EXHIBIT 10.11
AGREEMENT
between
CHAMPION INTERNATIONAL CORPORATION
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Effective September 18, 1997
Table of Contents
-----------------
Paragraph
Number Title Page
--------- ----- ----
1 Employment 1
2 Position and Responsibilities 1
3 (a) Period of Employment 1
(b) Duties 2
4 Compensation 2
5 Participation in Benefit Plans 2
6 Disability 3
(a) Disability Benefits 3
(b) Services During Disability 4
(c) (i) Retirement Credit During Disability 4
(ii) Death Benefits While Disabled 5
(d) No Duplication of Benefits 5
(e) Definition of Disability 5
7 Termination During Month 5
8 Termination 6
(a) Termination Payments 6
(i) Monthly Payments 6
(ii) Lump Sum Payment Upon Termination
Following a Change in Control 6
(iii) Cash-Out of Options and Contingently
Credited Shares 7
(iv) Payment of Final Value of Retirement
Benefits 7
8 (b) Definition of Termination 8
(c) Definition of Cause 9
(d) Definition of Change in Control 10
9 (a) [Intentionally left Blank] 10
(b) Retirement 10
(i) Executive's Basic Retirement
Allowance Increase 10
(ii) Spouse's Basic Survivor Retirement
Allowance Increase 12
(iii) Retirement Allowance Offsets 13
(iv) Alternative Forms of Payment of
Retirement Allowances; #001 Plan
Calculation Methods 14
(c) [Intentionally left Blank] 15
(d) Election of Lump Sum Payment of
Retirement Allowances Upon or
Following Retirement 15
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Paragraph
Number Title Page
--------- ----- ----
10 Post-termination Obligations
of Executive; Default by Company 16
(a) Assistance In Litigation 17
(b) Detrimental Conduct 17
(c) Discoveries and Inventions 17
(d) Reimbursement of Expenses 17
(e) Competition 17
(f) Failure to Comply 18
(g) Post-termination Default in
Payments or Benefits 18
11 Determination of Benefits 19
12 (a) Time of Payment 19
(b) Withholding of Taxes 20
13 Decisions by Company 20
14 Prior Agreements 20
15 Consolidation or Merger 20
16 (a) Non-assignability 20
(b) No Attachment 20
(c) Binding Agreement 21
(d) Unfunded Obligations; Trust Agreement 21
17 (a) Amendment of Agreement 22
(b) No Waiver 22
18 Severability 23
19 Headings 23
20 Governing Law 23
21 Parachute Tax 23
22 Notices 24
23 Arbitration 25
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EXHIBITS
--------
Page
Exhibit Reference
------- ---------
A Summary of Retirement Plan for Salaried
Employees as in effect on the Effective
Date 3
B Summary of Disability Plan as in effect
on the Effective Date 4
C Certain benefits to be provided after a
termination following a change in control 6
D Payments and benefits subject to
acceleration in event of default in
payments or benefits by Company after
cessation of employment 18
E [Intentionally left Blank]
F Form of Trust Agreement 21
G Amounts to be deposited in trust upon a 21
potential change in control
DEFINED TERMS
-------------
Defined Term Paragraph Page
------------ --------- ----
Agreement Introduction 1
Alternative Benefit 9(b)(iv) 14
Average Annual Compensation 9(b)(i) 11
Cause 8(c) 9
Change in Control 8(d) 10
Code 8(a)(iii) 7
Company Introduction 1
Disability 6(e) 5
Effective Date 3(a) 1
Executive Introduction 1
Fair Market Value 8(a)(iii) 7
Legal Expense Agreement 8(b)(ii) 8
Normal Benefit 9(b)(iv) 14
#001 Plan 8(a)(iv) 7
Period of Employment 3(a) 1
Potential Change in Control 9(d)(iv) 16
Retirement Plan 5 3
Termination 8(b) 8
___________________________
Words and terms relating to 9(b)(iv) 15
retirement allowances and (last sentence)
related matters
iii
THIS AGREEMENT between CHAMPION INTERNATIONAL CORPORATION, a New York
corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Executive"), effective
September 18, 1997 (the "Agreement").
W I T N E S S E T H:
WHEREAS, the Company and the Executive executed an agreement effective
August 18, 1988, as amended September 19, 1991, providing for termination
payments under the circumstances set forth therein; and
WHEREAS, the Executive was elected Chief Executive Officer of the Company
on August 15, 1996 and Chairman of the Board of Directors of the Company
effective October 1, 1996; and
WHEREAS, the Company and the Executive wish to terminate the aforesaid
agreement and to replace it with this agreement; and
WHEREAS, the Company wishes to provide additional incentive for the
Executive to continue in the employ of the Company;
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Employment
----------
The Company will continue the Executive in its employ, and the Executive
hereby agrees to remain in the employ of the Company, for the period stated in
subparagraph 3(a) below and upon the other terms and conditions hereinafter
stated.
2. Position and Responsibilities
-----------------------------
During the period of his employment under this Agreement, the Executive
agrees to serve as the Chief Executive Officer of the Company subject to the
supervision of, and reporting directly to, the Board of Directors of the
Company. During the period of his employment under this Agreement, the
Executive also agrees to serve, for the period for which he is and shall from
time to time be elected, as Chairman of the Board of Directors of the Company
and as an officer and director of any subsidiary or affiliate of the Company.
3. (a) Period of Employment
--------------------
The period of the Executive's employment under this Agreement shall be
deemed to have commenced as of September 1, 1997 (the "Effective Date") and
shall continue for the period from the Effective Date to the date on which he
shall attain the age of 62 (such period being herein referred to as the "period
of employment"). Such period of employment, and each one-year extension of the
period of employment pursuant to the following provisions of this sentence,
shall, without further action by the parties, be extended one additional year
unless either party hereto shall have given written notice to the other party
hereto, more than six months prior to the expiration of the period of employment
or one-year extension thereof then in effect, that the period of employment or
one-year extension thereof then in effect is not to be so extended. In the
event that the Executive shall continue in the full-time employment of the
Company after the period from the Effective Date to the date on which he shall
attain the age of 62, as such period may have been extended, such continued
employment shall be subject to the terms and conditions
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of this Agreement. In such event, the Executive's period of employment shall
include the period during which he in fact continues in the Company's employ.
(b) Duties
------
Throughout the period of his employment hereunder and except for illness,
reasonable vacation periods and reasonable leaves of absence, the Executive
shall devote all his business time, attention, skill and efforts to the faithful
performance of his duties hereunder; provided, however, that the Executive may,
with the approval of the Board of Directors of the Company, from time to time
serve or continue to serve on the boards of directors of, and hold any other
offices or positions in, companies or organizations which present no conflict of
interest with the Company and which will not materially affect the performance
of his obligations under this Agreement.
4. Compensation
------------
For all services rendered by the Executive in any capacity during the
period of his employment under this Agreement, including, without limitation,
services as an employee, officer, director or member of any committee of the
Company or of any subsidiary, affiliate or division thereof, the Executive shall
be paid as compensation, (a) a salary at a monthly rate which is the higher of
(A) $66,667, and (B) such higher amount as may from time to time be fixed by the
Board of Directors of the Company, or by a Committee designated by the Board of
Directors; and (b) such bonus, if any, as may from time to time be awarded to
the Executive by the Board of Directors of the Company, or by a Committee
designated by the Board of Directors. Such salary shall be payable on the last
day of each month, and any such bonus shall be payable in the manner specified
at the time any such bonus is awarded.
