person (including the Corporation) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Person who is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Corporation
representing ten percent (10%) or more of the combined voting power of
the Corporation's then outstanding securities, increases such Person's
beneficial ownership of such securities by five percent (5%) or more of
the Corporation's then outstanding securities over the percentage so
owned by such Person on the date hereof; or
<PAGE> 17
Page 17
(d) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
10. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions
<PAGE> 18
Page 18
of such courts for the purpose of any such suit, action, proceeding or judgment.
By your execution and delivery of this Agreement, you appoint the Secretary of
the Corporation, at the Corporation's office in Toledo, Ohio, as your agent upon
which process may be served in any such suit, action or proceeding; and by its
execution and delivery of this Agreement, the Corporation appoints the Secretary
of the Corporation, at its office in Toledo, Ohio, as its agent upon which
process may be served in any such suit, action or proceeding. Service of process
upon such applicable agent, together with actual notice of such service given to
you or the Corporation, as applicable, in the manner provided in Section 7
hereof, shall be deemed in every respect effective service of process upon the
applicable party in any suit, action, proceeding or judgment. Nothing herein
shall be deemed to limit the ability of you or the Corporation to serve any such
writs, process or summonses in any other manner permitted by applicable law. You
and the Corporation hereby irrevocably waive any objections which you or the
Corporation, as applicable, may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement
brought in any court of competent jurisdiction in the State of Ohio, and hereby
further irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event that no court of competent
jurisdiction in the State of Ohio will accept such jurisdiction and venue, then
any suit, action or proceeding with respect to this Agreement, or any judgment
entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the continental United States which has jurisdiction
over such suit, proceeding or action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was
<PAGE> 19
Page 19
withheld during the period of the Dispute plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees and expenses, if any, incurred in contesting or
disputing any termination of your employment or in seeking to obtain or enforce
any right or benefit provided by this Agreement, or in connection with any tax
audit or proceeding to the extent attributable to the application of section
4999 of the Code to any payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans . Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
If this letter sets forth our agreement on the
subject matter hereof, kindly sign and return to the Corporation the enclosed
copy of this letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
-------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted,
this 27 day of May, 1998.
/s/ Willie B. Purvis
- ---------------------------
[Executive]
<PAGE> 1
[Libbey Letterhead]
Exhibit 10.48
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Richard I. Reynolds
6762 Brintwood
Sylvania, Ohio 43560
Dear Dick,
Libbey Inc. (the "Corporation") considers it essential to the best interests of
its shareholders to foster the continuous employment of key management
personnel. In connection with this, the Corporation's Board of Directors (the
"Board") recognizes that, as is the case with many publicly held corporations,
the possibility of a change in control of the Corporation may exist and that the
uncertainty and questions that it may raise among management could result in the
departure or distraction of management personnel to the detriment of the
Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including yourself, to
their assigned duties without the distraction arising from the possibility of a
change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation hereby agrees
that after this letter agreement (this "Agreement") has been fully executed, you
shall receive the severance benefits set forth in this Agreement in the event
your employment with the Corporation is terminated under the circumstances
described below subsequent to a Change in Control (as defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and shall
continue in effect through December 31, 2001; provided, however, that commencing
on January 1, 2002 and on each January 1 thereafter, the term of this Agreement
shall automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Corporation shall have given notice that
it does not wish to extend this Agreement; provided, further, that if a Change
in Control (as defined in Section 2), occurs during the original or any extended
term of this Agreement, the term of this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there has
been a Change in Control. For purposes of this Agreement, a Change in Control
shall be deemed to occur if:
<PAGE> 2
Page Two
(a) any Person (as defined below) is or becomes the Beneficial
Owner (as defined below), directly or indirectly, of securities of the
Corporation representing twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding securities. For purposes of this
Agreement, (A) the term "Person" is used as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); provided, however, that the term shall not include the Corporation, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by the
shareholders of the Corporation, in substantially the same proportions as their
ownership of stock of the Corporation, and (B) the term "Beneficial Owner" shall
have the meaning given to such term in Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Corporation to effect a transaction described in Sections 2(a), (c) or (d))
whose election by the Board or nomination for election by the Corporation's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
(hereinafter referred to as "Continuing Directors"), cease for any reason to
constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation (or other entity),
other than a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 662/3% of the combined voting power of the
voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets; or
<PAGE> 3
Page Three
(e) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing ten percent (10%) or
more of the combined voting power of the Corporation's then outstanding
securities (a "10% Owner") and (A) the identity of the Chief Executive Officer
of the Corporation is changed during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease for any
reason to serve on the Board during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter; provided, however, that this subsection (e) shall not apply to
any Person who is a 10% Owner as of the date hereof so long as such Person does
not increase such beneficial ownership by five percent (5%) or more over the
percentage so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than (1) for Good Reason (as defined in Section 3(iv)), or (2) in a
Covered Resignation (as defined in Section 3(v)). In the event that you are
entitled to such benefits, such benefits shall be paid notwithstanding the
subsequent expiration of the term of this Agreement. In the event your
employment with the Corporation is terminated for any reason and subsequently a
Change in Control occurs, you shall not be entitled to any benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
<PAGE> 4
Page Four
(iii) CAUSE. Termination by the Corporation of your employment
for "Cause" shall mean termination (a) upon your willful and continued failure
to substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) either (x) for Good Reason, or (y) in
connection with a Covered Resignation, after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (b) upon your willful and continued failure
to substantially follow and comply with the specific and lawful directives of
the Board, as reasonably determined by the Board (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after your issuance of a Notice of Termination for
Good Reason or in connection with a Covered Resignation), after a written demand
for substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances
<PAGE> 5
Page Five
are fully corrected (provided such circumstances are capable of correction)
prior to the Date of Termination (as defined in Section 3(vii)) specified in the
Notice of Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent with the
position in the Corporation that you held immediately prior to the Change in
Control, a significant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other action by
the Corporation that results in a material diminution in your position,
authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base salary as in
effect on the date hereof or as the same may be increased from time to time;
(c) the relocation of the Corporation's offices at which you are
principally employed immediately prior to the date of the Change in Control
(your "Principal Location") to a location more than thirty (30) miles from such
location, or the Corporation's requiring you, without your written consent, to
be based anywhere other than your Principal Location, except for required travel
on the Corporation's business to an extent substantially consistent with your
present business travel obligations;
(d) the Corporation's failure to pay to you any portion of your
current compensation or to pay to you any portion of an installment of deferred
compensation under any deferred compensation program of the Corporation within
seven (7) days of the date such compensation is due;
(e) the Corporation's failure to continue in effect any material
compensation or benefit plan or practice in which you participate immediately
prior to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such plan,
or the Corporation's failure to continue your participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of your participation
relative to other participants, as existed at the time of the Change in Control;
<PAGE> 6
Page Six
(f) the Corporation's failure to continue to provide you with
benefits substantially similar in the aggregate to those enjoyed by you under
any of the Corporation's life insurance, medical, health and accident,
disability, pension, retirement, or other benefit plans or practices in which
you and your eligible family members were participating at the time of the
Change in Control, the taking of any action by the Corporation which would
directly or indirectly materially reduce any of such benefits, or the failure by
the Corporation to provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at the time
of the Change in Control;
(g) the Corporation's failure to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof;
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(vi) hereof (and, if applicable, the requirements of Section 3(iii)
hereof), which purported termination shall not be effective for purposes of this
Agreement; or
(i) the continuation or repetition, after written notice of
objection from you, of harassing or denigrating treatment of you inconsistent
with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION AND COVERED RESIGNATION. You shall be
entitled to voluntarily terminate your employment for any reason or no reason at
any time after a Change in Control. Any such termination which occurs within the
thirty (30) day period following the first anniversary of the occurrence of a
Change in Control shall constitute a resignation which entitles you to receive
benefits under this Agreement (a "Covered Resignation").
<PAGE> 7
Page Seven
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (a) if your employment is terminated due to your death, the date of your
death; (b) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such thirty (30) day period),
and (c) if your employment is terminated pursuant to Section 3(iii), Section
3(iv) or Section 3(v) or for any other reason (other than death or Disability),
the date specified in the Notice of Termination (which, in the case of a
termination for Cause shall not be less than thirty (30) days from the date such
Notice of Termination is given, and in the case of a termination for Good Reason
or in connection with a Covered Resignation shall not be less than fifteen (15)
nor more than sixty (60) days from the date such Notice of Termination is
given). Notwithstanding anything to the contrary contained in this Section
3(vii), if within fifteen (15) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, then the Date of Termination shall be
the date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION.
Following a Change in Control during the term of this
Agreement, you shall be entitled to the benefits described below upon
termination of your employment, provided that such termination occurs during the
term of this Agreement and within the two (2) year period immediately following
the date of such Change in Control. The benefits to which you are entitled,
subject to the terms and conditions of this Agreement, are:
<PAGE> 8
Page Eight
(i) If your employment shall be terminated by the Corporation for
Cause or by you other than (x) for Good Reason or (y) pursuant to a Covered
Resignation, the Corporation shall pay you your full base salary, when due,
through the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled under any
compensation plan or practice of the Corporation at the time such payments are
due, and the Corporation shall have no further obligations to you under this
Agreement.
(ii) If your employment by the Corporation shall be terminated by you
(x) for Good Reason or (y) pursuant to a Covered Resignation, or by the
Corporation other than for Cause or Disability, then you shall be entitled to
the benefits provided below:
(a) the Corporation shall pay to you your full base salary, when
due, through the Date of Termination at the rate in effect at the time Notice of
Termination is given, at the time specified in Section 4(iii), plus all other
amounts to which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as severance
pay to you, at the time specified in Section 4(iii), a lump-sum severance
payment (together with the payments provided in Section 4(ii)(c) below, the
"Severance Payments") equal to the sum of the following:
(A) three (3) times your annual base
salary as in effect as of the Date
of Termination or immediately prior
to the Change in Control, whichever
is greater; and
(B) three (3) times the greater of (x)
your targeted annual bonus as in
effect as of the Date of Termination
or immediately prior to the Change
in Control, whichever is greater, or
(y) your annual bonus for the year
immediately preceding the Date of
Termination;
<PAGE> 9
Page Nine
(c) notwithstanding any provisions of the Corporation's stock
option plans, incentive plans, or other similar plans, the restricted period
with respect to any restricted stock granted to you thereunder shall lapse and
such shares shall be distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date of
Termination, the Corporation shall, at its sole expense as incurred, provide you
with financial planning services of substantially the same type and scope as
those which the Corporation was providing to you immediately prior to the Date
of Termination, or, if more favorable to you, the date of the Change in Control;
(e) for a period of two (2) years following the Date of
Termination, the Corporation shall, at its sole expense as incurred, provide you
with outplacement services, the scope and provider of which shall be selected by
you in your sole discretion;
(f) for a thirty-six (36) month period after such termination,
the Corporation shall continue to provide you and your eligible family members,
based on the cost sharing arrangement between you and the Corporation on the
date of the Change in Control, with medical and dental health benefits at least
equal to those which would have been provided to you and them if your employment
had not been terminated or, if more favorable to you, as in effect generally at
any time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health benefits
under another employer's plans, the Corporation's obligations under this Section
4(ii)(f) shall be reduced to the extent comparable benefits are actually
received by you during the thirty-six (36) month period following your
termination, and any such benefits actually received by you shall be reported to
the Corporation. In the event you are ineligible under the terms of such benefit
plans or programs to continue to be so covered, the Corporation shall provide
you with substantially equivalent coverage through other sources or will provide
you with a lump-sum payment in such amount that, after all taxes on that amount,
shall be equal to the cost to you of providing yourself such benefit coverage.
At the termination of the benefits coverage under the second preceding sentence,
you, your spouse and your dependents shall be entitled to continuation coverage
pursuant to section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security Act of
1974, as
<PAGE> 10
Page Ten
amended, and under any other applicable law, to the extent required by such
laws, as if you had terminated employment with the Corporation on the date such
benefits coverage terminates. The lump-sum shall be determined on a present
value basis using the interest rate provided in section 1274(b)(2)(B) of the
Code on the Date of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
you or for your benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject to the excise tax imposed by section 4999 of the
Code (the "Excise Tax"), then you shall be entitled to receive from the
Corporation an additional payment (the "Gross-Up Payment") in an amount such
that the net amount of the Payment and the Gross-Up Payment retained by you
after the calculation and deduction of all Excise Taxes (including any interest
or penalties imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including any
interest or penalties imposed with respect to such taxes) on the Gross-Up
Payment provided for in this Section 4(ii)(g), and taking into account any lost
or reduced tax deductions on account of the Gross-Up Payment, shall be equal to
the Payment;
(2) all determinations required to be made under this Section
4(ii)(g), including whether and when the Gross-Up Payment is required and the
amount of such Gross-Up Payment, and the assumptions to be utilized in arriving
at such determinations shall be made by the Accountants (as defined below) which
shall provide you and the Corporation with detailed supporting calculations with
respect to such Gross-Up Payment within fifteen (15) business days of the
receipt of notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the "Accountants"
shall mean the Corporation's independent certified public accountants serving
immediately prior to the Change in Control. In the event that the Accountants
are also serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, you shall appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accountants hereunder). All
fees and expenses of the Accountants shall be borne solely by the Corporation.
For the purposes of determining whether any of the Payments will be subject to
the Excise Tax and the amount of such Excise Tax, such Payments will be treated
as "parachute payments" within the meaning of section 280G of
<PAGE> 11
Page Eleven
the Code, and all "parachute payments" in excess of the "base amount" (as
defined under section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that in the opinion of the
Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay Federal income taxes at the highest applicable marginal
rate of Federal income taxation for the calendar year in which the Gross-Up
Payment is to be made and to pay any applicable state and local income taxes at
the highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from the deduction of such state or local
taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of your adjusted gross income), and to have
otherwise allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the Gross-Up
Payment in your adjusted gross income. To the extent practicable, any Gross-Up
Payment with respect to any Payment shall be paid by the Corporation at the time
you are entitled to receive the Payment and in no event will any Gross-Up
Payment be paid later than five days after the receipt by you of the
Accountant's determination. Any determination by the Accountants shall be
binding upon the Corporation and you. As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Accountants hereunder, it is possible that the Gross-Up Payment made will
have been an amount less than the Corporation should have paid pursuant to this
Section 4(ii)(g) (the "Underpayment"). In the event that the Corporation
exhausts its remedies pursuant to Section 4(ii)(g)(3) and you are required to
make a payment of any Excise Tax, the Underpayment shall be promptly paid by the
Corporation to or for your benefit; and
<PAGE> 12
Page Twelve
(3) you shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Corporation of the Gross-Up Payment. Such notification shall be given as
soon as practicable after you are informed in writing of such claim and shall
apprise the Corporation of the nature of such claim and the date on which such
claim is requested to be paid. You shall not pay such claim prior to the
expiration of the 30-day period following the date on which you give such notice
to the Corporation (or such shorter period ending on the date that any payment
of taxes, interest and/or penalties with respect to such claim is due). If the
Corporation notifies you in writing prior to the expiration of such period that
it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting such
claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in order to
effectively contest such claim; and
(D) permit the Corporation to participate in any proceedings
relating to such claims;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify you for and hold you harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of all related costs and expenses. Without limiting the foregoing
provisions of this Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner,
<PAGE> 13
Page Thirteen
and you agree 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 Corporation shall determine; provided, however, that if
the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an interest-free
basis, and shall indemnify you for and hold you harmless from, on an after-tax
basis, 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 (including as a result of any
forgiveness by the Corporation of such advance); provided, further, that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of you with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in respect
of any judgments, fines, settlements, loss, cost or expense (including
attorneys' fees) of any nature related to or arising out of your activities as
an agent, employee, officer or director of the Corporation or in any other
capacity on behalf of or at the request of the Corporation, the Corporation
shall promptly on written request, indemnify (and advance expenses to) you to
the fullest extent permitted by applicable law, including but not limited to
making such findings and determinations and taking any and all such actions as
the Corporation may, under applicable law, be permitted to have the discretion
to take so as to effectuate such indemnification or advancement. Such agreement
by the Corporation shall not be deemed to impair any other obligation of the
Corporation respecting your indemnification otherwise arising out of this or any
other agreement or promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6) years
following the Date of Termination (without reference to whether the term of this
Agreement continues in effect) with directors' and officers' liability insurance
insuring you against insurable events which occur or have occurred while you
were a director or officer of the
<PAGE> 14
Page Fourteen
Corporation, such insurance to have policy limits aggregating not less than the
amount in effect immediately prior to the Change in Control, and otherwise to be
in substantially the same form and to contain substantially the same terms,
conditions and exceptions as the liability issuance policies provided for
officers and directors of the Corporation in force from time to time, provided,
however, that such terms, conditions and exceptions shall not be, in the
aggregate, materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for such
insurance at any time during such period exceed one hundred and fifty percent
(150%) of the per annum rate of premium currently paid by the Corporation for
such insurance, then the Corporation shall provide the maximum coverage that
will then be available at an annual premium equal to one hundred and fifty
percent (150%) of such rate; and
(j) you shall be fully vested in your accrued benefits under
any qualified or nonqualified pension, profit sharing, deferred compensation or
supplemental plans maintained by the Corporation for your benefit, and the
Corporation shall provide you with additional fully vested benefits under such
plans in an amount equal to the benefits which you would have accrued had you
continued your employment with the Corporation for three (3) additional years
following your Date of Termination; provided, however, that to the extent that
the acceleration of vesting or enhanced accrual of such benefits would violate
any applicable law or require the Corporation to accelerate the vesting of the
accrued benefits of all participants in such plan or plans or to provide
additional benefit accruals to such participants, the Corporation shall pay you
a lump-sum payment at the time specified in Section 4(iii) in an amount equal to
the value of such benefits; provided, further, that to the extent that the
present value of all benefits payable to you under this Section 4(ii)(j) is less
than $250,000, the Corporation shall pay you a lump-sum payment at the time
specified in Section 4(iii) in an amount equal to the difference between
$250,000 and the amount of such benefits which are otherwise payable to you
under this Section 4(ii)(j); provided, further, that if you are eligible to
receive grandfathered benefits under the Corporation's pension plan, the
provisions of this Section 4(ii)(j) shall apply to such grandfathered benefits,
without reduction for age, in addition to any other benefits to which you are
entitled under this Section 4(ii)(j).
