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EXHIBIT 10.4(a)
FORM OF EMPLOYMENT AGREEMENT
AGREEMENT by and between CLARCOR Inc., a Delaware corporation (the
"Corporation") and ______________________ (the "Executive") dated as of June
13, 1996. The Corporation and the Executive hereby agree as follows:
Factual Background
The Corporation wishes to attract and retain well-qualified executive and
key personnel and to assure both itself and the Executive of continuity of
management in the event of any actual or threatened Change of Control (as
defined in Section 2) of the Corporation. To achieve this purpose, the
Compensation Committee of the Board of Directors of the Corporation has
considered and recommends that agreements should be entered into with such
personnel and in accordance with that recommendation the Board of Directors has
approved this Agreement as being in the best interests of the Corporation and
its shareholders.
1. Operation of Agreement. The "effective date of this Agreement" shall
be the date on which a Change of Control occurs. Anything in this Agreement to
the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Corporation is terminated or the Executive
ceases to be an officer of the Corporation prior to the date on which the
Change of Control occurs, and if it is reasonably demonstrated by the Executive
that such termination of employment or cessation of status as an officer (i)
was at the request of a third party who has taken steps reasonably calculated
to effect the Change of Control or (ii) otherwise arose in connection with
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or anticipation of the Change of Control, then for all purposes of this
Agreement the "effective date of this agreement" shall mean the date
immediately prior to the date of such termination of employment or cessation of
status as an officer.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition (other than from the Corporation) by any
person, entity or "group", within the meaning of Section 13(d) (3)
or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange
Act"), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 15% or more of either the
then outstanding shares of common stock or the combined voting power
of the Corporation's then outstanding voting securities entitled to
vote generally in the election of directors; provided, however, no
Change of Control shall be deemed to have occurred for any
acquisition by any corporation with respect to which, following such
acquisition, more than 60% of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors
is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals or entities who were the
beneficial owners, respectively, of the then outstanding shares of
common stock or the combined voting power of the Corporation's then
outstanding voting securities immediately prior to such acquisition
in substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Corporation's then
outstanding common stock and then outstanding voting securities, as
the case may be; or
(b) Individuals who, as of the date hereof, constitute the Board
(as of the date hereof the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Corporation's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the Directors of the
Corporation, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall be, for purposes of this
Agreement, considered as though such person were a member of the
Incumbent Board; or
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(c) Approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, with respect
to which persons who were the shareholders of the Corporation
immediately prior to such reorganization, merger or consolidation do
not, immediately thereafter, own more than 60% of the combined
voting power entitled to vote generally in the election of directors
of the reorganized, merged or consolidated corporation's then
outstanding voting securities, or a liquidation or dissolution of
the Corporation or of the sale of all or substantially all of the
assets of the Corporation.
3. Employment. The Corporation hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Corporation, for the period commencing on the effective date of
this Agreement and ending on the earlier to occur of the third anniversary of
such date or the Executive's normal retirement date under the Corporation's
retirement plans (the "employment period"), to exercise such authority and
perform such executive duties as are commensurate with the authority being
exercised and duties being performed by the Executive during the 90-day period
immediately prior to the effective date of this Agreement, which services shall
be performed at the location where the Executive was employed immediately prior
to the effective date of this Agreement. During the employment period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Corporation and, to
the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the employment period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B)
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deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Corporation in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the effective
date of this Agreement, the continued conduct of such activities (or conduct of
activities similar in nature and scope thereto) subsequent to the effective
date of this Agreement shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Corporation.
4. Compensation, Compensation Plans, Benefits and Perquisites. During
the employment period, the Executive shall be compensated as follows:
(a) He shall receive an annual salary at a monthly rate at least
equal to the highest monthly base salary paid or payable to the
Executive by the Corporation during the 36 calendar months
immediately prior to the effective date of this Agreement, with the
opportunity for increases, from time to time thereafter, which are
in accordance with the Corporation's regular practices. Annual
salary shall not be reduced after any such increase and the term
"salary" as utilized in this Agreement shall refer to such annual
salary as increased.
(b) He shall be eligible to participate on a reasonable basis in
the Corporation's Stock Option Plan, Key Management Incentive Plan,
Long Range Performance Share Plan and other bonus and incentive
compensation plans (whether now or hereinafter in effect) which
provide opportunities to receive compensation which are the greater
of the opportunities provided by the Corporation for executives with
comparable duties or the opportunities under any such plans in which
he was participating during the 90-day period immediately prior to
the effective date of this Agreement.