5. Participation in Benefit Plans
------------------------------
Except as otherwise specifically provided herein, the payments provided
under this Agreement for the Executive are in addition to any benefits to which
the Executive (or his beneficiaries or estate) may be or become entitled under
any hospitalization, health care, dental care or sick leave plan, life or other
insurance or death benefit plan, travel and accident insurance, executive or
contingent compensation plan, restricted stock or stock purchase plan,
retirement income or pension plan, vacation plan, or other present or future
employee benefit plans or programs of the Company for which key executives are
eligible, and the Executive shall be eligible to receive, during the period of
his employment under this Agreement and during any subsequent period that he
shall be entitled to receive payments from the Company under subparagraph 6(a)
or subparagraph 8(a)(i) below (whether or not any such period shall have been
accelerated) as if the Executive had continued to be employed by the Company
during such subsequent period, any benefits and emoluments for which key
executives are eligible under any such benefit plan or program of the Company in
accordance with the
2
provisions of any such plan or program, provided, however, that during the
period that the Executive is so entitled to receive payments under subparagraph
6(a) (during any period of long-term disability) or 8(a)(i) below, he shall not
be eligible to participate in the Company's Savings Plan for Salaried Employees
or Nonqualified Supplemental Savings Plan or to receive option grants under any
stock option plan of the Company. To the extent that such benefits or service
credits for benefits shall not be payable or provided under such plans or
programs by reason of the Executive no longer being an employee of the Company,
the Company shall itself pay or provide for payment of such benefits and service
credit for benefits. Nothing in this Agreement shall preclude the Company from
terminating or amending any such employee benefit plan or program so as to
eliminate, reduce or otherwise change any benefit payable thereunder subject, in
the case of the Company's disability plan, to the provisions of subparagraph
6(a) below, and provided that, if the retirement allowances payable to the
Executive on his retirement under the pension plans, including related
supplemental and excess benefit plans, of the Company and any subsidiary or
affiliate of the Company, when combined with any additional retirement allowance
provided under subparagraph 9(b) below, shall be less than the retirement
allowance which the Executive would have received under the Retirement Plan for
Salaried Employees of Champion International Corporation as in effect on the
Effective Date, exclusive of any limitations on the amount of benefits or
contributions for an individual participant imposed by the Employee Retirement
Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986,
as amended, (the "Retirement Plan"), a summary of which is attached hereto as
Exhibit A, had he been credited in full, for purposes of vesting and benefits,
---------
with all of his years and full months of service with the Company and any
subsidiary or affiliate thereof and with any subsequent period that he was
entitled to receive payments from the Company under subparagraph 8(a)(i) below
(regardless of whether or not any such period shall have been accelerated) and
credited, for purpose of benefits, with such portion of his annual bonus awards
as on such retirement would have been credited for such purpose if all such
bonus awards had been paid in cash when awarded, then the difference shall be
paid by the Company.
6. Disability
----------
In the event of the disability, as defined in subparagraph 6(e) below, of
the Executive, the following provisions of this paragraph 6 shall apply.
(a) Disability Benefits
-------------------
The Company shall pay the Executive, subject to compliance with the
applicable provisions of paragraph 10 and to the reduction provided in
subparagraph 6(d) below, a disability benefit equal to the greater of (i) the
benefit which the Executive would receive upon such disability under the
disability plan of the Company as in effect on the Effective Date, a summary
3
of which is attached hereto as Exhibit B, regardless of whether such plan
---------
remains in effect at the commencement of, or during, the Executive's disability;
and (ii) the benefit which the Executive would receive upon such disability
under the disability plan of the Company as in effect at the commencement of,
and (if and to the extent that increased benefits under the disability plan are
extended generally to employees who were disabled prior to the adoption of such
increased benefits) during, the Executive's disability. Payment of such
disability benefit shall commence on the last day of the month next following
the commencement of the Executive's disability and cease with the earlier of (i)
the payment for the month in which the Executive dies and (ii) the payment for
the month preceding the month in which occurs the Executive's normal retirement
date under the Company's pension plan.
(b) Services During Disability
--------------------------
During the period that the Executive shall be receiving payments under
subparagraph 6(a) above, he shall, to the extent that he shall be physically and
mentally able to do so, furnish information and assistance and refrain from
detrimental conduct and otherwise act in accordance with paragraph 10 below,
and, in addition, upon reasonable request in writing on behalf of the Board of
Directors, from time to time make himself available to the Company to undertake
reasonable assignments, consistent with his place of residence from time to
time, the dignity, importance and scope of his prior position and his physical
and mental health. During such period of service, he shall be responsible and
report to, and shall be subject to the supervision of, the Board of Directors of
the Company or an executive officer designated by the Board, both as to the
method and manner in which he shall perform such assignments, subject in each
case to the preceding provisions of this subparagraph 6(b), and shall keep the
Board of Directors, when it is in session, or such executive officer,
appropriately informed from time to time of his progress in any such assignment.
The Company shall continue to pay all reasonable expenses incident to the
performance of the Executive's duties hereunder including, without limitation,
expenses of travel to and from his place of residence and the headquarters of
the Company or such other place or places as may be required in each case for
the performance of his assignments and reports.
(c)(i) Retirement Credit During Disability
-----------------------------------
The Company shall pay the Executive, subject to compliance with the
applicable provisions of paragraph 10 and to the reduction provided in
subparagraph 6(d) below, a retirement allowance which shall be no less than the
retirement allowance which the Executive would have received under the
Retirement Plan had he remained in full-time employment with the Company until
the earliest of termination of his disability or his normal retirement date or
early retirement date at his annual rate of compensation, in accordance with
paragraph 4 above, at the
4
commencement of his disability, and had he been credited in full, for purposes
of vesting and benefits, with all of his years and full months of service with
the Company and any subsidiary or affiliate thereof and credited, for purpose of
benefits, with such portion of his annual bonus awards as on his normal
retirement date would have been credited for such purpose if all such bonus
awards had been paid in cash when awarded; provided, however, that nothing in
this Agreement shall preclude the Company from providing a larger benefit for
the Executive under any pension plan or otherwise. Such retirement allowance
shall be paid monthly, commencing with the first day of the month coincident
with or next following the Executive's normal retirement date under the
Company's pension plan or early retirement if he elects early retirement instead
of disability payments, and shall continue to be paid in accordance with the
method of payment selected by the Executive under such pension plan.
(ii) Death Benefits While Disabled
-----------------------------
In the event that the death of the Executive should occur after his
disability but before his normal retirement date and before any early
retirement, the Company shall pay the Executive's beneficiary or beneficiaries
under the Company's pension plan, subject to the reduction provided in
subparagraph 6(d) below, a benefit which shall be based upon an amount no less
than the retirement allowance which the Executive would have received under the
Retirement Plan had the Executive remained in full-time employment with the
Company at his annual rate of compensation, in accordance with paragraph 4
above, at the commencement of his disability, and been credited with service and
bonuses as provided in subparagraph (c)(i) above, and then retired on the date
of his death. Such benefit shall be paid monthly, commencing with the first day
of the month next following the date of the Executive's death, and shall
continue to be paid in accordance with the method of payment selected by the
Executive under the Company's pension plan.