<PAGE> 15
Page Fifteen
(iii) The payments provided for in Sections 4(ii)(a), (b),
(c), (d) and (j) shall be made not later than the fifth day following the Date
of Termination; provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
(iv) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise
nor, except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything contained
herein, in the event of a Change in Control during the term of this Agreement,
all outstanding options ("Options"), if any, granted to you under any of the
Corporation's stock option plans, incentive plans or other similar plans (or
options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be
<PAGE> 16
Page Sixteen
deemed the Date of Termination. Unless expressly provided otherwise,
"Corporation" as used herein shall mean the Corporation as defined in this
Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. NON- COMPETE, CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) NON-COMPETE. In consideration of and in connection with
the benefits provided to you under this Agreement, and in order to protect the
goodwill of the Corporation, you hereby agree that, if your employment is
terminated pursuant to a Covered Resignation, then, for a period of twelve (12)
months commencing on the Date of Termination, you shall not, directly or
indirectly, own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be connected as a director, officer,
employee, partner, consultant or otherwise with any of the following entities
(or any subsidiary of any such entity) other than as a shareholder or beneficial
owner owning 5% or less of the outstanding securities of a public company:
Durand International, the Anchor Hocking unit of Newell Co., Cardinal
International, Inc., the Indiana Glass unit of Lancaster Colony Corporation,
Oneida LTD or any glass tableware manufacturer, seller or importer for Bormioli
Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the
Sisecam group of companies of Turkey including Pasabahce.
<PAGE> 17
Page Seventeen
(ii) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the (iii)
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(iii) NON-SOLICITATION. You hereby agree that, for the
period commencing on the Date of Termination and terminating on the third
anniversary thereof, you shall not, either on your own account or jointly with
or as a manager, agent, officer, employee, consultant, partner, joint venturer,
owner or shareholder or otherwise on behalf of any other person, firm or
corporation, directly or indirectly solicit or attempt to solicit away from the
Corporation any of its officers or employees or offer employment to any person
who, on or during the six (6) months immediately preceding the date of such
solicitation or offer, is or was an officer or employee of the Corporation;
provided, however, that a general advertisement to which an employee of the
Corporation responds shall in no event be deemed to result in a breach of this
Section 8(iii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following the execution and
delivery of this Agreement by you and the Corporation, the Corporation shall
partially fund its obligations to provide benefits hereunder (including, without
limitation, its obligations under Section 4(ii)(g)) by establishing and
irrevocably partially funding a trust for your benefit and the benefit of other
executives of the Corporation with whom
<PAGE> 18
Page Eighteen
the Corporation has entered into agreements similar to this Agreement. The
Corporation shall initially contribute $1000 to such trust. Such trust shall be
a grantor trust described in section 671 of the Code. Upon the occurrence of a
Potential Change in Control (as defined below), the Corporation shall fully fund
its obligations to provide benefits hereunder (including, without limitation,
its obligations under Section 4(ii)(g)) by irrevocably contributing funds to
such trust on your behalf. The amount of such contribution shall equal the then
present value of the Corporation's obligations under Section 4 hereof as
determined by the firms serving as the Corporation's actuaries and accountants
immediately prior to the Change in Control. Such actuaries and accountants shall
be paid by the Corporation. The establishment and funding of such trust shall
not affect the obligation of the Corporation to provide benefits under the terms
of this Agreement. For purposes of this Agreement a "Potential Change in
Control" shall be deemed to occur if:
(a) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing ten
percent (10%) or more of the combined voting power of the Corporation's then
outstanding securities, increases such Person's beneficial ownership of such
securities by five percent (5%) or more of the Corporation's then outstanding
securities over the percentage so owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been
<PAGE> 19
Page Nineteen
made by either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Ohio without regard to its conflicts of
law principles. All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions of such courts for the
purpose of any such suit, action, proceeding or judgment. By your execution and
delivery of this Agreement, you appoint the Secretary of the Corporation, at the
Corporation's office in Toledo, Ohio, as your agent upon which process may be
served in any such suit, action or proceeding; and by its execution and delivery
of this Agreement, the Corporation appoints the Secretary of the Corporation, at
its office in Toledo, Ohio, as its agent upon which process may be served in any
such suit, action or proceeding. Service of process upon such applicable agent,
together
<PAGE> 20
Page Twenty
with actual notice of such service given to you or the Corporation, as
applicable, in the manner provided in Section 7 hereof, shall be deemed in every
respect effective service of process upon the applicable party in any suit,
action, proceeding or judgment. Nothing herein shall be deemed to limit the
ability of you or the Corporation to serve any such writs, process or summonses
in any other manner permitted by applicable law. You and the Corporation hereby
irrevocably waive any objections which you or the Corporation, as applicable,
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Ohio, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Notwithstanding the foregoing,
in the event that no court of competent jurisdiction in the State of Ohio will
accept such jurisdiction and venue, then any suit, action or proceeding with
respect to this Agreement, or any judgment entered by any court in respect
thereof, may be brought in any court of competent jurisdiction in the
continental United States which has jurisdiction over such suit, proceeding or
action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
<PAGE> 21
Page Twenty-One
and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein, including, without
limitation, any prior severance agreements, is hereby terminated and cancelled;
provided, however, that the Employment Agreement, dated as of June 24, 1993 by
and between you and the Corporation, as amended, shall remain in full force and
effect and shall, pursuant to the terms and conditions thereof, provide certain
severance benefits to you upon certain terminations of employment. Any of your
rights hereunder shall be in addition to any rights you may otherwise have under
benefit plans or agreements of the Corporation to which you are a party or in
which you are a participant, including, but not limited to, any Corporation
sponsored employee benefit plans and stock options plans. Provisions of this
Agreement shall not in any way abrogate your rights under such other plans and
agreements.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted as of the,
27 day of May, 1998.
/s/ R. I. Reynolds
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<PAGE> 1
[Libbey Letterhead]
Exhibit 10.49
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Scott Sellick
6810 Wynnbrook Court
Holland, OH 43528
Dear Scott,
Libbey Inc. (the "Corporation") considers it essential to the
best interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the
Corporation hereby agrees that after this letter agreement (this "Agreement")
has been fully executed, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control (as
defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 2001; provided,
however, that commencing on January 1, 2002 and on each January 1 thereafter,
the term of this Agreement shall automatically be extended for one additional
year unless, not later than September 30 of the preceding year, the Corporation
shall have given notice that it does not wish to extend this Agreement;
provided, further, that if a Change in Control (as defined in Section 2), occurs
during the original or any extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than thirty-six (36)
months beyond the month in which such Change in Control occurred.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there has been a Change in Control. For purposes of this Agreement, a
Change in Control shall be deemed to occur if:
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(a) any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of
securities of the Corporation representing twenty percent (20%) or more
of the combined voting power of the Corporation's then outstanding
securities. For purposes of this Agreement, (A) the term "Person" is
used as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided,
however, that the term shall not include the Corporation, any trustee
or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by
the shareholders of the Corporation, in substantially the same
proportions as their ownership of stock of the Corporation, and (B) the
term "Beneficial Owner" shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in Sections 2(a), (c) or (d)) whose election by
the Board or nomination for election by the Corporation's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"), cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation
(or other entity), other than a merger or consolidation which would
result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 66 2/3% of the combined voting power of the
voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the
sale or disposition by the Corporation of all or substantially all of
the Corporation's assets; or
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(e) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities (a "10% Owner") and (A) the
identity of the Chief Executive Officer of the Corporation is changed
during the period beginning sixty (60) days before the attainment of
the ten percent (10%) beneficial ownership and ending two (2) years
thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease
for any reason to serve on the Board during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter; provided, however, that
this subsection (e) shall not apply to any Person who is a 10% Owner as
of the date hereof so long as such Person does not increase such
beneficial ownership by five percent (5%) or more over the percentage
so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than for Good Reason (as defined in Section 3(iv)). In the event
that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the
event your employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, you shall not be entitled to any
benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment
for "Cause" shall mean termination (a) upon your willful and continued failure
to substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or
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anticipated failure after your issuance of a Notice of Termination (as defined
in Section 3(vi)) for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (b) upon your willful and continued failure
to substantially follow and comply with the specific and lawful directives of
the Board, as reasonably determined by the Board (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after your issuance of a Notice of Termination for
Good Reason), after a written demand for substantial performance is delivered to
you by the Board, which demand specifically identifies the manner in which the
Board believes that you have not substantially performed your duties, (c) upon
your willful commission of an act of fraud or dishonesty resulting in material
economic or financial injury to the Corporation, or (d) upon your willful
engagement in illegal conduct or gross misconduct, in each case which is
materially and demonstrably injurious to the Corporation. For purposes of this
Section 3(iii), no act, or failure to act, on your part shall be deemed
"willful" unless done, or omitted to be done, by you not in good faith.
Notwithstanding the foregoing, you shall not be deemed terminated for Cause
pursuant to Sections 3(iii)(a), (b) or (d) hereof unless and until there shall
have been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board (after reasonable notice to you, an
opportunity for you, together with your counsel, to be heard before the Board
and a reasonable opportunity to cure), finding that in the Board's good faith
opinion you were guilty of conduct set forth above in this Section 3(iii) and
specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of
Termination (as defined in Section 3(vii)) specified in the Notice of
Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Corporation that you held immediately prior to
the Change in Control, a significant adverse alteration in the nature
or status of your responsibilities or the conditions of your employment
from those in effect immediately prior to such Change in Control,
including by virtue of the
<PAGE> 5
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Corporation ceasing to be a publicly-held corporation, or any other
action by the Corporation that results in a material diminution in your
position, authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base
salary as in effect on the date hereof or as the same may be increased
from time to time;
(c) the relocation of the Corporation's offices at
which you are principally employed immediately prior to the date of the
Change in Control (your "Principal Location") to a location more than
thirty (30) miles from such location, or the Corporation's requiring
you, without your written consent, to be based anywhere other than your
Principal Location, except for required travel on the Corporation's
business to an extent substantially consistent with your present
business travel obligations;
(d) the Corporation's failure to pay to you any
portion of your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due;
(e) the Corporation's failure to continue in effect
any material compensation or benefit plan or practice in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the Corporation's
failure to continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of
the Change in Control;
(f) the Corporation's failure to continue to provide
you with benefits substantially similar in the aggregate to those
enjoyed by you under any of the Corporation's life insurance, medical,
health and accident, disability, pension, retirement, or other benefit
plans or practices in which you and your eligible family members were
participating at the time of the Change in Control, the taking of any
action by the Corporation which would directly or indirectly materially
reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at
the time of the Change in
<PAGE> 6
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Control;
(g) the Corporation's failure to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(vi) hereof (and, if applicable, the
requirements of Section 3(iii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(i) the continuation or repetition, after written
notice of objection from you, of harassing or denigrating treatment of
you inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION. You shall be entitled to
voluntarily terminate your employment for any reason or no reason at any time
after a Change in Control.
(iv) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
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(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (a) if your employment is terminated due to your death, the date of your
death; (b) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such thirty (30) day period),
and (c) if your employment is terminated pursuant to Section 3(iii), Section
3(iv) or Section 3(v) or for any other reason (other than death or Disability),
the date specified in the Notice of Termination (which, in the case of a
termination for Cause shall not be less than thirty (30) days from the date such
Notice of Termination is given, and in the case of a termination for Good Reason
shall not be less than fifteen (15) nor more than sixty (60) days from the date
such Notice of Termination is given). Notwithstanding anything to the contrary
contained in this Section 3(vii), if within fifteen (15) days after any Notice
of Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, then the Date
of Termination shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, or otherwise; provided,
however, that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION. Following a Change in
Control during the term of this Agreement, you shall be entitled to the benefits
described below upon termination of your employment, provided that such
termination occurs during the term of this Agreement and within the two (2) year
period immediately following the date of such Change in Control. The benefits to
which you are entitled, subject to the terms and conditions of this Agreement,
are:
(i) If your employment shall be terminated by the
Corporation for Cause or by you other than for Good Reason, the Corporation
shall pay you your full base salary, when due, through the Date of Termination
at the rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due, and the Corporation shall have no
further obligations to you under this Agreement.
(ii) If your employment by the Corporation shall be
terminated by you for Good Reason or by the Corporation other than for Cause or
Disability, then you shall be entitled to the benefits provided below:
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(a) the Corporation shall pay to you your full base
salary, when due, through the Date of Termination at the rate in effect
at the time Notice of Termination is given, at the time specified in
Section 4(iii), plus all other amounts to which you are entitled under
any compensation plan or practice of the Corporation at the time such
payments are due;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Corporation shall
pay as severance pay to you, at the time specified in Section 4(iii), a
lump-sum severance payment (together with the payments provided in
Section 4(ii)(c) below, the "Severance Payments") equal to the sum of
the following:
(A) two (2) times your annual base salary as
in effect as of the Date of Termination or immediately prior
to the Change in Control, whichever is greater; and
(B) two (2) times the greater of (x) your
targeted annual bonus as in effect as of the Date of
Termination or immediately prior to the Change in Control,
whichever is greater, or (y) your annual bonus for the year
immediately preceding the Date of Termination;
(c) notwithstanding any provisions of the
Corporation's stock option plans, incentive plans, or other similar
plans, the restricted period with respect to any restricted stock
granted to you thereunder shall lapse and such shares shall be
distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same
type and scope as those which the Corporation was providing to you
immediately prior to the Date of Termination, or, if more favorable to
you, the date of the Change in Control;
(e) for a period of two (2) years following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by you in your sole discretion;
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(f) for a twenty-four (24) month period after such
termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between
you and the Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health
benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four (24) month
period following your termination, and any such benefits actually
received by you shall be reported to the Corporation. In the event you
are ineligible under the terms of such benefit plans or programs to
continue to be so covered, the Corporation shall provide you with
substantially equivalent coverage through other sources or will provide
you with a lump-sum payment in such amount that, after all taxes on
that amount, shall be equal to the cost to you of providing yourself
such benefit coverage. At the termination of the benefits coverage
under the second preceding sentence, you, your spouse and your
dependents shall be entitled to continuation coverage pursuant to
section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the
extent required by such laws, as if you had terminated employment with
the Corporation on the date such benefits coverage terminates. The
lump-sum shall be determined on a present value basis using the
interest rate provided in section 1274(b)(2)(B) of the Code on the Date
of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to you or for your benefit (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement
or otherwise (the "Payment") would be subject to the excise tax imposed
by section 4999 of the Code (the "Excise Tax"), then you shall be
entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the
Payment and the Gross-Up Payment retained by you after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed
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with respect to such taxes) on the Gross-Up Payment provided for in
this Section 4(ii)(g), and taking into account any lost or reduced tax
deductions on account of the Gross-Up Payment, shall be equal to the
Payment;
(2) all determinations required to be made under this
Section 4(ii)(g), including whether and when the Gross-Up Payment is
required and the amount of such Gross-Up Payment, and the assumptions
to be utilized in arriving at such determinations shall be made by the
Accountants (as defined below) which shall provide you and the
Corporation with detailed supporting calculations with respect to such
Gross-Up Payment within fifteen (15) business days of the receipt of
notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the
"Accountants" shall mean the Corporation's independent certified public
accountants serving immediately prior to the Change in Control. In the
event that the Accountants are also serving as accountant or auditor
for the individual, entity or group effecting the Change in Control,
you shall appoint another nationally recognized public accounting firm
to make the determinations required hereunder (which accounting firm
shall then be referred to as the Accountants hereunder). All fees and
expenses of the Accountants shall be borne solely by the Corporation.