(c) He shall be entitled to receive employee benefits and
perquisites which are the greater of the employee benefits and
perquisites provided by the Corporation to executives
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with comparable duties or the employee benefits and perquisites to
which he was entitled during the 90-day period immediately prior
to the effective date of this Agreement. Such benefits and
perquisites shall include, but not be limited to, the benefits and
perquisites included under the following:
CLARCOR Pension Trust
Retirement Savings Plan and Trust
Supplemental Retirement Plan
Dental Plan
Health Care Plan
Life Insurance Plan/Supplemental Life
Insurance Plan
Disability Plan
Automobile Plan
5. Termination. The term "termination" shall mean termination
by the Corporation of the employment of the Executive with the
Corporation for any reason other than death, disability or cause (as
defined below), or resignation of the Executive upon the occurrence
of any of the following events:
(a) An adverse change in the nature or scope of the Executive's
authority, duties or responsibilities from those referred to in
Section 3, as determined in good faith by the Executive, a change in
location from that referred to in Section 3, a reduction in total
compensation, compensation plans, benefits or perquisites from those
provided in Section 4, or the breach by the Corporation of any other
provision of this Agreement; or
(b) A good-faith determination by the Executive that as a result
of a Change of Control and a change in circumstances thereafter
significantly affecting his position, he is unable to exercise the
authorities, powers, function or duties attached to his position and
contemplated by Section 3 of the Agreement.
For purposes of this Section 5, any good-faith determination made by the
Executive shall be conclusive. The term "cause" means fraud, misappropriation
or intentional material damage to the property or business of the Corporation
or commission of a felony.
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6. Termination Payments. In the event of a termination and subject to
the provisions of Section 7 of this Agreement, the Corporation shall pay to the
Executive and provide him with the following:
(a) During the remainder of the employment period, the
Corporation shall continue to pay the Executive his salary at the
rate required by paragraph 4 (a) and in effect immediately prior to
the date of termination plus the estimated amount of any incentive
compensation or other bonuses to which he would have been entitled
had he remained in the employ of the Corporation for the remainder
of the employment period.
(b) During the remainder of the employment period, the Executive
shall continue to be treated as an employee under the provisions of
the Corporation's plans referred to in 4(b). In addition, the
Executive shall continue to be entitled to all benefits and service
credits for benefits, programs and arrangements of the Corporation
described in paragraph 4(c) as if he were still employed during such
period under this Agreement.
(c) If, despite the provisions of paragraph (b) above, benefits
or service credits or the right to accrue further benefits or
service credits under any plan referred to in Section 4(b) or (c)
shall not be payable or provided under such plan to the Executive,
or his dependents, beneficiaries and estate because he is no longer
an employee of the Corporation, the Corporation itself shall, to the
extent necessary, pay or provide for payment of such benefits and
service credits for such benefits to the Executive, his dependents,
beneficiaries and estate.
7. Non-Competition and Confidentiality. The Executive agrees that:
(a) There shall be no obligation on the part of the Corporation
to provide any further payments or benefits (other than benefits or
payments already earned, accrued or paid) described in Section 6 or
Section 9 if, (i) during the employment period, the Executive shall
be employed by or otherwise engaged or be interested (other than as
a passive investor in a publicly-owned entity) in any business which
directly competes with any business of the Corporation or of any of
its subsidiaries at such time and (ii) such employment or activity
is likely to cause, or causes, serious damage to the Corporation or
any of its subsidiaries at such time; and
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(b) During and after the employment period, he shall retain in
confidence any confidential information known to him concerning the
Corporation and its subsidiaries and their respective businesses so
long as such information is not publicly disclosed. Notwithstanding
the foregoing, a breach by the Executive of this Section 7(b) shall
not be used to set-off or delay amounts payable under this
Agreement.
8. No Obligation to Mitigate Damages. The Executive shall not be
obligated to seek other employment in mitigation of amounts payable or
arrangements made under the provisions of this Agreement and the obtaining of
such other employment shall in no event effect any reduction of the
Corporation's obligations under this Agreement.
9. Severance Allowance. In the event of termination of the Executive
during the employment period, the Executive may elect, within 60 days after
such termination, to be paid a lump sum severance allowance, in lieu of the
termination payments referred to in Section 6 above, in an amount which is
equal to the sum of the amounts determined in accordance with the following
paragraphs (a) and (b).
(a) An amount equivalent to salary payments for 36 calendar
months at the rate which he would have been entitled to receive in
accordance with Section 6(a) plus a pro rata share of the estimated
amount of any bonus which would have been payable for the bonus
period which includes the termination date; and
(b) An amount equivalent to 36 calendar months of bonus at the
greater of (i) the highest monthly rate of the bonus payment for the
bonus period in respect of the three fiscal years immediately prior
to the fiscal year including his termination date, or (ii) the
estimated amount of the bonus for the period which includes his
termination date.