(d) No Duplication of Benefits
--------------------------
Notwithstanding anything to the contrary contained herein, in order to
prevent duplication of benefits, the amount of any disability benefit,
retirement allowance or other benefit payable under this paragraph 6 shall be
reduced by the amount of any benefits actually paid to the Executive or his
beneficiary or beneficiaries, as the case may be, with respect to the same
period under the disability plan or pension plans, including related
supplemental and excess benefit plans, of the Company and any subsidiary or
affiliate thereof.
(e) Definition of Disability
------------------------
The term "disability" for purposes of this Agreement shall have the same
meaning as under the disability plan of the Company as in effect on the
Effective Date as summarized in Exhibit B.
----------
7. Termination During Month
------------------------
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In the event that the employment of the Executive shall terminate prior to
the end of a calendar month as a result of his death or disability or a
termination described in paragraph 8 below, the Company shall pay the Executive
or his legal representatives, as the case may be, in addition to any other
amounts payable by the Company hereunder, a lump cash sum which shall in no
event be less than the salary plus any bonus to which the Executive would have
been entitled had he remained in full-time employment until the end of the month
in which his employment shall so terminate.
8. Termination
-----------
In the event of a termination, as defined in subparagraph 8(b) below,
during the period of employment under this Agreement, the following provisions
of this paragraph 8 shall apply.
(a) Termination Payments
--------------------
(i) Monthly Payments. Subject to compliance with the applicable
----------------
provisions of paragraph 10 below, the Company shall pay the Executive or, in the
event of his subsequent death, his beneficiary or beneficiaries or his estate,
as the case may be, as severance pay or liquidated damages, or both, a monthly
sum equal to the highest total monthly compensation (highest total of annual
salary plus annual bonus for any calendar year of employment, divided by twelve)
paid to the Executive. Such payments shall commence on the last day of the
month next following the termination of employment of the Executive and shall
continue until the last day of the twenty-fourth full calendar month following
the termination of employment of the Executive, provided, however, that such
payments shall not continue beyond the earlier of (A) the last day of the month
next preceding his normal retirement date under the Company's pension plan, and
(B) the last day of the month next preceding the month in which he shall, with
his written consent, commence receiving his retirement allowance under the
Company's pension plan.
(ii) Lump Sum Payment upon Termination following a Change in
-------------------------------------------------------
Control. Anything in subparagraph 8(a)(i) above or elsewhere in this Agreement
to the contrary notwithstanding, if termination of the Executive occurs within
three years following a Change in Control: (x) the total of the monthly payments
provided for in subparagraph 8(a)(i) above shall be accelerated and paid in a
lump sum as soon as practicable after such termination if termination occurs
before the last day of the month next preceding the Executive's normal
retirement date under the Company's pension plan; if termination occurs on or
after such last day, no payment pursuant to subparagraph 8(a)(i) or (ii) shall
be made to the Executive; (y) the benefits required to be provided thereafter to
the Executive, his spouse and family, set forth in attached Exhibit C, shall be
---------
valued at the cost of acquiring insurance policies which would provide such
benefit coverage over the period of time involved in subparagraph 8(a)(i) above,
and such cost shall be paid in a lump sum as soon as practicable after
termination; and (z) the Executive shall be
6
paid the amount payable, if any, pursuant to subparagraph 8(a)(iii) and the
amount payable pursuant to subparagraph 8(a)(iv).
(iii) Cash-Out of Options and Contingently Credited Shares. In
----------------------------------------------------
the event that the Executive shall, at the time of termination of his employment
within three years following a Change in Control, (A) hold an outstanding and
unexercised (whether or not exercisable at the time) option or options
theretofore granted by the Company to him prior to the Change in Control, (B)
have shares contingently credited to him prior to the Change in Control under
the Company's Contingent Compensation Plan or 1986 Contingent Compensation Plan
or a successor plan, or both hold such option and have such shares contingently
credited to him, unless the Executive shall have given the Company written
notice to the contrary within thirty (30) days following such termination of
employment, the Company shall pay him, in a lump sum, an amount equal to the
excess above the option price, of each such option that is not an Incentive
Stock Option as defined in Section 422 of the Internal Revenue Code of 1986 as
amended (the "Code"), of the Fair Market Value of Common Shares of the Company
at the time of termination, and the Fair Market Value at the time of termination
of the shares, if any, so contingently credited. Solely for the purpose of this
subparagraph 8(a)(iii), Fair Market Value at the time of termination shall mean
the higher of (i) the average of the reported closing prices of the Common
Shares of the Company, as reported in "New York Stock Exchange Composite
Transactions" of the Eastern Edition of The Wall Street Journal, for the last
-----------------------
trading day prior to the termination and for each trading day of the preceding
sixty calendar days, and (ii) in the event that a Change in Control of the
Company, as defined in subparagraph 8(d) below, shall have taken place prior to
termination as the result of a tender or exchange offer, and such Change in
Control was consummated within three years of termination, an amount equal to
the highest consideration paid for Common Shares of the Company in the course of
such tender or exchange offer.
(iv) Payment of Final Value of Retirement Benefits. Anything in
---------------------------------------------
this Agreement to the contrary notwithstanding, in the event of a termination of
the Executive's employment within three years following a Change in Control, the
Executive and his spouse shall be entitled to the monthly retirement allowance,
and the monthly survivor retirement allowance, if any, respectively, under
subparagraph 9(b)(i) and (ii) below without regard to the offsets set forth in
subparagraph 9(b)(iii) below, in the amounts that he and she would have received
pursuant to such subparagraph 9(b)(i) and (ii) without regard to the offsets set
forth in subparagraph 9(b)(iii) below, had he continued in the employ of the
Company until age 62, to the extent that each such monthly allowance exceeds the
benefits under the Champion International Corporation Salaried Retirement Plan
#001 (the "#001 Plan") payable to the Executive and his spouse for the
applicable month.
7
If the Executive does not have a spouse at the time of such termination of his
employment, then the calculation provided for in the next preceding sentence
shall be made on the assumption that he had a spouse, his own age, at such time.
Such retirement allowance and survivor retirement allowance, as well as the
specified benefits under the #001 Plan, shall be valued and discounted in the
manner set forth in subparagraph 10(g) below relating to default in payments or
benefits, and such retirement allowance and survivor retirement allowance in
excess of the specified benefits under the #001 Plan shall be paid in a lump sum
as soon as practicable after such termination. By accepting such lump sum,
either from the Company or the trust contemplated by subparagraph 16(d) below,
the Executive and his spouse or other Beneficiary release the Company from all
obligations under all excess benefit, supplemental retirement and other
retirement plans and agreements of the Company, its subsidiaries and affiliates
applicable to the Executive and his spouse or other Beneficiary, including this
Agreement as amended from time to time but excluding the #001 Plan.