For the purposes of determining whether any of the Payments will be
subject to the Excise Tax and the amount of such Excise Tax, such
Payments will be treated as "parachute payments" within the meaning of
section 280G of the Code, and all "parachute payments" in excess of the
"base amount" (as defined under section 280G(b)(3) of the Code) shall
be treated as subject to the Excise Tax, unless and except to the
extent that in the opinion of the Accountants such Payments (in whole
or in part) either do not constitute "parachute payments" or represent
reasonable compensation for services actually rendered (within the
meaning of section 280G(b)(4) of the Code) in excess of the "base
amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up
Payment, you shall be deemed to pay Federal income taxes at the highest
applicable marginal rate of Federal income taxation for the calendar
year in which the Gross-Up Payment is to be made and to pay any
applicable state and local income taxes at the highest applicable
marginal rate of taxation for the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in Federal income
taxes which could be obtained from the deduction of such state or local
taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of your adjusted
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gross income), and to have otherwise allowable deductions for Federal,
state and local income tax purposes at least equal to those disallowed
because of the inclusion of the Gross-Up Payment in your adjusted gross
income. To the extent practicable, any Gross-Up Payment with respect to
any Payment shall be paid by the Corporation at the time you are
entitled to receive the Payment and in no event will any Gross-Up
Payment be paid later than five days after the receipt by you of the
Accountant's determination. Any determination by the Accountants shall
be binding upon the Corporation and you. As a result of uncertainty in
the application of section 4999 of the Code at the time of the initial
determination by the Accountants hereunder, it is possible that the
Gross-Up Payment made will have been an amount less than the
Corporation should have paid pursuant to this Section 4(ii)(g) (the
"Underpayment"). In the event that the Corporation exhausts its
remedies pursuant to Section 4(ii)(g)(3) and you are required to make a
payment of any Excise Tax, the Underpayment shall be promptly paid by
the Corporation to or for your benefit; and
(3) you shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the Gross-Up Payment. Such
notification shall be given as soon as practicable after you are
informed in writing of such claim and shall apprise the Corporation of
the nature of such claim and the date on which such claim is requested
to be paid. You shall not pay such claim prior to the expiration of the
30-day period following the date on which you give such notice to the
Corporation (or such shorter period ending on the date that any payment
of taxes, interest and/or penalties with respect to such claim is due).
If the Corporation notifies you in writing prior to the expiration of
such period that it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
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provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify you for
and hold you harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related
costs and expenses. Without limiting the foregoing provisions of this
Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you
agree 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 Corporation shall determine; provided,
however, that if the Corporation directs you to pay such claim and sue
for a refund, the Corporation shall advance the amount of such payment
to you, on an interest-free basis, and shall indemnify you for and hold
you harmless from, on an after-tax basis, 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 (including as a result of any forgiveness by
the Corporation of such advance); provided, further, that any extension
of the statute of limitations relating to the payment of taxes for the
taxable year of you with respect to which such contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, the Corporation's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Corporation or in any other capacity on behalf of or at the request of
the Corporation, the Corporation shall promptly on written request,
indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings
and determinations and taking any and all such actions as the
Corporation may,
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under applicable law, be permitted to have the discretion to take so as
to effectuate such indemnification or advancement. Such agreement by
the Corporation shall not be deemed to impair any other obligation of
the Corporation respecting your indemnification otherwise arising out
of this or any other agreement or promise of the Corporation or under
any statute;
(i) the Corporation shall furnish you for six (6)
years following the Date of Termination (without reference to whether
the term of this Agreement continues in effect) with directors' and
officers' liability insurance insuring you against insurable events
which occur or have occurred while you were a director or officer of
the Corporation, such insurance to have policy limits aggregating not
less than the amount in effect immediately prior to the Change in
Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such
terms, conditions and exceptions shall not be, in the aggregate,
materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for
such insurance at any time during such period exceed one hundred and
fifty percent (150%) of the per annum rate of premium currently paid by
the Corporation for such insurance, then the Corporation shall provide
the maximum coverage that will then be available at an annual premium
equal to one hundred and fifty percent (150%) of such rate; and
(j) you shall be fully vested in your accrued
benefits under any qualified or nonqualified pension, profit sharing,
deferred compensation or supplemental plans maintained by the
Corporation for your benefit, and the Corporation shall provide you
with additional fully vested benefits under such plans in an amount
equal to the benefits which you would have accrued had you continued
your employment with the Corporation for two (2) additional years
following your Date of Termination; provided, however, that to the
extent that the acceleration of vesting or enhanced accrual of such
benefits would violate any applicable law or require the Corporation to
accelerate the vesting of the accrued benefits of all participants in
such plan or plans or to provide additional benefit accruals to such
participants, the Corporation shall pay you a lump-sum payment at the
time specified in Section 4(iii) in an amount equal to the value of
such benefits; provided, further, that to the extent that the present
value of all benefits payable to you under this Section 4(ii)(j) is
less than $250,000, the Corporation
<PAGE> 14
Page 14 of 20
shall pay you a lump-sum payment at the time specified in Section
4(iii) in an amount equal to the difference between $250,000 and the
amount of such benefits which are otherwise payable to you under this
Section 4(ii)(j); provided, further, that if you are eligible to
receive grandfathered benefits under the Corporation's pension plan,
the provisions of this Section 4(ii)(j) shall apply to such
grandfathered benefits, without reduction for age, in addition to any
other benefits to which you are entitled under this Section 4(ii)(j).
(iii) The payments provided for in Sections 4(ii)(a), (b),
(c), (d) and (j) shall be made not later than the fifth day following the Date
of Termination; provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
(iv) You shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other employment or
otherwise nor, except as provided in Section 4(ii)(f), shall the amount of any
payment or benefit provided for in this Section 4 be reduced by any compensation
earned by you as the result of employment by another employer or
self-employment, by retirement benefits, by offset against any amount claimed to
be owed by you to the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding
anything contained herein, in the event of a Change in Control during the term
of this Agreement, all outstanding options ("Options"), if any, granted to you
under any of the Corporation's stock option plans, incentive plans or other
similar plans (or options substituted therefor covering the stock of a successor
corporation) shall, effective immediately prior to such Change in Control,
become fully vested and exercisable as to all shares of stock covered thereby.
<PAGE> 15
Page 15 of 20
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
<PAGE> 16
Page 16 of 20
8. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(ii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from the Corporation
any of its officers or employees or offer employment to any person who, on or
during the six (6) months immediately preceding the date of such solicitation or
offer, is or was an officer or employee of the Corporation; provided, however,
that a general advertisement to which an employee of the Corporation responds
shall in no event be deemed to result in a breach of this Section 8(ii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following
the execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation
<PAGE> 17
Page 17 of 20
with whom the Corporation has entered into agreements similar to this Agreement.
The Corporation shall initially contribute $1000 to such trust. Such trust shall
be a grantor trust described in section 671 of the Code. Upon the occurrence of
a Potential Change in Control (as defined below), the Corporation shall fully
fund its obligations to provide benefits hereunder (including, without
limitation, its obligations under Section 4(ii)(g)) by irrevocably contributing
funds to such trust on your behalf. The amount of such contribution shall equal
the then present value of the Corporation's obligations under Section 4 hereof
as determined by the firms serving as the Corporation's actuaries and
accountants immediately prior to the Change in Control. Such actuaries and
accountants shall be paid by the Corporation. The establishment and funding of
such trust shall not affect the obligation of the Corporation to provide
benefits under the terms of this Agreement. For purposes of this Agreement a
"Potential Change in Control" shall be deemed to occur if:
(a) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(b) any Person (including the Corporation) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Person who is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Corporation
representing ten percent (10%) or more of the combined voting power of
the Corporation's then outstanding securities, increases such Person's
beneficial ownership of such securities by five percent (5%) or more of
the Corporation's then outstanding securities over the percentage so
owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
1. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar
<PAGE> 18
Page 18 of 20
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Ohio without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be deemed also to
refer to any successor provisions to such sections. Except as provided in
Section 4(ii)(g) hereunder, any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law.
The obligations of the Corporation under Section 4 shall survive the expiration
of the term of this Agreement. The section headings contained in this Agreement
are for convenience only, and shall not affect the interpretation of this
Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions of such courts for the
purpose of any such suit, action, proceeding or judgment. By your execution and
delivery of this Agreement, you appoint the Secretary of the Corporation, at the
Corporation's office in Toledo, Ohio, as your agent upon which process may be
served in any such suit, action or proceeding; and by its execution and delivery
of this Agreement, the Corporation appoints the Secretary of the Corporation, at
its office in Toledo, Ohio, as its agent upon which process may be served in any
such suit, action or proceeding. Service of process upon such applicable agent,
together
<PAGE> 19
Page 19 of 20
with actual notice of such service given to you or the Corporation, as
applicable, in the manner provided in Section 7 hereof, shall be deemed in every
respect effective service of process upon the applicable party in any suit,
action, proceeding or judgment. Nothing herein shall be deemed to limit the
ability of you or the Corporation to serve any such writs, process or summonses
in any other manner permitted by applicable law. You and the Corporation hereby
irrevocably waive any objections which you or the Corporation, as applicable,
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Ohio, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Notwithstanding the foregoing,
in the event that no court of competent jurisdiction in the State of Ohio will
accept such jurisdiction and venue, then any suit, action or proceeding with
respect to this Agreement, or any judgment entered by any court in respect
thereof, may be brought in any court of competent jurisdiction in the
continental United States which has jurisdiction over such suit, proceeding or
action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
<PAGE> 20
Page 20 of 20
and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled; provided, however, that the Employment Agreement,
dated as of August 25,1997, by and between you and the Corporation, as amended,
shall remain in full force and effect and shall, pursuant to the terms and
conditions thereof, provide certain severance benefits to you upon certain
terminations of employment. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans . Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
If this letter sets forth our agreement on the
subject matter hereof, kindly sign and return to the Corporation the enclosed
copy of this letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
-------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted,
this 27th day of May, 1998.
/s/ Scott Sellick
- ---------------------------
[Executive]
<PAGE> 1
[LIBBEY LETTERHEAD] Exhibit 10.50
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Arthur H. Smith
421 Broadway
Maumee, Ohio 43537
Dear Art,
Libbey Inc. (the "Corporation") considers it essential to the best interests
of its shareholders to foster the continuous employment of key management
personnel. In connection with this, the Corporation's Board of Directors (the
"Board") recognizes that, as is the case with many publicly held corporations,
the possibility of a change in control of the Corporation may exist and that
the uncertainty and questions that it may raise among management could result
in the departure or distraction of management personnel to the detriment of
the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including yourself, to
their assigned duties without the distraction arising from the possibility of
a change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation hereby agrees
that after this letter agreement (this "Agreement") has been fully executed,
you shall receive the severance benefits set forth in this Agreement in the
event your employment with the Corporation is terminated under the
circumstances described below subsequent to a Change in Control (as defined in
Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and
shall continue in effect through December 31, 2001; provided, however, that
commencing on January 1, 2002 and on each January 1 thereafter, the term of
this Agreement shall automatically be extended for one additional year unless,
not later than September 30 of the preceding year, the Corporation shall have
given notice that it does not wish to extend this Agreement; provided,
further, that if a Change in Control (as defined in Section 2), occurs during
the original or any extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than thirty-six
(36) months beyond the month in which such Change in Control occurred.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there has
been a Change in Control. For purposes of this Agreement, a Change in Control
shall be deemed to occur if:
<PAGE> 2
Page Two
(a) any Person (as defined below) is or becomes the Beneficial
Owner (as defined below), directly or indirectly, of securities of the
Corporation representing twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding securities. For purposes of this
Agreement, (A) the term "Person" is used as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); provided, however, that the term shall not include the
Corporation, any trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation, and any corporation owned, directly
or indirectly, by the shareholders of the Corporation, in substantially the
same proportions as their ownership of stock of the Corporation, and (B) the
term "Beneficial Owner" shall have the meaning given to such term in Rule
13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has entered into
an agreement with the Corporation to effect a transaction described in
Sections 2(a), (c) or (d)) whose election by the Board or nomination for
election by the Corporation's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved (hereinafter referred to as "Continuing
Directors"), cease for any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation (or other
entity), other than a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 66 2/3%
of the combined voting power of the voting securities of the Corporation or
such surviving entity outstanding immediately after such merger or
consolidation;
(d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets; or
<PAGE> 3
Page Three
(e) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing ten percent (10%) or
more of the combined voting power of the Corporation's then outstanding
securities (a "10% Owner") and (A) the identity of the Chief Executive Officer
of the Corporation is changed during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease for any
reason to serve on the Board during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter; provided, however, that this subsection (e) shall not apply to
any Person who is a 10% Owner as of the date hereof so long as such Person does
not increase such beneficial ownership by five percent (5%) or more over the
percentage so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than (1) for Good Reason (as defined in Section 3(iv)), or (2) in a
Covered Resignation (as defined in Section 3(v)). In the event that you are
entitled to such benefits, such benefits shall be paid notwithstanding the
subsequent expiration of the term of this Agreement. In the event your
employment with the Corporation is terminated for any reason and subsequently a
Change in Control occurs, you shall not be entitled to any benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
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Page Four
(iii) CAUSE. Termination by the Corporation of your employment for
"Cause" shall mean termination (a) upon your willful and continued failure to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) either (x) for Good Reason, or (y) in
connection with a Covered Resignation, after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (b) upon your willful and continued failure
to substantially follow and comply with the specific and lawful directives of
the Board, as reasonably determined by the Board (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after your issuance of a Notice of Termination for
Good Reason or in connection with a Covered Resignation), after a written demand
for substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances
<PAGE> 5
Page Five
are fully corrected (provided such circumstances are capable of correction)
prior to the Date of Termination (as defined in Section 3(vii)) specified in the
Notice of Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent with the
position in the Corporation that you held immediately prior to the Change in
Control, a significant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other action by
the Corporation that results in a material diminution in your position,
authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base salary as
in effect on the date hereof or as the same may be increased from time to time;
(c) the relocation of the Corporation's offices at which you
are principally employed immediately prior to the date of the Change in Control
(your "Principal Location") to a location more than thirty (30) miles from such
location, or the Corporation's requiring you, without your written consent, to
be based anywhere other than your Principal Location, except for required travel
on the Corporation's business to an extent substantially consistent with your
present business travel obligations;
(d) the Corporation's failure to pay to you any portion of
your current compensation or to pay to you any portion of an installment of
deferred compensation under any deferred compensation program of the Corporation
within seven (7) days of the date such compensation is due;
(e) the Corporation's failure to continue in effect any
material compensation or benefit plan or practice in which you participate
immediately prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or the Corporation's failure to continue your
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided and
the level of your participation relative to other participants, as existed at
the time of the Change in Control;
<PAGE> 6
Page Six
(f) the Corporation's failure to continue to provide you with
benefits substantially similar in the aggregate to those enjoyed by you under
any of the Corporation's life insurance, medical, health and accident,
disability, pension, retirement, or other benefit plans or practices in which
you and your eligible family members were participating at the time of the
Change in Control, the taking of any action by the Corporation which would
directly or indirectly materially reduce any of such benefits, or the failure by
the Corporation to provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at the time
of the Change in Control;
(g) the Corporation's failure to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof;
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(vi) hereof (and, if applicable, the requirements of Section 3(iii)
hereof), which purported termination shall not be effective for purposes of this
Agreement; or
(i) the continuation or repetition, after written notice of
objection from you, of harassing or denigrating treatment of you inconsistent
with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION AND COVERED RESIGNATION. You shall be
entitled to voluntarily terminate your employment for any reason or no reason at
any time after a Change in Control. Any such termination which occurs within the
thirty (30) day period following the first anniversary of the occurrence of a
Change in Control shall constitute a resignation which entitles you to receive
benefits under this Agreement (a "Covered Resignation").