In the event that the Executive makes an election pursuant to the preceding
sentence of this Section 9 to receive a lump sum severance allowance of the
amount described in paragraphs (a) and (b), then, in addition to such amount,
he shall receive (i) in addition to the benefits provided under any pension
benefit plan maintained by the Corporation, the pension benefits he would have
accrued under such pension benefit plan if he had remained in the employ of the
Corporation for 36 calendar months after his termination, which benefits will
be paid in a lump sum concurrently with, and in addition to, the lump sum
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payment of the benefits provided under such pension benefit plan, (ii)
incentive compensation (including, but not limited to, the right to receive and
exercise stock options and stock appreciation rights and other bonus and
similar incentive compensation benefits) to which he would have been entitled
under all incentive compensation plans maintained by the Corporation if he had
remained in the employ of the Corporation for 36 calendar months after such
termination, payable in a lump sum, and (iii) the employee benefits (including,
but not limited to, coverage under any medical and insurance arrangements or
programs) to which he would have been entitled under all employee benefit
plans, programs or arrangements maintained by the Corporation if he had
remained in the employ of the Corporation for 36 calendar months after his
termination, or at the election of the Executive, the value of the amounts
described in (i), (ii) and (iii) next preceding. The amount of the payments
described in the preceding sentence shall be determined by the Accounting Firm
(as defined in Section 10) and such payments shall be distributed as soon as
reasonably possible but in no event later than 30 days after the election by
the Executive pursuant to this Section 9. The Executive making an election
pursuant to this Section 9 shall not be restricted by the provisions of
paragraph 7(a).
10. Certain Additional Payments by the Corporation. The Corporation
agrees that:
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment or distribution
by the Corporation to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise, but determined without regard
to any additional payments required under this Section 10) (a
"Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax
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imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payment.
(b) Subject to the provisions of Section 10(c), all
determinations required to be made under this Section 10, including
whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by Coopers & ▇▇▇▇▇▇▇ (the
"Accounting Firm") which shall provide detailed supporting
calculations both to the Corporation and the Executive within 15
business days of the receipt of notice from the Executive that there
has been a Payment, or such earlier time as is requested by the
Corporation. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting
the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to
as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Corporation. Any
Gross-Up Payment, as determined pursuant to this Section 10, shall
be paid by the Corporation to the Executive within five days of the
receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion that failure to
report the Excise Tax on the Executive's applicable federal income
tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be
binding upon the Corporation and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments which will not have been made
by the Corporation should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In
the event that the Corporation exhausts its remedies pursuant to
Section 10(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Corporation to or for the
benefit of the Executive.
(c) The Executive 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 but no later
than ten business days after the Executive is 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. The
Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives
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such notice to the Corporation (or such shorter period ending on
the date that any payment of taxes with respect to such claim is
due). If the Corporation notifies the Executive in writing prior
to the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) give the Corporation any information reasonably
requested by the Corporation relating to such claim,
(ii) 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,
(iii) cooperate with the Corporation in good faith
in order effectively to contest such claim, and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
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 and hold the Executive harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 10(c), 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 the Executive to pay the tax claimed and ▇▇▇ for a
refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the
Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and ▇▇▇ for a
refund, the Corporation shall advance the amount of such payment
to the Executive, on an interest-free basis and shall indemnify
and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and
further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the
Corporation's control of the
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contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive
shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Corporation pursuant to Section 10(c), the Executive becomes
entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Corporation's complying with the
requirements of Section 10(c)) promptly pay to the Corporation the
amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Corporation pursuant to
Section 10(c), a determination is made that the Executive shall not
be entitled to any refund with respect to such claim and the
Corporation does not notify the Executive in writing of its intent
to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
11. Full Settlement. The Corporation's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Corporation may have against
the Executive or others. The Corporation agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Corporation, the Executive or others of the validity of enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate provided for in
Section 7872 (f) (2) (A) of the Code.
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12. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at _____________, or at the last
address he has filed in writing with the Corporation or, in the case of the
Corporation, at its principal executive offices.
13. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien upon any amounts provided
under this agreement; and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts, or by
operation of law, except by will or the laws of descent and distribution.
14. Governing Law. The provisions of this Agreement shall be construed
in accordance with the laws of the State of Illinois.
15. Amendment. This Agreement may be amended or canceled by mutual
agreement of the parties in writing without the consent of any other person
and, so long as the Executive lives, no person, other than the parties hereto,
shall have any rights under or interest in this agreement or the subject matter
hereof.
16. Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Corporation shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Corporation and its successors and assigns.
(c) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation
to assume expressly 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. As used in
this Agreement, "Corporation" shall mean the Corporation as
hereinbefore defined and any successor to its business
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and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise. Any failure by
the Corporation to comply with and satisfy this Section 16(c)
shall constitute a termination as provided in Section 5 of this
Agreement, provided that such successor has received at least ten
days prior written notice from the Corporation or the Executive of
the requirements of this Section 16(c).
17. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect.
18. "At Will". The Executive and the Corporation acknowledge that,
except as may otherwise be provided under any other written agreement between
the Executive and the Corporation, the employment of the Executive by the
Corporation is "at will" and, prior to the effective date of this Agreement and
except as otherwise provided herein, may be terminated by either the Executive
or the Corporation at any time. Moreover, if prior to the effective date of
this Agreement, (i) the Executive's employment with the Corporation terminates
or (ii) the Executive ceases to be an officer of the Corporation, then the
Executive shall have no further rights under this Agreement.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Corporation has
caused these presents to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its Secretary, all as of
the day and year first above written.
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the Executive
CLARCOR Inc.
By
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Its Chief Executive Officer
ATTEST:
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Secretary
(Seal)
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