(b) Definition of Termination
-------------------------
The term "termination" for purposes of this Agreement shall mean:
(i) The termination by the Company of the Executive's full-time
employment with the Company for any reason other than Cause; or
(ii) Any (A) failure to elect or re-elect the Executive to the
office of Chairman of the Board of Directors of the Company or as a director of
the Company or to designate or re-designate the Executive as Chief Executive
Officer of the Company, (B) material change by the Company of the Executive's
functions, duties or responsibilities without his express written consent as a
result of which change the Executive's position with the Company shall be or
become of less dignity, responsibility, importance or scope than the position
described in paragraph 2 above, and any such material change shall be deemed a
continuing breach of this Agreement, (C) liquidation, dissolution, consolidation
or merger of the Company, or transfer of all or substantially all of its assets,
other than in compliance with the provisions of paragraph 15 below, (D) other
breach of this Agreement by the Company, or breach of the Agreement Relating to
Legal Expenses between the Company and the Executive dated September 18, 1997
(the "Legal Expense Agreement"), or (E) determination in good faith by the
Executive that, as a result of a Change in Control of the Company within the
prior three years, and a change in circumstances thereafter significantly
affecting his position, he is unable to carry out the authorities, powers,
functions or duties attached to his position and contemplated by paragraph 2
above, and the situation is not remedied within 30 days after receipt by the
Company of written notice from the Executive of such determination; provided
that in any such event the Executive elects to terminate his employment under
this
8
Agreement upon not less than sixty days' advance written notice given within a
reasonable period of time not to exceed, except in case of a continuing breach,
four calendar months after the event giving rise to the election.
(c) Definition of Cause
-------------------
For the purpose of any provision of this Agreement, the termination of the
Executive's employment shall be deemed to have been for Cause only
(i) if termination of his employment shall have been the result
of an act or acts of dishonesty on the part of the Executive constituting a
felony and resulting or intended to result directly or indirectly in gain
or personal enrichment at the expense of the Company, or
(ii) if there has been a breach by the Executive during the
period of employment of this Agreement, and such breach results in
demonstrably material injury to the Company, and, with respect to any
alleged breach of subparagraph 3(b) hereof, the Executive shall have either
failed to remedy such alleged breach within thirty days from his receipt of
written notice from the Secretary of the Company pursuant to a resolution
duly adopted by the Board of Directors of the Company after notice to the
Executive and an opportunity to be heard demanding that he remedy such
alleged breach, or shall have failed to take all reasonable steps to that
end during such thirty-day period and thereafter;
provided that there shall have been delivered to the Executive a certified copy
of a resolution of the Board of Directors of the Company adopted by the
affirmative vote of not less than three-fourths of the entire membership of the
Board of Directors at a meeting called and held for that purpose and at which
the Executive was given an opportunity to be heard, finding that the Executive
was guilty of conduct set forth in subparagraph (i) or (ii) above, specifying
the particulars thereof in detail.
Anything in this subparagraph 8(c) or elsewhere in this Agreement to the
contrary notwithstanding, the employment of the Executive shall in no event be
considered to have been terminated by the Company for Cause if termination of
his employment took place (A) as the result of bad judgment or negligence on the
part of the Executive, or (B) as the result of an act or omission without intent
of gaining therefrom directly or indirectly a profit to which the Executive was
not legally entitled, or (C) because of an act or omission believed by the
Executive in good faith to have been in or not opposed to the interests of the
Company, or (D) for any act or omission in respect of which a determination
could properly be made that the Executive met the applicable standard of conduct
prescribed for indemnifica-tion or reimbursement or payment of expenses under
(I) the Restated Certificate of Incorporation or By-Laws of the
9
Company, or (II) the laws of the State of New York, or (III) the directors' and
officer's liability insurance of the Company, in each case either as in effect
at the time of this Agreement or in effect at the time of such act or omission,
or (E) as the result of an act or omission which occurred more than twelve
calendar months prior to the Executive having been given notice of the
termination of his employment for such act or omission unless the commission of
such act or such omission could not at the time of such commission or omission
have been known to a member of the Board of Directors of the Company (other than
the Executive, if he is then a member of the Board of Directors), in which case
more than twelve calendar months from the date that the commission of such act
or such omission was or could reasonably have been so known, or (F) as the
result of a continuing course of action which commenced and was or could
reasonably have been known to a member of the Board of Directors of the Company
(other than the Executive, if he is then a member of the Board of Directors)
more than twelve calendar months prior to notice having been given to the
Executive of the termination of his employment.
(d) Definition of Change in Control
-------------------------------
For the purpose of this Agreement, a Change in Control of the
Company shall be deemed to have occurred if
(i) any "person" (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the combined voting power of the
Company's then outstanding securities;
(ii) during any period within two (2) consecutive years there
shall cease to be a majority of the Board of Directors comprised as follows:
individuals who at the beginning of such period constitute the Board of
Directors and any new director(s) whose election by the Board of Directors or
nomination for election by the Company'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; or
(iii) the shareholders of the Company approve (A) a plan of
complete liquidation of the Company or (B) the sale or other disposition of all
or substantially all the Company's assets.
9. (a) [Intentionally left Blank]
------------------------
(b) Retirement
----------
(i) Executive's Basic Retirement Allowance Increase.
-----------------------------------------------
Effective on the date hereof, the Executive is indefeasibly vested,
subject to paragraph 9(b)(iv) and paragraph
10
10, in a monthly retirement allowance, subject to any reduction required by
subparagraph 9(b)(iii), equal to one-twelfth (1/12) of sixty percent (60%) of
the Executive's Average Annual Compensation, as hereafter defined, less one-
twelfth (1/12) of fifty percent (50%) of the Executive's annual Social Security
Benefits.
Subject to subparagraph 9(b)(iv) and paragraph 10, if the
Executive should continue in the employ of the Company
(A) until the date on which he shall attain the age of 62,
or
(B) until his earlier
(I) disability, as "disability" is defined in the
Company's Temporary Disability Plan described in Exhibit B
herein, which has continued for a period of six consecutive
months, or
(II) termination, as "termination" is defined in
subparagraph 8(b) above,
the Executive will be indefeasibly vested in a monthly retirement allowance,
subject to any reduction required by subparagraph 9(b)(iii), equal to one-
twelfth (1/12) of sixty-five percent (65%) of his Average Annual Compensation,
as hereafter defined, less one-twelfth (1/12) of fifty percent (50%) of the
Executive's annual Social Security Benefits. Any such sixty-five percent (65%)
retirement allowance shall be in lieu of the sixty percent (60%) retirement
allowance provided for immediately above.
The Company will pay the Executive the applicable retirement allowance,
subject to any reduction required by subparagraph 9(b)(iii), on or about the
first day of each month during the Executive's lifetime, commencing with the
month following the month in which the Executive's employment with the Company
terminates by his election to retire any time after six months of disability, or
in which the Executive's employment with the Company otherwise terminates,
unless the Company will be making a payment in such month under subparagraph
8(a)(i) above, by reason of a "termination" as defined in subparagraph 8(b)
above, in which event, commencing with the first month thereafter in which the
Company will not be making such a payment. Notwithstanding the foregoing,
payments under this subparagraph 9(b)(i) will not commence to be made until the
first day of the calendar month for which the Executive receives payment under
the #001 Plan. For purposes of this subparagraph 9(b), Average Annual
Compensation means the annual average of the Executive's total compensation
consisting of base salary (before any deductions or reductions including,
without limitation, any deduction or reduction pursuant to Section 401(k) of the
Code) and annual bonus awards for the three consecutive years of highest total
compensation occurring within the ten consecutive years immediately preceding
termination of his employment (determined in accordance with the definitions and
methods of calculation used in the #001 Plan). It is understood and agreed that
in no event shall the retirement allowance provided by this
11
subparagraph (b)(i) or by subparagraph 9(b)(iv) below be payable prior to
termination of the Executive's employment with the Company, and that for
purposes of this subparagraph (b)(i) and subparagraph 9(b)(iv) below, the
Executive shall be considered to continue in the employ of the Company during
any period for which he receives disability payments under the Company's
Temporary Disability Plan or Long Term Disability Plan described in Exhibit B
herein, or any successor or substitute disability plan.