<PAGE> 7
Page Seven
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall mean
(a) if your employment is terminated due to your death, the date of your death;
(b) if your employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30) day period), and
(c) if your employment is terminated pursuant to Section 3(iii), Section 3(iv)
or Section 3(v) or for any other reason (other than death or Disability), the
date specified in the Notice of Termination (which, in the case of a termination
for Cause shall not be less than thirty (30) days from the date such Notice of
Termination is given, and in the case of a termination for Good Reason or in
connection with a Covered Resignation shall not be less than fifteen (15) nor
more than sixty (60) days from the date such Notice of Termination is given).
Notwithstanding anything to the contrary contained in this Section 3(vii), if
within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION.
Following a Change in Control during the term of this Agreement,
you shall be entitled to the benefits described below upon termination of your
employment, provided that such termination occurs during the term of this
Agreement and within the two (2) year period immediately following the date of
such Change in Control. The benefits to which you are entitled, subject to the
terms and conditions of this Agreement, are:
<PAGE> 8
Page Eight
(i) If your employment shall be terminated by the Corporation for
Cause or by you other than (x) for Good Reason or (y) pursuant to a Covered
Resignation, the Corporation shall pay you your full base salary, when due,
through the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled under any
compensation plan or practice of the Corporation at the time such payments are
due, and the Corporation shall have no further obligations to you under this
Agreement.
(ii) If your employment by the Corporation shall be terminated by
you (x) for Good Reason or (y) pursuant to a Covered Resignation, or by the
Corporation other than for Cause or Disability, then you shall be entitled to
the benefits provided below:
(a) the Corporation shall pay to you your full base salary,
when due, through the Date of Termination at the rate in effect at the time
Notice of Termination is given, at the time specified in Section 4(iii), plus
all other amounts to which you are entitled under any compensation plan or
practice of the Corporation at the time such payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as severance
pay to you, at the time specified in Section 4(iii), a lump-sum severance
payment (together with the payments provided in Section 4(ii)(c) below, the
"Severance Payments") equal to the sum of the following:
(A) three (3) times your annual base salary as in effect
as of the Date of Termination or immediately prior
to the Change in Control, whichever is greater; and
(B) three (3) times the greater of (x) your targeted
annual bonus as in effect as of the Date of
Termination or immediately prior to the Change in
Control, whichever is greater, or (y) your annual
bonus for the year immediately preceding the Date of
Termination;
<PAGE> 9
Page Nine
(c) notwithstanding any provisions of the Corporation's stock
option plans, incentive plans, or other similar plans, the restricted period
with respect to any restricted stock granted to you thereunder shall lapse and
such shares shall be distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date of
Termination, the Corporation shall, at its sole expense as incurred, provide you
with financial planning services of substantially the same type and scope as
those which the Corporation was providing to you immediately prior to the Date
of Termination, or, if more favorable to you, the date of the Change in Control;
(e) for a period of two (2) years following the Date of
Termination, the Corporation shall, at its sole expense as incurred, provide you
with outplacement services, the scope and provider of which shall be selected by
you in your sole discretion;
(f) for a thirty-six (36) month period after such termination,
the Corporation shall continue to provide you and your eligible family members,
based on the cost sharing arrangement between you and the Corporation on the
date of the Change in Control, with medical and dental health benefits at least
equal to those which would have been provided to you and them if your employment
had not been terminated or, if more favorable to you, as in effect generally at
any time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health benefits
under another employer's plans, the Corporation's obligations under this Section
4(ii)(f) shall be reduced to the extent comparable benefits are actually
received by you during the thirty-six (36) month period following your
termination, and any such benefits actually received by you shall be reported to
the Corporation. In the event you are ineligible under the terms of such benefit
plans or programs to continue to be so covered, the Corporation shall provide
you with substantially equivalent coverage through other sources or will provide
you with a lump-sum payment in such amount that, after all taxes on that amount,
shall be equal to the cost to you of providing yourself such benefit coverage.
At the termination of the benefits coverage under the second preceding sentence,
you, your spouse and your dependents shall be entitled to continuation coverage
pursuant to section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security Act of
1974, as
<PAGE> 10
Page Ten
amended, and under any other applicable law, to the extent required by such
laws, as if you had terminated employment with the Corporation on the date such
benefits coverage terminates. The lump-sum shall be determined on a present
value basis using the interest rate provided in section 1274(b)(2)(B) of the
Code on the Date of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
you or for your benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject to the excise tax imposed by section 4999 of the
Code (the "Excise Tax"), then you shall be entitled to receive from the
Corporation an additional payment (the "Gross-Up Payment") in an amount such
that the net amount of the Payment and the Gross-Up Payment retained by you
after the calculation and deduction of all Excise Taxes (including any interest
or penalties imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including any
interest or penalties imposed with respect to such taxes) on the Gross-Up
Payment provided for in this Section 4(ii)(g), and taking into account any lost
or reduced tax deductions on account of the Gross-Up Payment, shall be equal to
the Payment;
(2) all determinations required to be made under this Section
4(ii)(g), including whether and when the Gross-Up Payment is required and the
amount of such Gross-Up Payment, and the assumptions to be utilized in arriving
at such determinations shall be made by the Accountants (as defined below) which
shall provide you and the Corporation with detailed supporting calculations with
respect to such Gross-Up Payment within fifteen (15) business days of the
receipt of notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the "Accountants"
shall mean the Corporation's independent certified public accountants serving
immediately prior to the Change in Control. In the event that the Accountants
are also serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, you shall appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accountants hereunder). All
fees and expenses of the Accountants shall be borne solely by the Corporation.
For the purposes of determining whether any of the Payments will be subject to
the Excise Tax and the amount of such Excise Tax, such Payments will be treated
as "parachute payments" within the meaning of section 280G of
<PAGE> 11
Page Eleven
the Code, and all "parachute payments" in excess of the "base amount" (as
defined under section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that in the opinion of the
Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay Federal income taxes at the highest applicable marginal
rate of Federal income taxation for the calendar year in which the Gross-Up
Payment is to be made and to pay any applicable state and local income taxes at
the highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from the deduction of such state or local
taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of your adjusted gross income), and to have
otherwise allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the Gross-Up
Payment in your adjusted gross income. To the extent practicable, any Gross-Up
Payment with respect to any Payment shall be paid by the Corporation at the time
you are entitled to receive the Payment and in no event will any Gross-Up
Payment be paid later than five days after the receipt by you of the
Accountant's determination. Any determination by the Accountants shall be
binding upon the Corporation and you. As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Accountants hereunder, it is possible that the Gross-Up Payment made will
have been an amount less than the Corporation should have paid pursuant to this
Section 4(ii)(g) (the "Underpayment"). In the event that the Corporation
exhausts its remedies pursuant to Section 4(ii)(g)(3) and you are required to
make a payment of any Excise Tax, the Underpayment shall be promptly paid by the
Corporation to or for your benefit; and
<PAGE> 12
Page Twelve
(3) you shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Corporation of the Gross-Up Payment. Such notification shall be given as
soon as practicable after you are informed in writing of such claim and shall
apprise the Corporation of the nature of such claim and the date on which such
claim is requested to be paid. You shall not pay such claim prior to the
expiration of the 30-day period following the date on which you give such notice
to the Corporation (or such shorter period ending on the date that any payment
of taxes, interest and/or penalties with respect to such claim is due). If the
Corporation notifies you in writing prior to the expiration of such period that
it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting such
claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in order
to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify you for and hold you harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of all related costs and expenses. Without limiting the foregoing
provisions of this Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner,
<PAGE> 13
Page Thirteen
and you agree 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 Corporation shall determine; provided, however, that if
the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an interest-free
basis, and shall indemnify you for and hold you harmless from, on an after-tax
basis, 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 (including as a result of any
forgiveness by the Corporation of such advance); provided, further, that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of you with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in respect
of any judgments, fines, settlements, loss, cost or expense (including
attorneys' fees) of any nature related to or arising out of your activities as
an agent, employee, officer or director of the Corporation or in any other
capacity on behalf of or at the request of the Corporation, the Corporation
shall promptly on written request, indemnify (and advance expenses to) you to
the fullest extent permitted by applicable law, including but not limited to
making such findings and determinations and taking any and all such actions as
the Corporation may, under applicable law, be permitted to have the discretion
to take so as to effectuate such indemnification or advancement. Such agreement
by the Corporation shall not be deemed to impair any other obligation of the
Corporation respecting your indemnification otherwise arising out of this or any
other agreement or promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6) years
following the Date of Termination (without reference to whether the term of this
Agreement continues in effect) with directors' and officers' liability insurance
insuring you against insurable events which occur or have occurred while you
were a director or officer of the
<PAGE> 14
Page Fourteen
Corporation, such insurance to have policy limits aggregating not less than the
amount in effect immediately prior to the Change in Control, and otherwise to be
in substantially the same form and to contain substantially the same terms,
conditions and exceptions as the liability issuance policies provided for
officers and directors of the Corporation in force from time to time, provided,
however, that such terms, conditions and exceptions shall not be, in the
aggregate, materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for such
insurance at any time during such period exceed one hundred and fifty percent
(150%) of the per annum rate of premium currently paid by the Corporation for
such insurance, then the Corporation shall provide the maximum coverage that
will then be available at an annual premium equal to one hundred and fifty
percent (150%) of such rate; and
(j) you shall be fully vested in your accrued benefits under
any qualified or nonqualified pension, profit sharing, deferred compensation or
supplemental plans maintained by the Corporation for your benefit, and the
Corporation shall provide you with additional fully vested benefits under such
plans in an amount equal to the benefits which you would have accrued had you
continued your employment with the Corporation for three (3) additional years
following your Date of Termination; provided, however, that to the extent that
the acceleration of vesting or enhanced accrual of such benefits would violate
any applicable law or require the Corporation to accelerate the vesting of the
accrued benefits of all participants in such plan or plans or to provide
additional benefit accruals to such participants, the Corporation shall pay you
a lump-sum payment at the time specified in Section 4(iii) in an amount equal to
the value of such benefits; provided, further, that to the extent that the
present value of all benefits payable to you under this Section 4(ii)(j) is less
than $250,000, the Corporation shall pay you a lump-sum payment at the time
specified in Section 4(iii) in an amount equal to the difference between
$250,000 and the amount of such benefits which are otherwise payable to you
under this Section 4(ii)(j); provided, further, that if you are eligible to
receive grandfathered benefits under the Corporation's pension plan, the
provisions of this Section 4(ii)(j) shall apply to such grandfathered benefits,
without reduction for age, in addition to any other benefits to which you are
entitled under this Section 4(ii)(j).
<PAGE> 15
Page Fifteen
(i) The payments provided for in Sections 4(ii)(a), (b), (c),
(d) and (j) shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
(ii) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise
nor, except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything
contained herein, in the event of a Change in Control during the term of this
Agreement, all outstanding options ("Options"), if any, granted to you under any
of the Corporation's stock option plans, incentive plans or other similar plans
(or options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be
<PAGE> 16
Page Sixteen
deemed the Date of Termination. Unless expressly provided otherwise,
"Corporation" as used herein shall mean the Corporation as defined in this
Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. NON-COMPETE, CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) NON-COMPETE. In consideration of and in connection with
the benefits provided to you under this Agreement, and in order to protect the
goodwill of the Corporation, you hereby agree that, if your employment is
terminated pursuant to a Covered Resignation, then, for a period of twelve (12)
months commencing on the Date of Termination, you shall not, directly or
indirectly, own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be connected as a director, officer,
employee, partner, consultant or otherwise with any of the following entities
(or any subsidiary of any such entity) other than as a shareholder or beneficial
owner owning 5% or less of the outstanding securities of a public company:
Durand International, the Anchor Hocking unit of Newell Co., Cardinal
International, Inc., the Indiana Glass unit of Lancaster Colony Corporation,
Oneida LTD or any glass tableware manufacturer, seller or importer for Bormioli
Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the
Sisecam group of companies of Turkey including Pasabahce.
<PAGE> 17
Page Seventeen
(ii) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(iii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from the Corporation
any of its officers or employees or offer employment to any person who, on or
during the six (6) months immediately preceding the date of such solicitation or
offer, is or was an officer or employee of the Corporation; provided, however,
that a general advertisement to which an employee of the Corporation responds
shall in no event be deemed to result in a breach of this Section 8(iii).
7. FUNDING OF OBLIGATIONS. Within a reasonable time following the
execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation with whom
<PAGE> 18
Page Eighteen
the Corporation has entered into agreements similar to this Agreement. The
Corporation shall initially contribute $1000 to such trust. Such trust shall be
a grantor trust described in section 671 of the Code. Upon the occurrence of a
Potential Change in Control (as defined below), the Corporation shall fully fund
its obligations to provide benefits hereunder (including, without limitation,
its obligations under Section 4(ii)(g)) by irrevocably contributing funds to
such trust on your behalf. The amount of such contribution shall equal the then
present value of the Corporation's obligations under Section 4 hereof as
determined by the firms serving as the Corporation's actuaries and accountants
immediately prior to the Change in Control. Such actuaries and accountants shall
be paid by the Corporation. The establishment and funding of such trust shall
not affect the obligation of the Corporation to provide benefits under the terms
of this Agreement. For purposes of this Agreement a "Potential Change in
Control" shall be deemed to occur if:
(a) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces
an intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing ten
percent (10%) or more of the combined voting power of the Corporation's then
outstanding securities, increases such Person's beneficial ownership of such
securities by five percent (5%) or more of the Corporation's then outstanding
securities over the percentage so owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been
<PAGE> 19
Page Nineteen
made by either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Ohio without regard to its conflicts of
law principles. All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions of such courts for the
purpose of any such suit, action, proceeding or judgment. By your execution and
delivery of this Agreement, you appoint the Secretary of the Corporation, at the
Corporation's office in Toledo, Ohio, as your agent upon which process may be
served in any such suit, action or proceeding; and by its execution and delivery
of this Agreement, the Corporation appoints the Secretary of the Corporation, at
its office in Toledo, Ohio, as its agent upon which process may be served in any
such suit, action or proceeding. Service of process upon such applicable agent,
together
<PAGE> 20
Page Twenty
with actual notice of such service given to you or the Corporation, as
applicable, in the manner provided in Section 7 hereof, shall be deemed in every
respect effective service of process upon the applicable party in any suit,
action, proceeding or judgment. Nothing herein shall be deemed to limit the
ability of you or the Corporation to serve any such writs, process or summonses
in any other manner permitted by applicable law. You and the Corporation hereby
irrevocably waive any objections which you or the Corporation, as applicable,
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Ohio, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Notwithstanding the foregoing,
in the event that no court of competent jurisdiction in the State of Ohio will
accept such jurisdiction and venue, then any suit, action or proceeding with
respect to this Agreement, or any judgment entered by any court in respect
thereof, may be brought in any court of competent jurisdiction in the
continental United States which has jurisdiction over such suit, proceeding or
action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
<PAGE> 21
Page Twenty-One
and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled; provided, however, that the Employment Agreement,
dated as of June 24, 1993 by and between you and the Corporation, as amended,
shall remain in full force and effect and shall, pursuant to the terms and
conditions thereof, provide certain severance benefits to you upon certain
terminations of employment. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans. Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
------------------------------
Its: Chairman of the Board and
Chief Executive Officer
Agreed and Accepted as of the,
27th day of May, 1998.