(ii) Spouse's Basic Survivor Retirement Allowance Increase.
Subject to subparagraph 9(b)(iv), if the Executive should die either
(A) following termination of his employment,
(I) after a retirement allowance had commenced to be payable to him
under subparagraph (b)(i) immediately above, or
(II) before a retirement allowance had commenced to be payable to the
Executive under subparagraph (b)(i) immediately above solely because the
Company had been making payments to him, under paragraph 8(a)(i) above, by
reason of a "termination" as defined in subparagraph 8(b) above, or
(B) while employed by the Company (including the period during which the
Executive is disabled and considered to be employed by the Company),
and if, in either case, the Executive should be survived by a spouse (in the
case of clause 9(b)(ii)(A) above, only a spouse who is eligible to receive a
retirement allowance under the #001 Plan; in the case of clause 9(b)(ii)(B)
above, only if the spouse meets the definition of an Eligible Spouse as defined
in subparagraph 9.2(e)(l) of the #001 Plan), then the Company will pay her a
retirement allowance, subject to any reduction applicable to her required by
subparagraph 9(b)(iii) below, on or about the first day of each month during her
lifetime following the Executive's death, commencing with the month following
the month in which the Executive's death shall occur (unless the Company will be
making a payment in such month under subparagraph 8(a)(i) above, in which event,
commencing with the first month thereafter in which the Company will not be
making such a payment), equal to
(I) in the case of clause 9(b)(ii)(A) above, sixty percent (60%) of
the monthly retirement allowance
(aa) that was payable to the Executive under subparagraph
9(b)(i) above (prior to any reduction required by subparagraph 9(b)(iii) below)
immediately prior to the Executive's death, or
(bb) that would have been payable to the Executive under
subparagraph 9(b)(i) above (prior to any such reduction) after completion of
payments to the Executive under subparagraph 8(a)(i) above, had the Executive
lived, or
(II) in the case of clause 9(b)(ii)(B) above, sixty percent (60%) of
the monthly retirement allowance that would have been payable to the Executive
under subparagraph 9(b)(i) above
12
(prior to any reduction required by subparagraph 9(b)(iii) below) had the
Executive retired on the day before his death.
(iii) Retirement Allowance Offsets.
----------------------------
(A) The monthly retirement allowance provided for the Executive under
subparagraph 9(b)(i) above or 9(b)(iv) below shall be reduced by the aggregate
of
(I) an amount equal to the retirement benefits paid to the Executive
for the applicable month (but only to the extent attributable to contributions
other than his own), under
(aa) the Company's retirement program, including the #001 Plan
and related excess benefit and supplemental retirement plans, and
(bb) any other retirement plan or agreement of the Company, its
subsidiaries or affiliates applicable to the Executive including this
Agreement as amended from time to time, and
(II) any disability benefits paid to the Executive during the
applicable month (but only to the extent attributable to contributions other
than his own) under the Company's disability plan or any other disability plan
or agreement of the Company, its subsidiaries or affiliates applicable to him,
including this Agreement as amended from time to time.
(B) The monthly retirement allowance provided for the Executive's spouse
under subparagraph 9(b)(ii) above or for his spouse or other Beneficiary under
subparagraph 9(b)(iv) below, if any, shall be reduced by the following amount:
(I) If the Executive's retirement benefits under
the program, plans and agreements referred to in clauses (aa) and (bb) of
subparagraph 9(b)(iii)(A) above had commenced to be paid to him prior to
his death, the
monthly retirement allowance provided for his spouse or other Beneficiary
shall be reduced by an amount equal to the retirement benefits (to the
extent attributable to
contributions other than his own) paid to such spouse or
other Beneficiary under the program, plans or agreements referred to in
clauses (aa) and (bb) of subparagraph 9(b)(iii)(A) above for the applicable
month.
(II) If the Executive's retirement benefits under the program, plans
and agreements referred to in clauses (aa) and (bb) of subparagraph
9(b)(iii)(A) above had not commenced to be paid to him prior to his death,
the monthly retirement allowance provided for his spouse or other
Beneficiary shall be reduced by an amount equal to the retirement benefits
(to the extent attributable to contributions other than his own) paid to
such spouse or other Beneficiary thereunder for the applicable month, and
by the amount, if any, paid for the applicable month to his Beneficiary or
Beneficiaries under subparagraph 6(c)(ii) above.
13
(iv) Alternative Forms of Payment of Retirement Allowances;
------------------------------------------------------
#001 Plan Calculation Methods.
-----------------------------
(A) The Company will pay the retirement allowance set forth above in
subparagraph 9(b)(i) and the spouse's survivor retirement allowance set forth
above in subparagraph 9(b)(ii) (together, the "Normal Benefit") provided that on
the benefit commencement date there is in effect for the Executive, under the
#001 Plan, a valid election to receive his benefit in the form of a 50% joint
and surviving spouse annuity.
(B) If on the benefit commencement date there is in effect for the
Executive under the #001 Plan a valid election to receive his benefit under a
form of payment other than a 50% joint and surviving spouse annuity, then, in
lieu of the retirement allowance described above in subparagraph 9(b)(i) and the
spouse's survivor retirement allowance described above in subparagraph 9(b)(ii),
in each case without regard to the offsets described in subparagraph 9(b)(iii)
above, the Executive and his spouse or other Beneficiary, if any, shall receive
an actuarially equivalent benefit under such other form of payment (as a result
of which he will be entitled to receive a larger or smaller retirement allowance
than under subparagraph 9(b)(i) above and his spouse will be entitled to receive
an actuarially corresponding smaller or larger survivor retirement allowance
than under subparagraph 9(b)(ii) above or no such allowance at all) subject to
any reduction required by subparagraph 9(b)(iii) above (the "Alternative
Benefit"). In such event, the actuarially equivalent benefit will be paid to
the Executive, and to his spouse or other Beneficiary, if any, following the
death of the Executive, in accordance with such other form of payment, less any
reduction required by subparagraph 9(b)(iii) above. Such Alternative Benefit
shall commence to be paid at the time the Normal Benefit under subparagraphs
9(b)(i) and (ii) would otherwise have commenced to be paid.
(C) Anything in paragraph 11 below to the contrary notwithstanding, in
making calculations necessary to convert the Normal Benefit to an actuarially
equivalent Alternative Benefit, and in determining retirement benefit
entitlements under this Agreement generally, the party making such calculations
shall be generally guided (except, for example, where otherwise expressly
provided in this Agreement, or with respect to limitations and restrictions
required by the Code for a tax-qualified plan as, e.g., Articles 11, 12 and 16
of the #001 Plan relating to limitation on benefits, contingent restrictions on
benefits, and top-heavy rules, respectively) by the definitions, methods of
calculation, discounts, terms, conditions and restrictions applicable to
determining benefits and making calculations with respect to benefits under the
#001 Plan, it being the principal intent of this subparagraph 9(b) merely to
enhance the benefits payable under the #001 Plan and related excess benefit and
supplemental retirement plans while retaining the methodology and concepts, to
the extent feasible, of those plans. Words and
14
terms used in this Agreement and referring to retirement allowances and related
matters, where applicable and unless otherwise expressly stated, shall have the
meanings ascribed to them in the #001 Plan.
(c) [Intentionally left Blank]
--------------------------
(d) Election of Lump Sum Payment of Retirement
------------------------------------------
Allowances Upon or Following Retirement
---------------------------------------
Anything in this Agreement to the contrary notwithstanding:
(i) Upon the retirement of the Executive pursuant to
subparagraph 9(b) above, the Executive may elect, if the Board of Directors in
its discretion expressly so authorizes, to have his excess retirement allowance
(and any related excess survivor retirement allowance) paid in a lump sum. In
such case, such excess retirement allowances shall be valued and discounted in
the manner set forth in subparagraph 10(g) relating to default in payments or
benefits.
(ii) In the event of a Potential Change in Control after the
retirement of the Executive pursuant to subparagraph 9(b) above, if the
Executive shall not have received a lump sum payment pursuant to the immediately
preceding clause (i), the Executive may elect, if the Board of Directors in its
discretion expressly so authorizes, to have his remaining excess retirement
payments (and any related excess survivor retirement payments) paid upon the
occurrence of a Change in Control, if any, in a lump sum determined in the
manner set forth in the immediately preceding clause (i). If the Executive
shall have died after retirement pursuant to subparagraph 9(b) above and prior
to such Potential Change in Control, then in the event of a Potential Change in
Control his spouse or other Beneficiary may elect, if the Board of Directors in
its discretion expressly so authorizes, to have the spouse's or other
Beneficiary's remaining excess survivor retirement payments, if any, paid upon
the occurrence of a Change in Control, if any, in a lump sum determined in the
manner set forth in the immediately preceding clause (i). A lump sum elected
pursuant to this clause (ii) shall not be paid unless and until a Change in
Control occurs. If a Change in Control does not occur within six (6) months
after a Potential Change in Control, no such lump sum shall be paid by the
Company, provided that the provisions of this clause (ii) shall again be
applicable in the event of one or more subsequent Potential Changes in Control.
(iii) The excess retirement allowance and payments and excess
survivor retirement allowance and payments referred to in clauses (i) and (ii)
above of this subparagraph 9(d) shall consist of the following: In the case of
an election by the Executive pursuant to subparagraph 9(d)(i) above, all
allowances under subparagraph 9(b)(i) and (ii) above, without regard to the
offsets set forth in subparagraph 9(b)(iii) above, in excess of the respective
benefits payable to the Executive and his spouse under the #001 Plan. If the
Executive does not have a spouse at
15
the time at which the calculation is being made, then the calculation provided
for in the next preceding sentence shall be made on the assumption that he had a
spouse, his own age, at such time. In the case of an election by the Executive
pursuant to subparagraph 9(d)(ii) above, all allowances under subparagraph
9(b)(i) and (ii) or (iv) above, whichever in fact is applicable to the
Executive, (or the unpaid balance thereof) without regard to the offsets set
forth in subparagraph 9(b)(iii) above, in excess of the respective benefits
payable to the Executive and his spouse or other Beneficiary under the #001
Plan. In the case of an election by the spouse or other Beneficiary of the
Executive pursuant to subparagraph 9(d)(ii) above, all allowances under
subparagraph 9(b)(ii) or (iv) above, whichever in fact is applicable to such
spouse or Beneficiary, (or the unpaid balance thereof) without regard to the
offsets set forth in subparagraph 9(b)(iii) above, in excess of the respective
benefits payable to the spouse or other Beneficiary under the #001 Plan. By
accepting the lump sum provided for in clause (i) or (ii) above of this
subparagraph 9(d), either from the Company or the trust contemplated by
subparagraph 16(d) below, the Executive and his spouse or other Beneficiary
release the Company from all obligations under all excess benefit, supplemental
retirement and other retirement plans and agreements of the Company, its
subsidiaries and affiliates applicable to the Executive and his spouse or other
Beneficiary including this Agreement as amended from time to time but excluding
the #001 Plan.
(iv) For purposes of this Agreement, a "Potential Change in Control" shall
be deemed to have occurred if
(A) the Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control of the Company;
(B) any person (including the Company) publicly announces an intention to
take or to consider taking actions which if consummated would constitute a
Change in Control of the Company;
(C) any person, other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing ten
percent (10%) or more of the combined voting power of the Company's then
outstanding securities; or
(D) the Board of Directors adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control of the Company has
occurred.
10. Post-termination Obligations of Executive; Default by Company
-------------------------------------------------------------
All payments and benefits to the Executive under this Agreement after his
full-time employment with the Company shall have terminated shall be subject to
compliance with the following provisions, which compliance shall be subject to
the proviso in
16
subparagraph 10(f) below. Anything in this paragraph 10 or elsewhere in this
Agreement to the contrary notwithstanding, the Executive may continue to serve
as a director, after his full-time employment with the Company shall have
terminated, of any corporation which he has served as a director for the last
six months of his full-time employment with the Company.
(a) Assistance In Litigation
------------------------
The Executive shall, upon reasonable notice, furnish such information and
proper assistance to the Company as may reasonably be required by the Company in
connection with any litigation in which it or any of its subsidiaries or
affiliates is or may become a party.
(b) Detrimental Conduct
-------------------
The Executive shall not to the material detriment of the Company knowingly
disclose or reveal to any unauthorized person any manufacturing or trade secret
or other confidential information relating to the Company, its subsidiaries or
affiliates, or to any of the businesses operated by them, and confirms that such
information constitutes the exclusive property of the Company. The Executive
shall not otherwise knowingly act or conduct himself to the material detriment
of the Company, its subsidiaries or affiliates, or in a manner which is
materially inimical or contrary to their interests. The Executive recognizes
that the restrictions on his activities contained in this Agreement are required
for the reasonable protection of the Company and its investments.
(c) Discoveries and Inventions
--------------------------
If, while employed by the Company or during a period of one year after
termination of such employment, the Executive shall have made, either solely or
jointly with others, any discovery, improvement or invention which would pertain
or relate in any way to the business, products, publications or processes of the
Company, its subsidiaries or affiliates at the time of termination of his
employment, such discovery, improvement or invention (whether or not of a
patentable nature) shall be the exclusive property of the Company. The
Executive shall execute and deliver to the Company without further compensation
any documents which the Company may deem necessary or appropriate to prepare or
prosecute applications for patents upon such discovery, improvement or
invention, to assign and transfer to the Company his entire right, title and
interest in and to such discovery, improvement or invention, and patents
therefor, or otherwise more fully and perfectly to evidence the Company's
ownership thereof.
(d) Reimbursement of Expenses
-------------------------
The Company shall pay or reimburse the Executive for all reasonable travel
and other expenses incurred by the Executive in performing his obligations under
this paragraph 10.