/s/ Arthur H. Smith
- --------------------------
<PAGE> 1
Exhibit 10.51
[LIBBEY LETTERHEAD]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Kenneth G. Wilkes
7516 Rymoor Court
Sylvania, Ohio 43560
Dear Ken,
Libbey Inc. (the "Corporation") considers it essential to the best interests of
its shareholders to foster the continuous employment of key management
personnel. In connection with this, the Corporation's Board of Directors (the
"Board") recognizes that, as is the case with many publicly held corporations,
the possibility of a change in control of the Corporation may exist and that the
uncertainty and questions that it may raise among management could result in the
departure or distraction of management personnel to the detriment of the
Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including yourself, to
their assigned duties without the distraction arising from the possibility of a
change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation hereby agrees
that after this letter agreement (this "Agreement") has been fully executed, you
shall receive the severance benefits set forth in this Agreement in the event
your employment with the Corporation is terminated under the circumstances
described below subsequent to a Change in Control (as defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and shall
continue in effect through December 31, 2001; provided, however, that commencing
on January 1, 2002 and on each January 1 thereafter, the term of this Agreement
shall automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Corporation shall have given notice that
it does not wish to extend this Agreement; provided, further, that if a Change
in Control (as defined in Section 2), occurs during the original or any extended
term of this Agreement, the term of this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there has
been a Change in Control. For purposes of this Agreement, a Change in Control
shall be deemed to occur if:
<PAGE> 2
Page Two
(a) any Person (as defined below) is or becomes the Beneficial
Owner (as defined below), directly or indirectly, of securities of the
Corporation representing twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding securities. For purposes of this
Agreement, (A) the term "Person" is used as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); provided, however, that the term shall not include the Corporation, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by the
shareholders of the Corporation, in substantially the same proportions as their
ownership of stock of the Corporation, and (B) the term "Beneficial Owner" shall
have the meaning given to such term in Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Corporation to effect a transaction described in Sections 2(a), (c) or
(d)) whose election by the Board or nomination for election by the Corporation's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
(hereinafter referred to as "Continuing Directors"), cease for any reason to
constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation (or other entity),
other than a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 66 2/3% of the combined voting power of the
voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets; or
<PAGE> 3
Page Three
(e) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing ten percent (10%) or
more of the combined voting power of the Corporation's then outstanding
securities (a "10% Owner") and (A) the identity of the Chief Executive Officer
of the Corporation is changed during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease for any
reason to serve on the Board during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter; provided, however, that this subsection (e) shall not apply to
any Person who is a 10% Owner as of the date hereof so long as such Person does
not increase such beneficial ownership by five percent (5%) or more over the
percentage so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the events
described in Section 2 constituting a Change in Control shall have occurred, you
shall be entitled to the benefits provided in Section 4(ii) upon the subsequent
termination of your employment, provided that such termination occurs during the
term of this Agreement and within the two (2) year period immediately following
the date of such Change in Control, unless such termination is (a) because of
your death or Disability (as defined in Section 3(ii)), (b) by the Corporation
for Cause (as defined in Section 3(iii)), or (c) by you other than (1) for Good
Reason (as defined in Section 3(iv)), or (2) in a Covered Resignation (as
defined in Section 3(v)). In the event that you are entitled to such benefits,
such benefits shall be paid notwithstanding the subsequent expiration of the
term of this Agreement. In the event your employment with the Corporation is
terminated for any reason and subsequently a Change in Control occurs, you shall
not be entitled to any benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to physical
or mental illness, you shall have been absent from the full-time performance of
your duties with the Corporation for six (6) consecutive months, and within
thirty (30) days after written notice of termination is given you shall not have
returned to the full-time performance of your duties, your employment may be
terminated for "Disability."
<PAGE> 4
Page Four
(iii) CAUSE. Termination by the Corporation of your employment for
"Cause" shall mean termination (a) upon your willful and continued failure to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) either (x) for Good Reason, or (y) in
connection with a Covered Resignation, after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (b) upon your willful and continued failure
to substantially follow and comply with the specific and lawful directives of
the Board, as reasonably determined by the Board (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after your issuance of a Notice of Termination for
Good Reason or in connection with a Covered Resignation), after a written demand
for substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a Change in Control
of any of the following circumstances unless, in the case of Sections 3(iv)(a),
(e), (f), (g), (h) or (i), such circumstances
<PAGE> 5
Page Five
are fully corrected (provided such circumstances are capable of correction)
prior to the Date of Termination (as defined in Section 3(vii)) specified in the
Notice of Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent with the
position in the Corporation that you held immediately prior to the Change in
Control, a significant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other action by
the Corporation that results in a material diminution in your position,
authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base salary as
in effect on the date hereof or as the same may be increased from time to time;
(c) the relocation of the Corporation's offices at which you
are principally employed immediately prior to the date of the Change in Control
(your "Principal Location") to a location more than thirty (30) miles from such
location, or the Corporation's requiring you, without your written consent, to
be based anywhere other than your Principal Location, except for required travel
on the Corporation's business to an extent substantially consistent with your
present business travel obligations;
(d) the Corporation's failure to pay to you any portion of
your current compensation or to pay to you any portion of an installment of
deferred compensation under any deferred compensation program of the Corporation
within seven (7) days of the date such compensation is due;
(e) the Corporation's failure to continue in effect any
material compensation or benefit plan or practice in which you participate
immediately prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or the Corporation's failure to continue your
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided and
the level of your participation relative to other participants, as existed at
the time of the Change in Control;
<PAGE> 6
Page Six
(f) the Corporation's failure to continue to provide you with
benefits substantially similar in the aggregate to those enjoyed by you under
any of the Corporation's life insurance, medical, health and accident,
disability, pension, retirement, or other benefit plans or practices in which
you and your eligible family members were participating at the time of the
Change in Control, the taking of any action by the Corporation which would
directly or indirectly materially reduce any of such benefits, or the failure by
the Corporation to provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at the time
of the Change in Control;
(g) the Corporation's failure to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof;
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(vi) hereof (and, if applicable, the requirements of Section 3(iii)
hereof), which purported termination shall not be effective for purposes of this
Agreement; or
(i) the continuation or repetition, after written notice of
objection from you, of harassing or denigrating treatment of you inconsistent
with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION AND COVERED RESIGNATION. You shall be
entitled to voluntarily terminate your employment for any reason or no reason at
any time after a Change in Control. Any such termination which occurs within the
thirty (30) day period following the first anniversary of the occurrence of a
Change in Control shall constitute a resignation which entitles you to receive
benefits under this Agreement (a "Covered Resignation").
<PAGE> 7
Page Seven
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall mean (a)
if your employment is terminated due to your death, the date of your death; (b)
if your employment is terminated for Disability, thirty (30) days after Notice
of Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30) day period), and
(c) if your employment is terminated pursuant to Section 3(iii), Section 3(iv)
or Section 3(v) or for any other reason (other than death or Disability), the
date specified in the Notice of Termination (which, in the case of a termination
for Cause shall not be less than thirty (30) days from the date such Notice of
Termination is given, and in the case of a termination for Good Reason or in
connection with a Covered Resignation shall not be less than fifteen (15) nor
more than sixty (60) days from the date such Notice of Termination is given).
Notwithstanding anything to the contrary contained in this Section 3(vii), if
within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION.
Following a Change in Control during the term of this Agreement, you
shall be entitled to the benefits described below upon termination of your
employment, provided that such termination occurs during the term of this
Agreement and within the two (2) year period immediately following the date of
such Change in Control. The benefits to which you are entitled, subject to the
terms and conditions of this Agreement, are:
<PAGE> 8
Page Eight
(i) If your employment shall be terminated by the Corporation for
Cause or by you other than (x) for Good Reason or (y) pursuant to a Covered
Resignation, the Corporation shall pay you your full base salary, when due,
through the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled under any
compensation plan or practice of the Corporation at the time such payments are
due, and the Corporation shall have no further obligations to you under this
Agreement.
(ii) If your employment by the Corporation shall be terminated by
you (x) for Good Reason or (y) pursuant to a Covered Resignation, or by the
Corporation other than for Cause or Disability, then you shall be entitled to
the benefits provided below:
(a) the Corporation shall pay to you your full base salary,
when due, through the Date of Termination at the rate in effect at the time
Notice of Termination is given, at the time specified in Section 4(iii), plus
all other amounts to which you are entitled under any compensation plan or
practice of the Corporation at the time such payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as severance
pay to you, at the time specified in Section 4(iii), a lump-sum severance
payment (together with the payments provided in Section 4(ii)(c) below, the
"Severance Payments") equal to the sum of the following:
(A) three (3) times your annual base salary as in
effect as of the Date of Termination or
immediately prior to the Change in Control,
whichever is greater; and
(B) three (3) times the greater of (x) your targeted
annual bonus as in effect as of the Date of
Termination or immediately prior to the Change in
Control, whichever is greater, or (y) your annual
bonus for the year immediately preceding the Date
of Termination;
<PAGE> 9
Page Nine
(c) notwithstanding any provisions of the Corporation's stock
option plans, incentive plans, or other similar plans, the restricted period
with respect to any restricted stock granted to you thereunder shall lapse and
such shares shall be distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date of
Termination, the Corporation shall, at its sole expense as incurred, provide you
with financial planning services of substantially the same type and scope as
those which the Corporation was providing to you immediately prior to the Date
of Termination, or, if more favorable to you, the date of the Change in Control;
(e) for a period of two (2) years following the Date of
Termination, the Corporation shall, at its sole expense as incurred, provide you
with outplacement services, the scope and provider of which shall be selected by
you in your sole discretion;
(f) for a thirty-six (36) month period after such termination,
the Corporation shall continue to provide you and your eligible family members,
based on the cost sharing arrangement between you and the Corporation on the
date of the Change in Control, with medical and dental health benefits at least
equal to those which would have been provided to you and them if your employment
had not been terminated or, if more favorable to you, as in effect generally at
any time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health benefits
under another employer's plans, the Corporation's obligations under this Section
4(ii)(f) shall be reduced to the extent comparable benefits are actually
received by you during the thirty-six (36) month period following your
termination, and any such benefits actually received by you shall be reported to
the Corporation. In the event you are ineligible under the terms of such benefit
plans or programs to continue to be so covered, the Corporation shall provide
you with substantially equivalent coverage through other sources or will provide
you with a lump-sum payment in such amount that, after all taxes on that amount,
shall be equal to the cost to you of providing yourself such benefit coverage.
At the termination of the benefits coverage under the second preceding sentence,
you, your spouse and your dependents shall be entitled to continuation coverage
pursuant to section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security Act of
1974, as
<PAGE> 10
Page Ten
amended, and under any other applicable law, to the extent required by such
laws, as if you had terminated employment with the Corporation on the date such
benefits coverage terminates. The lump-sum shall be determined on a present
value basis using the interest rate provided in section 1274(b)(2)(B) of the
Code on the Date of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
you or for your benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject to the excise tax imposed by section 4999 of the
Code (the "Excise Tax"), then you shall be entitled to receive from the
Corporation an additional payment (the "Gross-Up Payment") in an amount such
that the net amount of the Payment and the Gross-Up Payment retained by you
after the calculation and deduction of all Excise Taxes (including any interest
or penalties imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including any
interest or penalties imposed with respect to such taxes) on the Gross-Up
Payment provided for in this Section 4(ii)(g), and taking into account any lost
or reduced tax deductions on account of the Gross-Up Payment, shall be equal to
the Payment;
(2) all determinations required to be made under this Section
4(ii)(g), including whether and when the Gross-Up Payment is required and the
amount of such Gross-Up Payment, and the assumptions to be utilized in arriving
at such determinations shall be made by the Accountants (as defined below) which
shall provide you and the Corporation with detailed supporting calculations with
respect to such Gross-Up Payment within fifteen (15) business days of the
receipt of notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the "Accountants"
shall mean the Corporation's independent certified public accountants serving
immediately prior to the Change in Control. In the event that the Accountants
are also serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, you shall appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accountants hereunder). All
fees and expenses of the Accountants shall be borne solely by the Corporation.
For the purposes of determining whether any of the Payments will be subject to
the Excise Tax and the amount of such Excise Tax, such Payments will be treated
as "parachute payments" within the meaning of section 280G of
<PAGE> 11
Page Eleven
the Code, and all "parachute payments" in excess of the "base amount" (as
defined under section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that in the opinion of the
Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay Federal income taxes at the highest applicable marginal
rate of Federal income taxation for the calendar year in which the Gross-Up
Payment is to be made and to pay any applicable state and local income taxes at
the highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from the deduction of such state or local
taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of your adjusted gross income), and to have
otherwise allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the Gross-Up
Payment in your adjusted gross income. To the extent practicable, any Gross-Up
Payment with respect to any Payment shall be paid by the Corporation at the time
you are entitled to receive the Payment and in no event will any Gross-Up
Payment be paid later than five days after the receipt by you of the
Accountant's determination. Any determination by the Accountants shall be
binding upon the Corporation and you. As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Accountants hereunder, it is possible that the Gross-Up Payment made will
have been an amount less than the Corporation should have paid pursuant to this
Section 4(ii)(g) (the "Underpayment"). In the event that the Corporation
exhausts its remedies pursuant to Section 4(ii)(g)(3) and you are required to
make a payment of any Excise Tax, the Underpayment shall be promptly paid by the
Corporation to or for your benefit; and
<PAGE> 12
Page Twelve
(3) you shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Corporation of the Gross-Up Payment. Such notification shall be given as
soon as practicable after you are informed in writing of such claim and shall
apprise the Corporation of the nature of such claim and the date on which such
claim is requested to be paid. You shall not pay such claim prior to the
expiration of the 30-day period following the date on which you give such notice
to the Corporation (or such shorter period ending on the date that any payment
of taxes, interest and/or penalties with respect to such claim is due). If the
Corporation notifies you in writing prior to the expiration of such period that
it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting such
claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in order to
effectively contest such claim; and
(D) permit the Corporation to participate in any proceedings
relating to such claims;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify you for and hold you harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of all related costs and expenses. Without limiting the foregoing
provisions of this Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner,
<PAGE> 13
Page Thirteen
and you agree 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 Corporation shall determine; provided, however, that if
the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an interest-free
basis, and shall indemnify you for and hold you harmless from, on an after-tax
basis, 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 (including as a result of any
forgiveness by the Corporation of such advance); provided, further, that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of you with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in respect
of any judgments, fines, settlements, loss, cost or expense (including
attorneys' fees) of any nature related to or arising out of your activities as
an agent, employee, officer or director of the Corporation or in any other
capacity on behalf of or at the request of the Corporation, the Corporation
shall promptly on written request, indemnify (and advance expenses to) you to
the fullest extent permitted by applicable law, including but not limited to
making such findings and determinations and taking any and all such actions as
the Corporation may, under applicable law, be permitted to have the discretion
to take so as to effectuate such indemnification or advancement. Such agreement
by the Corporation shall not be deemed to impair any other obligation of the
Corporation respecting your indemnification otherwise arising out of this or any
other agreement or promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6) years
following the Date of Termination (without reference to whether the term of this
Agreement continues in effect) with directors' and officers' liability insurance
insuring you against insurable events which occur or have occurred while you
were a director or officer of the
<PAGE> 14
Page Fourteen
Corporation, such insurance to have policy limits aggregating not less than the
amount in effect immediately prior to the Change in Control, and otherwise to be
in substantially the same form and to contain substantially the same terms,
conditions and exceptions as the liability issuance policies provided for
officers and directors of the Corporation in force from time to time, provided,
however, that such terms, conditions and exceptions shall not be, in the
aggregate, materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for such
insurance at any time during such period exceed one hundred and fifty percent
(150%) of the per annum rate of premium currently paid by the Corporation for
such insurance, then the Corporation shall provide the maximum coverage that
will then be available at an annual premium equal to one hundred and fifty
percent (150%) of such rate; and
(j) you shall be fully vested in your accrued benefits under
any qualified or nonqualified pension, profit sharing, deferred compensation or
supplemental plans maintained by the Corporation for your benefit, and the
Corporation shall provide you with additional fully vested benefits under such
plans in an amount equal to the benefits which you would have accrued had you
continued your employment with the Corporation for three (3) additional years
following your Date of Termination; provided, however, that to the extent that
the acceleration of vesting or enhanced accrual of such benefits would violate
any applicable law or require the Corporation to accelerate the vesting of the
accrued benefits of all participants in such plan or plans or to provide
additional benefit accruals to such participants, the Corporation shall pay you
a lump-sum payment at the time specified in Section 4(iii) in an amount equal to
the value of such benefits; provided, further, that to the extent that the
present value of all benefits payable to you under this Section 4(ii)(j) is less
than $250,000, the Corporation shall pay you a lump-sum payment at the time
specified in Section 4(iii) in an amount equal to the difference between
$250,000 and the amount of such benefits which are otherwise payable to you
under this Section 4(ii)(j); provided, further, that if you are eligible to
receive grandfathered benefits under the Corporation's pension plan, the
provisions of this Section 4(ii)(j) shall apply to such grandfathered benefits,
without reduction for age, in addition to any other benefits to which you are
entitled under this Section 4(ii)(j).