(e) Competition
-----------
The Executive shall not engage in competition with any of the businesses in
which the Company, its subsidiaries or affiliates
17
may be engaged at the time of termination of his employment if such competition
should be materially detrimental to the Company, its subsidiaries or affiliates.
(f) Failure to Comply
-----------------
If the Executive, for any reason other than death or disability, shall,
without the written consent of the Company, fail to comply with any provision of
this paragraph 10 or subparagraph 6(b) above, his rights to any future payments
or other benefits hereunder shall terminate, and the Company's obligations to
make such payments and provide such benefits shall cease; provided, however,
that no failure to comply with any provision of this paragraph 10 or
subparagraph 6(b) above shall be deemed to have occurred unless and until the
Executive shall have received written notice on behalf of the Board of Directors
of the Company, specifying the conduct alleged to constitute such failure, and
has thereafter continued to engage in such conduct after a reasonable
opportunity and a reasonable period, but in no event more than sixty days after
receipt of such notice, to refrain from such conduct. In no event shall the
Executive be under any obligation to repay to the Company any amounts
theretofore paid to him.
(g) Post-termination Default in Payments or Benefits
------------------------------------------------
If, after the Executive ceases to be an employee of the Company, the
Company should (i) default in payment of all or any part of the payments
required to be made hereunder or under the Legal Expense Agreement, or (ii) fail
to pay for or provide any benefits required to be provided hereunder, and if the
Company should not remedy such default or failure within thirty (30) days after
having received notice of such default or failure from the Executive, his
spouse, or such other person or entity who or which is entitled thereto, the
applicable payments or benefits set forth in Exhibit D shall, at the sole
---------
election of the Executive, his spouse, or such other person or entity then
entitled thereto, exercised in writing signed by the Executive, his spouse or
such other person or entity, and delivered to the Company within 90 days after
the expiration of such thirty-day period, be accelerated and become immediately
due and payable in a lump sum equal to the total of (x) the severance payment
set forth in Exhibit D, if applicable, (y) the cost of acquiring insurance
---------
policies which would provide the disability, medical and dental coverages set
forth in Exhibit D, if applicable, and (z) the retirement payments set forth in
---------
Exhibit D in an actuarially equivalent lump sum calculated by utilizing the 1983
---------
GAM Table (or such other pensioner annuity mortality table as the Company with
the Executive's written consent or, following his death, his spouse's or other
Beneficiary's consent, shall determine) and discounted to a present value amount
by applying a discount rate, equal to the arithmetic average of (i.e., one-
twelfth of the sum of) the single employer interest rates for immediate
annuities promulgated by the Pension Benefit Guaranty Corporation each month
during the calendar year immediately
18
preceding the date of payment as set forth in Appendix B to Part 4044 of 29 Code
of Federal Regulations or such successor to such Appendix B as may be in effect
during such calendar year, to all such retirement payments which otherwise would
become due thereafter. In the event the election referred to in the preceding
sentence has been made, then the total amount due and payable from the Company
pursuant to this subparagraph shall be the sum of all accelerated amounts,
together with any expenses incurred in enforcing payment thereof (including all
reasonable legal fees). In making the foregoing retirement payment
calculations, the intent is to compute a lump sum amount which will provide the
Executive and his spouse or other Beneficiary, as the case may be, with the same
amount, after deduction of all federal, state and municipal income taxes, as he
and his spouse or other Beneficiary, as the case may be, would have retained,
after all such income taxes, had payments and benefits been made and provided as
originally scheduled and without acceleration. By accepting such lump sum, the
Executive and his spouse or other Beneficiary, as the case may be, release the
Company from all obligations under all excess benefit, supplemental retirement
and other retirement plans and agreements of the Company, its subsidiaries and
affiliates applicable to the Executive and his spouse or other Beneficiary, as
the case may be, including this Agreement as amended from time to time but
excluding the #001 Plan. It is understood and agreed that this subparagraph
10(g) shall not apply to any default or failure to pay, as described in the
first sentence of this subparagraph 10(g), which occurs during the Executive's
period of employment; upon any such default or failure to pay, the Executive
shall be entitled to such payments as may be applicable pursuant to subparagraph
8(a).
11. Determination of Benefits
-------------------------
Whenever under this Agreement it is necessary to determine whether one
benefit is less than, equal to or larger than another, whether or not such
benefits are provided under this Agreement, such determination shall be made by
the Company's independent consulting actuary, using mortality, interest and any
other assumptions normally used at the time by such actuary in determining
actuarial equivalents for the purpose of employee benefit plans of the Company.
12. (a) Time of Payment
---------------
Anything in this Agreement to the contrary notwithstanding, the Company
may, for its own administrative convenience or for any other reason deemed by it
sufficient, accelerate payment to the Executive of any sums due under this
Agreement following termination of his employment; provided, however, that
payments by the Company under this Agreement in any one calendar year shall not,
as a result of such acceleration, together with any payments required to be made
under the pension plan of the Company, exceed an amount equal to (i) 80 percent
of his monthly rate of salary paid in accordance with paragraph 4 for the last
19
full calendar month of his employment, multiplied by (ii) the number 12.
(b) Withholding of Taxes
--------------------
The Company may withhold from any benefits payable under this Agreement
all federal, state, city or other taxes as shall be required pursuant to any law
or governmental regulation or ruling.
13. Decisions by Company
--------------------
Except as otherwise expressly provided in this Agreement, any decision or
action by the Company relating to this Agreement, its operation or its
termination, shall be made by the Board of Directors. Any decision or action of
such Board shall, to the extent permitted by law, be by the affirmative vote of
not less than three-fourths of the members of the Board of Directors then in
office; provided, however, that in the event of any dispute as to any benefit
payable under this Agreement, the Executive shall have the same rights as a
Participant under the Company's pension plan in effect at the time with respect
to the method of determining such dispute and enforcing his rights with respect
thereto.
14. Prior Agreements
----------------
This Agreement shall supersede any prior employment or severance agreement
between the Company or any predecessor of the Company and the Executive but this
Agreement shall not affect or operate to reduce any benefit or compensation of a
kind not expressly provided for in this Agreement, including, without
limitation, any employee stock option or stock appreciation right, any grant of
restricted shares or share units and any grant of performance shares or share
units.
15. Consolidation or Merger
-----------------------
Nothing in this Agreement shall preclude the Company from consolidating or
merging into or with, or transferring all or substantially all of its assets to,
another corporation which assumes this Agreement and all obligations of the
Company hereunder. Upon such a consolidation, merger or transfer of assets and
assumption, the term, "Company", shall refer to such other corporation and this
Agreement shall continue in full force and effect.
16. (a) Non-assignability
-----------------
Neither this Agreement nor any right or interest hereunder shall be
assignable by the Executive or the beneficiaries of the Executive or by his
legal representatives without the Company's prior written consent; provided,
however, that nothing in this subparagraph 16(a) shall preclude (i) the
Executive from designating a beneficiary to receive any benefit payable on his
death, and (ii) the legal representatives of the estate of the Executive from
assigning any rights hereunder to the person or persons entitled thereto under
his will or, in the case of intestacy, to the person or persons entitled thereto
under the laws of intestacy applicable to his estate.