<PAGE> 15
Page Fifteen
(iii) The payments provided for in Sections 4(ii)(a), (b), (c), (d)
and (j) shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
(iv) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise nor,
except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything contained
herein, in the event of a Change in Control during the term of this Agreement,
all outstanding options ("Options"), if any, granted to you under any of the
Corporation's stock option plans, incentive plans or other similar plans (or
options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be
<PAGE> 16
Page Sixteen
deemed the Date of Termination. Unless expressly provided otherwise,
"Corporation" as used herein shall mean the Corporation as defined in this
Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be enforceable
by you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. NON-COMPETE, CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) NON-COMPETE. In consideration of and in connection with the
benefits provided to you under this Agreement, and in order to protect the
goodwill of the Corporation, you hereby agree that, if your employment is
terminated pursuant to a Covered Resignation, then, for a period of twelve (12)
months commencing on the Date of Termination, you shall not, directly or
indirectly, own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be connected as a director, officer,
employee, partner, consultant or otherwise with any of the following entities
(or any subsidiary of any such entity) other than as a shareholder or beneficial
owner owning 5% or less of the outstanding securities of a public company:
Durand International, the Anchor Hocking unit of Newell Co., Cardinal
International, Inc., the Indiana Glass unit of Lancaster Colony Corporation,
Oneida LTD or any glass tableware manufacturer, seller or importer for Bormioli
Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the
Sisecam group of companies of Turkey including Pasabahce.
<PAGE> 17
Page Seventeen
(ii) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(iii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from the Corporation
any of its officers or employees or offer employment to any person who, on or
during the six (6) months immediately preceding the date of such solicitation or
offer, is or was an officer or employee of the Corporation; provided, however,
that a general advertisement to which an employee of the Corporation responds
shall in no event be deemed to result in a breach of this Section 8(iii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following the execution and
delivery of this Agreement by you and the Corporation, the Corporation shall
partially fund its obligations to provide benefits hereunder (including, without
limitation, its obligations under Section 4(ii)(g)) by establishing and
irrevocably partially funding a trust for your benefit and the benefit of other
executives of the Corporation with whom
<PAGE> 18
Page Eighteen
the Corporation has entered into agreements similar to this Agreement. The
Corporation shall initially contribute $1000 to such trust. Such trust shall be
a grantor trust described in section 671 of the Code. Upon the occurrence of a
Potential Change in Control (as defined below), the Corporation shall fully fund
its obligations to provide benefits hereunder (including, without limitation,
its obligations under Section 4(ii)(g)) by irrevocably contributing funds to
such trust on your behalf. The amount of such contribution shall equal the then
present value of the Corporation's obligations under Section 4 hereof as
determined by the firms serving as the Corporation's actuaries and accountants
immediately prior to the Change in Control. Such actuaries and accountants shall
be paid by the Corporation. The establishment and funding of such trust shall
not affect the obligation of the Corporation to provide benefits under the terms
of this Agreement. For purposes of this Agreement a "Potential Change in
Control" shall be deemed to occur if:
(a) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces
an intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing ten
percent (10%) or more of the combined voting power of the Corporation's then
outstanding securities, increases such Person's beneficial ownership of such
securities by five percent (5%) or more of the Corporation's then outstanding
securities over the percentage so owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been
<PAGE> 19
Page Nineteen
made by either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Ohio without regard to its conflicts of
law principles. All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions of such courts for the
purpose of any such suit, action, proceeding or judgment. By your execution and
delivery of this Agreement, you appoint the Secretary of the Corporation, at the
Corporation's office in Toledo, Ohio, as your agent upon which process may be
served in any such suit, action or proceeding; and by its execution and delivery
of this Agreement, the Corporation appoints the Secretary of the Corporation, at
its office in Toledo, Ohio, as its agent upon which process may be served in any
such suit, action or proceeding. Service of process upon such applicable agent,
together
<PAGE> 20
Page Twenty
with actual notice of such service given to you or the Corporation, as
applicable, in the manner provided in Section 7 hereof, shall be deemed in every
respect effective service of process upon the applicable party in any suit,
action, proceeding or judgment. Nothing herein shall be deemed to limit the
ability of you or the Corporation to serve any such writs, process or summonses
in any other manner permitted by applicable law. You and the Corporation hereby
irrevocably waive any objections which you or the Corporation, as applicable,
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Ohio, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Notwithstanding the foregoing,
in the event that no court of competent jurisdiction in the State of Ohio will
accept such jurisdiction and venue, then any suit, action or proceeding with
respect to this Agreement, or any judgment entered by any court in respect
thereof, may be brought in any court of competent jurisdiction in the
continental United States which has jurisdiction over such suit, proceeding or
action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation during
any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed by a
Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal fees
and expenses incurred by you in connection with any Dispute arising out of or
relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
<PAGE> 21
Page Twenty-One
and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein, including, without
limitation, any prior severance agreements, is hereby terminated and cancelled;
provided, however, that the Employment Agreement, dated as of August 1, 1993 by
and between you and the Corporation, as amended, shall remain in full force and
effect and shall, pursuant to the terms and conditions thereof, provide certain
severance benefits to you upon certain terminations of employment. Any of your
rights hereunder shall be in addition to any rights you may otherwise have under
benefit plans or agreements of the Corporation to which you are a party or in
which you are a participant, including, but not limited to, any Corporation
sponsored employee benefit plans and stock options plans. Provisions of this
Agreement shall not in any way abrogate your rights under such other plans and
agreements.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
------------------------------
Its: Chairman of the Board and
Chief Executive Officer
Agreed and Accepted as of the,
27th day of May, 1998.
/s/ Kenneth G. Wilkes
- --------------------------
<PAGE> 1
Exhibit 10.52
[LIBBEY LETTERHEAD]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. John A. Zarb
436 N. Macomb Street
Monroe, Michigan 48162
Dear John,
Libbey Inc. (the "Corporation") considers it essential to the best interests of
its shareholders to foster the continuous employment of key management
personnel. In connection with this, the Corporation's Board of Directors (the
"Board") recognizes that, as is the case with many publicly held corporations,
the possibility of a change in control of the Corporation may exist and that the
uncertainty and questions that it may raise among management could result in the
departure or distraction of management personnel to the detriment of the
Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including yourself, to
their assigned duties without the distraction arising from the possibility of a
change in control of the Corporation.
In order to induce you to remain in its employ, the Corporation hereby agrees
that after this letter agreement (this "Agreement") has been fully executed, you
shall receive the severance benefits set forth in this Agreement in the event
your employment with the Corporation is terminated under the circumstances
described below subsequent to a Change in Control (as defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and shall
continue in effect through December 31, 2001; provided, however, that commencing
on January 1, 2002 and on each January 1 thereafter, the term of this Agreement
shall automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Corporation shall have given notice that
it does not wish to extend this Agreement; provided, further, that if a Change
in Control (as defined in Section 2), occurs during the original or any extended
term of this Agreement, the term of this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there has
been a Change in Control. For purposes of this Agreement, a Change in Control
shall be deemed to occur if:
<PAGE> 2
Page Two
(a) any Person (as defined below) is or becomes the Beneficial
Owner (as defined below), directly or indirectly, of securities of the
Corporation representing twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding securities. For purposes of this
Agreement, (A) the term "Person" is used as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); provided, however, that the term shall not include the Corporation, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by the
shareholders of the Corporation, in substantially the same proportions as their
ownership of stock of the Corporation, and (B) the term "Beneficial Owner" shall
have the meaning given to such term in Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Corporation to effect a transaction described in Sections 2(a), (c) or (d))
whose election by the Board or nomination for election by the Corporation's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
(hereinafter referred to as "Continuing Directors"), cease for any reason to
constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation (or other entity),
other than a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 66 2/3% of the combined voting power of the
voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition by
the Corporation of all or substantially all of the Corporation's assets; or
<PAGE> 3
Page Three
(e) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing ten percent (10%) or
more of the combined voting power of the Corporation's then outstanding
securities (a "10% Owner") and (A) the identity of the Chief Executive Officer
of the Corporation is changed during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease for any
reason to serve on the Board during the period beginning sixty (60) days before
the attainment of the ten percent (10%) beneficial ownership and ending two (2)
years thereafter; provided, however, that this subsection (e) shall not apply to
any Person who is a 10% Owner as of the date hereof so long as such Person does
not increase such beneficial ownership by five percent (5%) or more over the
percentage so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the events
described in Section 2 constituting a Change in Control shall have occurred, you
shall be entitled to the benefits provided in Section 4(ii) upon the subsequent
termination of your employment, provided that such termination occurs during the
term of this Agreement and within the two (2) year period immediately following
the date of such Change in Control, unless such termination is (a) because of
your death or Disability (as defined in Section 3(ii)), (b) by the Corporation
for Cause (as defined in Section 3(iii)), or (c) by you other than (1) for Good
Reason (as defined in Section 3(iv)), or (2) in a Covered Resignation (as
defined in Section 3(v)). In the event that you are entitled to such benefits,
such benefits shall be paid notwithstanding the subsequent expiration of the
term of this Agreement. In the event your employment with the Corporation is
terminated for any reason and subsequently a Change in Control occurs, you shall
not be entitled to any benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to physical or
mental illness, you shall have been absent from the full-time performance of
your duties with the Corporation for six (6) consecutive months, and within
thirty (30) days after written notice of termination is given you shall not have
returned to the full-time performance of your duties, your employment may be
terminated for "Disability."
<PAGE> 4
Page Four
(iii) CAUSE. Termination by the Corporation of your employment for
"Cause" shall mean termination (a) upon your willful and continued failure to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) either (x) for Good Reason, or (y) in
connection with a Covered Resignation, after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (b) upon your willful and continued failure
to substantially follow and comply with the specific and lawful directives of
the Board, as reasonably determined by the Board (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after your issuance of a Notice of Termination for
Good Reason or in connection with a Covered Resignation), after a written demand
for substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv)GOOD REASON. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean, without
your express written consent, the occurrence after a Change in Control of any of
the following circumstances unless, in the case of Sections 3(iv)(a), (e), (f),
(g), (h) or (i), such circumstances
<PAGE> 5
Page Five
are fully corrected (provided such circumstances are capable of correction)
prior to the Date of Termination (as defined in Section 3(vii)) specified in the
Notice of Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent with the
position in the Corporation that you held immediately prior to the Change in
Control, a significant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other action by
the Corporation that results in a material diminution in your position,
authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base salary as in
effect on the date hereof or as the same may be increased from time to time;
(c) the relocation of the Corporation's offices at which you are
principally employed immediately prior to the date of the Change in Control
(your "Principal Location") to a location more than thirty (30) miles from such
location, or the Corporation's requiring you, without your written consent, to
be based anywhere other than your Principal Location, except for required travel
on the Corporation's business to an extent substantially consistent with your
present business travel obligations;
(d) the Corporation's failure to pay to you any portion of your
current compensation or to pay to you any portion of an installment of deferred
compensation under any deferred compensation program of the Corporation within
seven (7) days of the date such compensation is due;
(e) the Corporation's failure to continue in effect any material
compensation or benefit plan or practice in which you participate immediately
prior to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such plan,
or the Corporation's failure to continue your participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of your participation
relative to other participants, as existed at the time of the Change in Control;
<PAGE> 6
Page Six
(f) the Corporation's failure to continue to provide you with
benefits substantially similar in the aggregate to those enjoyed by you under
any of the Corporation's life insurance, medical, health and accident,
disability, pension, retirement, or other benefit plans or practices in which
you and your eligible family members were participating at the time of the
Change in Control, the taking of any action by the Corporation which would
directly or indirectly materially reduce any of such benefits, or the failure by
the Corporation to provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at the time
of the Change in Control;
(g) the Corporation's failure to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof;
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(vi) hereof (and, if applicable, the requirements of Section 3(iii)
hereof), which purported termination shall not be effective for purposes of this
Agreement; or
(i) the continuation or repetition, after written notice of
objection from you, of harassing or denigrating treatment of you inconsistent
with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION AND COVERED RESIGNATION. You shall be
entitled to voluntarily terminate your employment for any reason or no reason at
any time after a Change in Control. Any such termination which occurs within the
thirty (30) day period following the first anniversary of the occurrence of a
Change in Control shall constitute a resignation which entitles you to receive
benefits under this Agreement (a "Covered Resignation").
<PAGE> 7
Page Seven
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall mean (a) if
your employment is terminated due to your death, the date of your death; (b) if
your employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such thirty (30) day period), and (c) if your
employment is terminated pursuant to Section 3(iii), Section 3(iv) or Section
3(v) or for any other reason (other than death or Disability), the date
specified in the Notice of Termination (which, in the case of a termination for
Cause shall not be less than thirty (30) days from the date such Notice of
Termination is given, and in the case of a termination for Good Reason or in
connection with a Covered Resignation shall not be less than fifteen (15) nor
more than sixty (60) days from the date such Notice of Termination is given).
Notwithstanding anything to the contrary contained in this Section 3(vii), if
within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION.
Following a Change in Control during the term of this Agreement, you
shall be entitled to the benefits described below upon termination of your
employment, provided that such termination occurs during the term of this
Agreement and within the two (2) year period immediately following the date of
such Change in Control. The benefits to which you are entitled, subject to the
terms and conditions of this Agreement, are:
<PAGE> 8
Page Eight
(i) If your employment shall be terminated by the Corporation for Cause
or by you other than (x) for Good Reason or (y) pursuant to a Covered
Resignation, the Corporation shall pay you your full base salary, when due,
through the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled under any
compensation plan or practice of the Corporation at the time such payments are
due, and the Corporation shall have no further obligations to you under this
Agreement.
(ii) If your employment by the Corporation shall be terminated by you
(x) for Good Reason or (y) pursuant to a Covered Resignation, or by the
Corporation other than for Cause or Disability, then you shall be entitled to
the benefits provided below:
(a) the Corporation shall pay to you your full base salary, when
due, through the Date of Termination at the rate in effect at the time Notice of
Termination is given, at the time specified in Section 4(iii), plus all other
amounts to which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as severance
pay to you, at the time specified in Section 4(iii), a lump-sum severance
payment (together with the payments provided in Section 4(ii)(c) below, the
"Severance Payments") equal to the sum of the following:
(A) three (3) times your annual base salary as in effect as
of the Date of Termination or immediately prior to the
Change in Control, whichever is greater; and
(B) three (3) times the greater of (x) your targeted annual
bonus as in effect as of the Date of Termination or
immediately prior to the Change in Control, whichever is
greater, or (y) your annual bonus for the year
immediately preceding the Date of Termination;
<PAGE> 9
Page Nine
(c) notwithstanding any provisions of the Corporation's stock
option plans, incentive plans, or other similar plans, the restricted period
with respect to any restricted stock granted to you thereunder shall lapse and
such shares shall be distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date of Termination,
the Corporation shall, at its sole expense as incurred, provide you with
financial planning services of substantially the same type and scope as those
which the Corporation was providing to you immediately prior to the Date of
Termination, or, if more favorable to you, the date of the Change in Control;
(e) for a period of two (2) years following the Date of
Termination, the Corporation shall, at its sole expense as incurred, provide you
with outplacement services, the scope and provider of which shall be selected by
you in your sole discretion;
(f) for a thirty-six (36) month period after such termination, the
Corporation shall continue to provide you and your eligible family members,
based on the cost sharing arrangement between you and the Corporation on the
date of the Change in Control, with medical and dental health benefits at least
equal to those which would have been provided to you and them if your employment
had not been terminated or, if more favorable to you, as in effect generally at
any time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health benefits
under another employer's plans, the Corporation's obligations under this Section
4(ii)(f) shall be reduced to the extent comparable benefits are actually
received by you during the thirty-six (36) month period following your
termination, and any such benefits actually received by you shall be reported to
the Corporation. In the event you are ineligible under the terms of such benefit
plans or programs to continue to be so covered, the Corporation shall provide
you with substantially equivalent coverage through other sources or will provide
you with a lump-sum payment in such amount that, after all taxes on that amount,
shall be equal to the cost to you of providing yourself such benefit coverage.
At the termination of the benefits coverage under the second preceding sentence,
you, your spouse and your dependents shall be entitled to continuation coverage
pursuant to section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security Act of
1974, as
<PAGE> 10
Page Ten
amended, and under any other applicable law, to the extent required by such
laws, as if you had terminated employment with the Corporation on the date such
benefits coverage terminates. The lump-sum shall be determined on a present
value basis using the interest rate provided in section 1274(b)(2)(B) of the
Code on the Date of Termination.
(g) (1) anything in this Agreement to the contrary notwithstanding,
if it shall be determined that any payment or distribution to you or for your
benefit (whether paid or payable or distributed or distributable) pursuant to
the terms of this Agreement or otherwise (the "Payment") would be subject to the
excise tax imposed by section 4999 of the Code (the "Excise Tax"), then you
shall be entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the Payment and the
Gross-Up Payment retained by you after the calculation and deduction of all
Excise Taxes (including any interest or penalties imposed with respect to such
taxes) on the payment and all federal, state and local income tax, employment
tax and Excise Tax (including any interest or penalties imposed with respect to
such taxes) on the Gross-Up Payment provided for in this Section 4(ii)(g), and
taking into account any lost or reduced tax deductions on account of the
Gross-Up Payment, shall be equal to the Payment;
(2) all determinations required to be made under this Section
4(ii)(g), including whether and when the Gross-Up Payment is required and the
amount of such Gross-Up Payment, and the assumptions to be utilized in arriving
at such determinations shall be made by the Accountants (as defined below) which
shall provide you and the Corporation with detailed supporting calculations with
respect to such Gross-Up Payment within fifteen (15) business days of the
receipt of notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the "Accountants"
shall mean the Corporation's independent certified public accountants serving
immediately prior to the Change in Control. In the event that the Accountants
are also serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, you shall appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accountants hereunder). All
fees and expenses of the Accountants shall be borne solely by the Corporation.
For the purposes of determining whether any of the Payments will be subject to
the Excise Tax and the amount of such Excise Tax, such Payments will be treated
as "parachute payments" within the meaning of section 280G of
<PAGE> 11
Page Eleven
the Code, and all "parachute payments" in excess of the "base amount" (as
defined under section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that in the opinion of the
Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay Federal income taxes at the highest applicable marginal
rate of Federal income taxation for the calendar year in which the Gross-Up
Payment is to be made and to pay any applicable state and local income taxes at
the highest applicable marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from the deduction of such state or local
taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of your adjusted gross income), and to have
otherwise allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the Gross-Up
Payment in your adjusted gross income. To the extent practicable, any Gross-Up
Payment with respect to any Payment shall be paid by the Corporation at the time
you are entitled to receive the Payment and in no event will any Gross-Up
Payment be paid later than five days after the receipt by you of the
Accountant's determination. Any determination by the Accountants shall be
binding upon the Corporation and you. As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Accountants hereunder, it is possible that the Gross-Up Payment made will
have been an amount less than the Corporation should have paid pursuant to this
Section 4(ii)(g) (the "Underpayment"). In the event that the Corporation
exhausts its remedies pursuant to Section 4(ii)(g)(3) and you are required to
make a payment of any Excise Tax, the Underpayment shall be promptly paid by the
Corporation to or for your benefit; and
<PAGE> 12
Page Twelve
(3) you shall notify the Corporation in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Corporation of the Gross-Up Payment. Such notification shall be given as soon as
practicable after you are informed in writing of such claim and shall apprise
the Corporation of the nature of such claim and the date on which such claim is
requested to be paid. You shall not pay such claim prior to the expiration of
the 30-day period following the date on which you give such notice to the
Corporation (or such shorter period ending on the date that any payment of
taxes, interest and/or penalties with respect to such claim is due). If the
Corporation notifies you in writing prior to the expiration of such period that
it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably requested
by the Corporation relating to such claim;
(B) take such action in connection with contesting such claim
as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in order to
effectively contest such claim; and
(D) permit the Corporation to participate in any proceedings
relating to such claims;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify you for and hold you harmless
from, on an after-tax basis, any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of all related costs and expenses. Without limiting the foregoing
provisions of this Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner,
<PAGE> 13
Page Thirteen
and you agree 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 Corporation shall determine; provided, however, that if
the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an interest-free
basis, and shall indemnify you for and hold you harmless from, on an after-tax
basis, 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 (including as a result of any
forgiveness by the Corporation of such advance); provided, further, that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of you with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the Corporation has
the power to indemnify (or advance expenses to) you in respect of any judgments,
fines, settlements, loss, cost or expense (including attorneys' fees) of any
nature related to or arising out of your activities as an agent, employee,
officer or director of the Corporation or in any other capacity on behalf of or
at the request of the Corporation, the Corporation shall promptly on written
request, indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings and
determinations and taking any and all such actions as the Corporation may, under
applicable law, be permitted to have the discretion to take so as to effectuate
such indemnification or advancement. Such agreement by the Corporation shall not
be deemed to impair any other obligation of the Corporation respecting your
indemnification otherwise arising out of this or any other agreement or promise
of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6) years following
the Date of Termination (without reference to whether the term of this Agreement
continues in effect) with directors' and officers' liability insurance insuring
you against insurable events which occur or have occurred while you were a
director or officer of the
<PAGE> 14
Page Fourteen
Corporation, such insurance to have policy limits aggregating not less than the
amount in effect immediately prior to the Change in Control, and otherwise to be
in substantially the same form and to contain substantially the same terms,
conditions and exceptions as the liability issuance policies provided for
officers and directors of the Corporation in force from time to time, provided,
however, that such terms, conditions and exceptions shall not be, in the
aggregate, materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for such
insurance at any time during such period exceed one hundred and fifty percent
(150%) of the per annum rate of premium currently paid by the Corporation for
such insurance, then the Corporation shall provide the maximum coverage that
will then be available at an annual premium equal to one hundred and fifty
percent (150%) of such rate; and
(j) you shall be fully vested in your accrued benefits under any
qualified or nonqualified pension, profit sharing, deferred compensation or
supplemental plans maintained by the Corporation for your benefit, and the
Corporation shall provide you with additional fully vested benefits under such
plans in an amount equal to the benefits which you would have accrued had you
continued your employment with the Corporation for three (3) additional years
following your Date of Termination; provided, however, that to the extent that
the acceleration of vesting or enhanced accrual of such benefits would violate
any applicable law or require the Corporation to accelerate the vesting of the
accrued benefits of all participants in such plan or plans or to provide
additional benefit accruals to such participants, the Corporation shall pay you
a lump-sum payment at the time specified in Section 4(iii) in an amount equal to
the value of such benefits; provided, further, that to the extent that the
present value of all benefits payable to you under this Section 4(ii)(j) is less
than $250,000, the Corporation shall pay you a lump-sum payment at the time
specified in Section 4(iii) in an amount equal to the difference between
$250,000 and the amount of such benefits which are otherwise payable to you
under this Section 4(ii)(j); provided, further, that if you are eligible to
receive grandfathered benefits under the Corporation's pension plan, the
provisions of this Section 4(ii)(j) shall apply to such grandfathered benefits,
without reduction for age, in addition to any other benefits to which you are
entitled under this Section 4(ii)(j).
<PAGE> 15
Page Fifteen
(iii) The payments provided for in Sections 4(ii)(a), (b), (c), (d) and
(j) shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to you, payable on
the fifth day after demand by the Corporation (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
(iv) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise nor,
except as provided in Section 4(ii)(f), shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding anything contained
herein, in the event of a Change in Control during the term of this Agreement,
all outstanding options ("Options"), if any, granted to you under any of the
Corporation's stock option plans, incentive plans or other similar plans (or
options substituted therefor covering the stock of a successor corporation)
shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be
<PAGE> 16
Page Sixteen
deemed the Date of Termination. Unless expressly provided otherwise,
"Corporation" as used herein shall mean the Corporation as defined in this
Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. NON- COMPETE, CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) NON-COMPETE. In consideration of and in connection with the
benefits provided to you under this Agreement, and in order to protect the
goodwill of the Corporation, you hereby agree that, if your employment is
terminated pursuant to a Covered Resignation, then, for a period of twelve (12)
months commencing on the Date of Termination, you shall not, directly or
indirectly, own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be connected as a director, officer,
employee, partner, consultant or otherwise with any of the following entities
(or any subsidiary of any such entity) other than as a shareholder or beneficial
owner owning 5% or less of the outstanding securities of a public company:
Durand International, the Anchor Hocking unit of Newell Co., Cardinal
International, Inc., the Indiana Glass unit of Lancaster Colony Corporation,
Oneida LTD or any glass tableware manufacturer, seller or importer for Bormioli
Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the
Sisecam group of companies of Turkey including Pasabahce.
<PAGE> 17
Page Seventeen
(ii) CONFIDENTIALITY. You hereby agree that, for the period commencing
on the Date of Termination and terminating on the third anniversary thereof, you
shall not, directly or indirectly, disclose or make available to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever, any Confidential Information (as defined below). You agree that,
upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(iii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the third anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from the Corporation
any of its officers or employees or offer employment to any person who, on or
during the six (6) months immediately preceding the date of such solicitation or
offer, is or was an officer or employee of the Corporation; provided, however,
that a general advertisement to which an employee of the Corporation responds
shall in no event be deemed to result in a breach of this Section 8(iii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following the execution and
delivery of this Agreement by you and the Corporation, the Corporation shall
partially fund its obligations to provide benefits hereunder (including, without
limitation, its obligations under Section 4(ii)(g)) by establishing and
irrevocably partially funding a trust for your benefit and the benefit of other
executives of the Corporation with whom
<PAGE> 18
Page Eighteen
the Corporation has entered into agreements similar to this Agreement. The
Corporation shall initially contribute $1000 to such trust. Such trust shall be
a grantor trust described in section 671 of the Code. Upon the occurrence of a
Potential Change in Control (as defined below), the Corporation shall fully fund
its obligations to provide benefits hereunder (including, without limitation,
its obligations under Section 4(ii)(g)) by irrevocably contributing funds to
such trust on your behalf. The amount of such contribution shall equal the then
present value of the Corporation's obligations under Section 4 hereof as
determined by the firms serving as the Corporation's actuaries and accountants
immediately prior to the Change in Control. Such actuaries and accountants shall
be paid by the Corporation. The establishment and funding of such trust shall
not affect the obligation of the Corporation to provide benefits under the terms
of this Agreement. For purposes of this Agreement a "Potential Change in
Control" shall be deemed to occur if:
(a) the Corporation enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(b) any Person (including the Corporation) publicly announces an
intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(c) any Person who is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing ten percent (10%) or
more of the combined voting power of the Corporation's then outstanding
securities, increases such Person's beneficial ownership of such securities by
five percent (5%) or more of the Corporation's then outstanding securities over
the percentage so owned by such Person on the date hereof; or
(d) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
10. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been
<PAGE> 19
Page Nineteen
made by either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Ohio without regard to its conflicts of
law principles. All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with respect
to this Agreement, nor any judgment entered by any court in respect thereof, may
be brought in any court, domestic or foreign, or before any similar domestic or
foreign authority, other than in a court of competent jurisdiction in the State
of Ohio, and you and the Corporation hereby irrevocably waive any right which
you or the Corporation, as applicable, may otherwise have had to bring such a
suit, action, proceeding or judgment in any other court, domestic or foreign, or
before any similar domestic or foreign authority. You and the Corporation hereby
submit to the exclusive jurisdictions of such courts for the purpose of any such
suit, action, proceeding or judgment. By your execution and delivery of this
Agreement, you appoint the Secretary of the Corporation, at the Corporation's
office in Toledo, Ohio, as your agent upon which process may be served in any
such suit, action or proceeding; and by its execution and delivery of this
Agreement, the Corporation appoints the Secretary of the Corporation, at its
office in Toledo, Ohio, as its agent upon which process may be served in any
such suit, action or proceeding. Service of process upon such applicable agent,
together
<PAGE> 20
Page Twenty
with actual notice of such service given to you or the Corporation, as
applicable, in the manner provided in Section 7 hereof, shall be deemed in every
respect effective service of process upon the applicable party in any suit,
action, proceeding or judgment. Nothing herein shall be deemed to limit the
ability of you or the Corporation to serve any such writs, process or summonses
in any other manner permitted by applicable law. You and the Corporation hereby
irrevocably waive any objections which you or the Corporation, as applicable,
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Ohio, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Notwithstanding the foregoing,
in the event that no court of competent jurisdiction in the State of Ohio will
accept such jurisdiction and venue, then any suit, action or proceeding with
respect to this Agreement, or any judgment entered by any court in respect
thereof, may be brought in any court of competent jurisdiction in the
continental United States which has jurisdiction over such suit, proceeding or
action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation during any
disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed by a
Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal fees and
expenses incurred by you in connection with any Dispute arising out of or
relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees
<PAGE> 21
Page Twenty-One
and expenses, if any, incurred in contesting or disputing any termination of
your employment or in seeking to obtain or enforce any right or benefit provided
by this Agreement, or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein, including, without
limitation, any prior severance agreements, is hereby terminated and cancelled;
provided, however, that the Employment Agreement, dated as of April 1, 1996 by
and between you and the Corporation, as amended, shall remain in full force and
effect and shall, pursuant to the terms and conditions thereof, provide certain
severance benefits to you upon certain terminations of employment. Any of your
rights hereunder shall be in addition to any rights you may otherwise have under
benefit plans or agreements of the Corporation to which you are a party or in
which you are a participant, including, but not limited to, any Corporation
sponsored employee benefit plans and stock options plans. Provisions of this
Agreement shall not in any way abrogate your rights under such other plans and
agreements.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Corporation the enclosed copy of this letter,
which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: John F. Meier
----------------------------
Its: Chairman of the Board and
Chief Executive Officer
Agreed and Accepted as of the,
27th day of May, 1998.
/s/ Mr. John A. Zarb
- --------------------
<PAGE> 1
Exhibit 10.53
[Libby Inc. Letterhead]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Wayne Zitkus
6209 Turnwood Drive
Jamesville, NY 13078
Dear Wayne,
Libbey Inc. (the "Corporation") considers it essential to the
best interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the
Corporation hereby agrees that after this letter agreement (this "Agreement")
has been fully executed, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control (as
defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 2001; provided,
however, that commencing on January 1, 2002 and on each January 1 thereafter,
the term of this Agreement shall automatically be extended for one additional
year unless, not later than September 30 of the preceding year, the Corporation
shall have given notice that it does not wish to extend this Agreement;
provided, further, that if a Change in Control (as defined in Section 2), occurs
during the original or any extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than thirty-six (36)
months beyond the month in which such Change in Control occurred.
<PAGE> 2
Page 2
2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there has been a Change in Control. For purposes of this Agreement, a
Change in Control shall be deemed to occur if:
(a) any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of
securities of the Corporation representing twenty percent (20%) or more
of the combined voting power of the Corporation's then outstanding
securities. For purposes of this Agreement, (A) the term "Person" is
used as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided,
however, that the term shall not include the Corporation, any trustee
or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by
the shareholders of the Corporation, in substantially the same
proportions as their ownership of stock of the Corporation, and (B) the
term "Beneficial Owner" shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in Sections 2(a), (c) or (d)) whose election by
the Board or nomination for election by the Corporation's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"), cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation
(or other entity), other than a merger or consolidation which would
result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 66 2/3% of the combined voting power of the
voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the
sale or
<PAGE> 3
Page 3
disposition by the Corporation of all or substantially all of the
Corporation's assets; or
(e) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities (a "10% Owner") and (A) the
identity of the Chief Executive Officer of the Corporation is changed
during the period beginning sixty (60) days before the attainment of
the ten percent (10%) beneficial ownership and ending two (2) years
thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease
for any reason to serve on the Board during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter; provided, however, that
this subsection (e) shall not apply to any Person who is a 10% Owner as
of the date hereof so long as such Person does not increase such
beneficial ownership by five percent (5%) or more over the percentage
so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than for Good Reason (as defined in Section 3(iv)). In the event
that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the
event your employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, you shall not be entitled to any
benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment
for
<PAGE> 4
Page 4
"Cause" shall mean termination (a) upon your willful and continued failure to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) for Good Reason), after a written
demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, (b) upon your willful and
continued failure to substantially follow and comply with the specific and
lawful directives of the Board, as reasonably determined by the Board (other
than any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable detail.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of
Termination (as defined in Section 3(vii)) specified in the Notice of
Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Corporation that you held immediately prior to
the Change in Control, a significant adverse alteration in the nature
or status of your responsibilities or the conditions of your employment
from those in effect
<PAGE> 5
Page 5
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other
action by the Corporation that results in a material diminution in your
position, authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base
salary as in effect on the date hereof or as the same may be increased
from time to time;
(c) the relocation of the Corporation's offices at
which you are principally employed immediately prior to the date of the
Change in Control (your "Principal Location") to a location more than
thirty (30) miles from such location, or the Corporation's requiring
you, without your written consent, to be based anywhere other than your
Principal Location, or the headquarters of the Corporation in Toledo,
Ohio or a manufacturing facility of the Corporation, except for
required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations;
(d) the Corporation's failure to pay to you any
portion of your current compensation or to pay to you any portion of an
installment of deferred compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due;
(e) the Corporation's failure to continue in effect
any material compensation or benefit plan or practice in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the Corporation's
failure to continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of
the Change in Control;
(f) the Corporation's failure to continue to provide
you with benefits substantially similar in the aggregate to those
enjoyed by you under any of the Corporation's life insurance, medical,
health and accident, disability, pension, retirement, or other benefit
plans or practices in which you and your eligible family members were
participating at the time of the Change in Control, the taking of any
action by the Corporation which would directly or indirectly materially
reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Corporation in
accordance with the
<PAGE> 6
Page 6
Corporation's normal vacation policy in effect at the time of the
Change in Control;
(g) the Corporation's failure to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(vi) hereof (and, if applicable, the
requirements of Section 3(iii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(i) the continuation or repetition, after written
notice of objection from you, of harassing or denigrating treatment of
you inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) VOLUNTARY TERMINATION. You shall be entitled to
voluntarily terminate your employment for any reason or no reason at any time
after a Change in Control.
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (a) if your employment is terminated due to your death, the date of your
death; (b) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such thirty (30) day period),
and (c) if your employment is terminated pursuant to Section 3(iii), Section
3(iv) or Section 3(v) or for any other reason (other
<PAGE> 7
Page 7
than death or Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause shall not be less than thirty
(30) days from the date such Notice of Termination is given, and in the case of
a termination for Good Reason shall not be less than fifteen (15) nor more than
sixty (60) days from the date such Notice of Termination is given).
Notwithstanding anything to the contrary contained in this Section 3(vii), if
within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.
4. COMPENSATION UPON TERMINATION. Following a Change in
Control during the term of this Agreement, you shall be entitled to the benefits
described below upon termination of your employment, provided that such
termination occurs during the term of this Agreement and within the two (2) year
period immediately following the date of such Change in Control. The benefits to
which you are entitled, subject to the terms and conditions of this Agreement,
are:
(i) If your employment shall be terminated by the
Corporation for Cause or by you other than for Good Reason, the Corporation
shall pay you your full base salary, when due, through the Date of Termination
at the rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due, and the Corporation shall have no
further obligations to you under this Agreement.
(ii) If your employment by the Corporation shall be
terminated by you for Good Reason or by the Corporation other than for Cause or
Disability, then you shall be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base
salary, when due, through the Date of Termination at the rate in effect
at the time Notice of Termination is given, at the time specified in
Section 4(iii), plus all other amounts to which you are entitled under
any compensation plan or practice of the Corporation at the time such
payments are due;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Corporation shall
pay as severance pay to you, at the time specified in Section 4(iii), a
lump-sum severance payment
<PAGE> 8
Page 8
(together with the payments provided in Section 4(ii)(c) below, the
"Severance Payments") equal to the sum of the following:
(A) two (2) times your annual base salary as
in effect as of the Date of Termination or immediately prior
to the Change in Control, whichever is greater; and
(B) two (2) times the greater of (x) your
targeted annual bonus as in effect as of the Date of
Termination or immediately prior to the Change in Control,
whichever is greater, or (y) your annual bonus for the year
immediately preceding the Date of Termination;
(c) notwithstanding any provisions of the
Corporation's stock option plans, incentive plans, or other similar
plans, the restricted period with respect to any restricted stock
granted to you thereunder shall lapse and such shares shall be
distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same
type and scope as those which the Corporation was providing to you
immediately prior to the Date of Termination, or, if more favorable to
you, the date of the Change in Control;
(e) for a period of two (2) years following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by you in your sole discretion;
(f) for a twenty-four (24) month period after such
termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between
you and the Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health
benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four (24) month
period following your termination, and any such benefits actually
received by you shall be reported to the Corporation. In the event you
are ineligible under the terms of such benefit
<PAGE> 9
Page 9
plans or programs to continue to be so covered, the Corporation shall
provide you with substantially equivalent coverage through other
sources or will provide you with a lump-sum payment in such amount
that, after all taxes on that amount, shall be equal to the cost to you
of providing yourself such benefit coverage. At the termination of the
benefits coverage under the second preceding sentence, you, your spouse
and your dependents shall be entitled to continuation coverage pursuant
to section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the
extent required by such laws, as if you had terminated employment with
the Corporation on the date such benefits coverage terminates. The
lump-sum shall be determined on a present value basis using the
interest rate provided in section 1274(b)(2)(B) of the Code on the Date
of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to you or for your benefit (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement
or otherwise (the "Payment") would be subject to the excise tax imposed
by section 4999 of the Code (the "Excise Tax"), then you shall be
entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the
Payment and the Gross-Up Payment retained by you after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 4(ii)(g), and taking into
account any lost or reduced tax deductions on account of the Gross-Up
Payment, shall be equal to the Payment;
(2) all determinations required to be made under this
Section 4(ii)(g), including whether and when the Gross-Up Payment is
required and the amount of such Gross-Up Payment, and the assumptions
to be utilized in arriving at such determinations shall be made by the
Accountants (as defined below) which shall provide you and the
Corporation with detailed supporting calculations with respect to such
Gross-Up Payment within fifteen (15) business days of the receipt of
notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the
"Accountants" shall mean the Corporation's independent certified public
accountants serving immediately prior to the Change in Control. In the
event that the Accountants are also serving as accountant or auditor
for the individual,
<PAGE> 10
Page 10
entity or group effecting the Change in Control, you shall appoint
another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accountants hereunder). All fees and expenses of the
Accountants shall be borne solely by the Corporation. For the purposes
of determining whether any of the Payments will be subject to the
Excise Tax and the amount of such Excise Tax, such Payments will be
treated as "parachute payments" within the meaning of section 280G of
the Code, and all "parachute payments" in excess of the "base amount"
(as defined under section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the
opinion of the Accountants such Payments (in whole or in part) either
do not constitute "parachute payments" or represent reasonable
compensation for services actually rendered (within the meaning of
section 280G(b)(4) of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise Tax. For
purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if paid in
such year (determined without regard to limitations on deductions based
upon the amount of your adjusted gross income), and to have otherwise
allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in your adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Corporation at the time you are entitled to receive the
Payment and in no event will any Gross-Up Payment be paid later than
five days after the receipt by you of the Accountant's determination.
Any determination by the Accountants shall be binding upon the
Corporation and you. As a result of uncertainty in the application of
section 4999 of the Code at the time of the initial determination by
the Accountants hereunder, it is possible that the Gross-Up Payment
made will have been an amount less than the Corporation should have
paid pursuant to this Section 4(ii)(g) (the "Underpayment"). In the
event that the Corporation exhausts its remedies pursuant to Section
4(ii)(g)(3) and you are required to make a payment of any Excise Tax,
the Underpayment shall be promptly paid by the Corporation to or for
your benefit; and
<PAGE> 11
Page 11
(3) you shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the Gross-Up Payment. Such
notification shall be given as soon as practicable after you are
informed in writing of such claim and shall apprise the Corporation of
the nature of such claim and the date on which such claim is requested
to be paid. You shall not pay such claim prior to the expiration of the
30-day period following the date on which you give such notice to the
Corporation (or such shorter period ending on the date that any payment
of taxes, interest and/or penalties with respect to such claim is due).
If the Corporation notifies you in writing prior to the expiration of
such period that it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify you for
and hold you harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related
costs and expenses. Without limiting the foregoing provisions of this
Section 4(ii)(g), the Corporation 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 you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you
agree 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 Corporation shall determine; provided,
however, that if
<PAGE> 12
Page 12
the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an
interest-free basis, and shall indemnify you for and hold you harmless
from, on an after-tax basis, 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 (including as a result of any forgiveness by the Corporation of
such advance); provided, further, that any extension of the statute of
limitations relating to the payment of taxes for the taxable year of
you with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and you 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;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Corporation or in any other capacity on behalf of or at the request of
the Corporation, the Corporation shall promptly on written request,
indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings
and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the
discretion to take so as to effectuate such indemnification or
advancement. Such agreement by the Corporation shall not be deemed to
impair any other obligation of the Corporation respecting your
indemnification otherwise arising out of this or any other agreement or
promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6)
years following the Date of Termination (without reference to whether
the term of this Agreement continues in effect) with directors' and
officers' liability insurance insuring you against insurable events
which occur or have occurred while you were a director or officer of
the Corporation, such insurance to have policy limits aggregating not
less than the amount in effect immediately prior to the Change in
Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such
terms, conditions and exceptions shall not be, in the
<PAGE> 13
Page 13
aggregate, materially less favorable to you than those in effect on the
date hereof; provided, further, that if the aggregate annual premiums
for such insurance at any time during such period exceed one hundred
and fifty percent (150%) of the per annum rate of premium currently
paid by the Corporation for such insurance, then the Corporation shall
provide the maximum coverage that will then be available at an annual
premium equal to one hundred and fifty percent (150%) of such rate; and
(j) you shall be fully vested in your accrued
benefits under any qualified or nonqualified pension, profit sharing,
deferred compensation or supplemental plans maintained by the
Corporation for your benefit, and the Corporation shall provide you
with additional fully vested benefits under such plans in an amount
equal to the benefits which you would have accrued had you continued
your employment with the Corporation for two (2) additional years
following your Date of Termination; provided, however, that to the
extent that the acceleration of vesting or enhanced accrual of such
benefits would violate any applicable law or require the Corporation to
accelerate the vesting of the accrued benefits of all participants in
such plan or plans or to provide additional benefit accruals to such
participants, the Corporation shall pay you a lump-sum payment at the
time specified in Section 4(iii) in an amount equal to the value of
such benefits; provided, further, that to the extent that the present
value of all benefits payable to you under this Section 4(ii)(j) is
less than $250,000, the Corporation shall pay you a lump-sum payment at
the time specified in Section 4(iii) in an amount equal to the
difference between $250,000 and the amount of such benefits which are
otherwise payable to you under this Section 4(ii)(j); provided,
further, that if you are eligible to receive grandfathered benefits
under the Corporation's pension plan, the provisions of this Section
4(ii)(j) shall apply to such grandfathered benefits, without reduction
for age, in addition to any other benefits to which you are entitled
under this Section 4(ii)(j).
(iii) The payments provided for in Sections 4(ii)(a), (b),
(c), (d) and (j) shall be made not later than the fifth day following the Date
of Termination; provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to
<PAGE> 14
Page 14
you, payable on the fifth day after demand by the Corporation (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code).
(iv) You shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other employment or
otherwise nor, except as provided in Section 4(ii)(f), shall the amount of any
payment or benefit provided for in this Section 4 be reduced by any compensation
earned by you as the result of employment by another employer or
self-employment, by retirement benefits, by offset against any amount claimed to
be owed by you to the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding
anything contained herein, in the event of a Change in Control during the term
of this Agreement, all outstanding options ("Options"), if any, granted to you
under any of the Corporation's stock option plans, incentive plans or other
similar plans (or options substituted therefor covering the stock of a successor
corporation) shall, effective immediately prior to such Change in Control,
become fully vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless
<PAGE> 15
Page 15
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.
7. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(ii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on
<PAGE> 16
Page 16
behalf of any other person, firm or corporation, directly or indirectly solicit
or attempt to solicit away from the Corporation any of its officers or employees
or offer employment to any person who, on or during the six (6) months
immediately preceding the date of such solicitation or offer, is or was an
officer or employee of the Corporation; provided, however, that a general
advertisement to which an employee of the Corporation responds shall in no event
be deemed to result in a breach of this Section 8(ii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following
the execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation with whom the Corporation has
entered into agreements similar to this Agreement. The Corporation shall
initially contribute $1000 to such trust. Such trust shall be a grantor trust
described in section 671 of the Code. Upon the occurrence of a Potential Change
in Control (as defined below), the Corporation shall fully fund its obligations
to provide benefits hereunder (including, without limitation, its obligations
under Section 4(ii)(g)) by irrevocably contributing funds to such trust on your
behalf. The amount of such contribution shall equal the then present value of
the Corporation's obligations under Section 4 hereof as determined by the firms
serving as the Corporation's actuaries and accountants immediately prior to the
Change in Control. Such actuaries and accountants shall be paid by the
Corporation. The establishment and funding of such trust shall not affect the
obligation of the Corporation to provide benefits under the terms of this
Agreement. For purposes of this Agreement a "Potential Change in Control" shall
be deemed to occur if:
(a) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(b) any Person (including the Corporation) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(c) any Person who is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Corporation
representing ten percent (10%) or more of the combined voting power of
the Corporation's then outstanding securities, increases such Person's
beneficial ownership of such securities by five percent (5%) or more of
the Corporation's then outstanding securities over the percentage so
owned by such Person on the date hereof; or
<PAGE> 17
Page 17
(d) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
10. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions
<PAGE> 18
Page 18
of such courts for the purpose of any such suit, action, proceeding or judgment.
By your execution and delivery of this Agreement, you appoint the Secretary of
the Corporation, at the Corporation's office in Toledo, Ohio, as your agent upon
which process may be served in any such suit, action or proceeding; and by its
execution and delivery of this Agreement, the Corporation appoints the Secretary
of the Corporation, at its office in Toledo, Ohio, as its agent upon which
process may be served in any such suit, action or proceeding. Service of process
upon such applicable agent, together with actual notice of such service given to
you or the Corporation, as applicable, in the manner provided in Section 7
hereof, shall be deemed in every respect effective service of process upon the
applicable party in any suit, action, proceeding or judgment. Nothing herein
shall be deemed to limit the ability of you or the Corporation to serve any such
writs, process or summonses in any other manner permitted by applicable law. You
and the Corporation hereby irrevocably waive any objections which you or the
Corporation, as applicable, may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement
brought in any court of competent jurisdiction in the State of Ohio, and hereby
further irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event that no court of competent
jurisdiction in the State of Ohio will accept such jurisdiction and venue, then
any suit, action or proceeding with respect to this Agreement, or any judgment
entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the continental United States which has jurisdiction
over such suit, proceeding or action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was
<PAGE> 19
Page 19
withheld during the period of the Dispute plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees and expenses, if any, incurred in contesting or
disputing any termination of your employment or in seeking to obtain or enforce
any right or benefit provided by this Agreement, or in connection with any tax
audit or proceeding to the extent attributable to the application of section
4999 of the Code to any payment or benefit provided hereunder).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans . Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
If this letter sets forth our agreement on the
subject matter hereof, kindly sign and return to the Corporation the enclosed
copy of this letter, which shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
---------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted,
this 27th day of May, 1998.
/s/ Wayne Zitkus
- ---------------------------
[Executive]
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