(b) No Attachment
-------------
20
Except as otherwise required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
(c) Binding Agreement
-----------------
This Agreement shall be binding upon and inure to the benefit of the
Company, its successors and assigns.
(d) Unfunded Obligations; Trust Agreement
-------------------------------------
(i) All payments to be made hereunder shall be made from the
general funds of the Company. To the extent that any person or entity acquires a
right to receive any payment hereunder, such right shall be no greater than the
right of an unsecured general creditor of the Company except to the extent
otherwise provided by law. No person who is entitled to payments hereunder shall
have any right, title or interest in or to any assets or investments which may
be acquired or made by the Company to aid it in meeting its obligations
hereunder.
(ii) Anything in this subparagraph 16(d) or elsewhere in this
Agreement to the contrary notwithstanding, the Company may provide the Executive
with collateral security, in the form of a bank letter of credit, an interest in
a trust or otherwise, to secure a portion of any or all of the Company's
obligations to the Executive under this Agreement and any other agreement. In
this connection, the Company has entered into a Trust Agreement substantially in
the form attached hereto as Exhibit F and, under the circumstances and upon the
---------
terms and conditions set forth therein, the Executive is a beneficiary under the
Trust therein established, this Agreement and the Legal Expense Agreement (and
its related memorandum) will be listed on Exhibit I of such Trust Agreement, the
amounts to be deposited with the trustee under the Trust Agreement shall be
those set forth on the Schedule of Amounts to be Deposited in Trust Upon a
Potential Change in Control, a copy of which is attached hereto as Exhibit G,
---------
and any other benefits which the Company, in its sole discretion, shall agree to
secure by the Trust Agreement.
(iii) If a Potential Change in Control should take place while
the Executive is in the employ of the Company, the value of the benefits set
forth in Exhibit G to be delivered by the Company to the trustee under such
---------
Trust Agreement shall be equal to the total of (x) the severance, options,
contingently credited shares and legal expenses payments set forth in Exhibit G,
---------
(y) the cost of acquiring insurance policies which would provide the disability,
medical and dental coverages set forth in Exhibit G, and (z) the retirement
---------
payments for active employees set forth in Exhibit G; if a Potential Change in
---------
Control should take place after the Executive shall have retired and if the
Executive should not have received a lump sum payment pursuant to subparagraph
9(d)(i) above, the value of the benefits to be
21
delivered by the Company to the trustee under such Trust Agreement shall be the
retirement payments for retired employees set forth in Exhibit G.
---------
(iv) The value of the retirement payments shall be an
actuarially equivalent amount calculated by utilizing the 1983 GAM Table (or
such other pensioner annuity mortality table as the Company with the Executive's
written consent or, following his death, his spouse's or other Beneficiary's
consent, shall determine) and discounted to a present value amount by applying a
discount rate, equal to the arithmetic average of (i.e., one-twelfth of the sum
of) the single employer interest rates for immediate annuities promulgated by
the Pension Benefit Guaranty Corporation each month during the calendar year
immediately preceding the date of payment as set forth in Appendix B to Part
4044 of 29 Code of Federal Regulations or such successor to such Appendix B as
may be in effect during such calendar year, to all such retirement benefits
which otherwise would become due thereafter. In making the foregoing retirement
payment calculations, the intent is to compute a lump sum payment which will
provide the Executive and his spouse or other Beneficiary with the same amount
of benefit, after deduction of all federal, state and municipal income taxes, as
he and his spouse or other Beneficiary would have retained, after all such
income taxes, had payments been made as originally scheduled and without
acceleration.
(v) Anything in this subparagraph 16(d) or elsewhere in this
Agreement to the contrary notwithstanding, the amount to be paid by the Company
to the trustee pursuant to the preceding provisions of this subparagraph 16(d)
shall be reduced by the amount, if any, that the Board of Directors of the
Company expressly determines, in its sole discretion on the advice of the
Company's independent public accountants or its tax counsel or other experts
selected by the Board of Directors, as a result of the application of the
provisions of paragraph 21 below, is not expected to be paid by the trustee to
the Executive and his beneficiary or beneficiaries.
(vi) The Company shall continue to be liable to make all
payments and provide all benefits required to be made and provided hereunder to
the extent such payments have not been made or such benefits have not been
provided through the above-mentioned trust.
17. (a) Amendment of Agreement
----------------------
No amendment or modification of this Agreement shall be deemed effective
unless and until executed in writing.
(b) No Waiver
---------
No term or condition of this Agreement shall be deemed to have been waived,
nor shall there be any estoppel to enforce any provision of this Agreement,
except by written instrument of the party charged with such waiver or estoppel.
Any written waiver shall not be deemed a continuing waiver unless specifically
stated, shall operate only to the specific term or condition
22
waived and shall not constitute a waiver of such term or condition for the
future or as to any act other than that specifically waived.
18. Severability
------------
If for any reason any provision of this Agreement shall be held invalid,
such invalidity shall not affect any other provision of this Agreement not so
held invalid, and all other such provisions shall to the full extent consistent
with law continue in full force and effect. If any such provision shall be held
invalid in part, such invalidity shall in no way affect the rest of such
provision not so held invalid, and the rest of such provision, together with all
other provisions of this Agreement, shall likewise to the full extent consistent
with law continue in full force and effect.
19. Headings
--------
The headings of paragraphs are included solely for convenience of reference
and shall not control the meaning or interpretation of any of the provisions of
this Agreement.
20. Governing Law
-------------
The validity, interpretation, construction, performance and enforcement of
this Agreement shall be governed by the laws of the State of New York without
giving effect to the principles of conflict of laws thereof.
21. Parachute Tax
-------------
(a) Except in the specific circumstance hereinafter described in this
paragraph 21, the Company shall pay to the Executive the full amount to which he
is entitled under this Agreement.
(b)
(i) If any payments or benefits received or to be received by
the Executive under this Agreement, or any other payments or benefits received
or to be received by the Executive from the Company or any other person,
constitute "parachute payments" within the meaning of Section 280G(b)(2) or any
successor provision of the Code (such payments or benefits being hereinafter
referred to as the "Parachute Payments"), and
(ii) if the aggregate present value of the Parachute Payments
from all sources, minus (A) any excise tax imposed under Section 4999 of the
Code (or any similar tax that may hereafter be imposed) (the "Excise Tax") and
(B) the net amount of federal, state and local income tax on such aggregate
present value, would be less than the maximum amount of Parachute Payments from
all sources that can be paid without triggering the Excise Tax, after deduction
of the net amount of federal, state and local income tax on such maximum amount,
then
(iii) the Parachute Payments to be paid by the Company to the
Executive under this Agreement shall be reduced to a lump sum amount (if any)
such that the aggregate present value of the Parachute Payments from all sources
is equal to the maximum amount of Parachute Payments that can be paid without
triggering the Excise Tax.
23
Anything in this subparagraph 21(b) to the contrary notwithstanding, it
is understood and agreed that the amount to be paid by the Company to the
Executive pursuant to this subparagraph 21(b) in the specific circumstance
described herein may be less, but never more, than the amount to which he would
otherwise be entitled under this Agreement.
(c) All matters to be determined pursuant to subparagraph 21(b) including,
without limitation, the existence or absence of any Parachute Payments, the
aggregate present value of any Parachute Payments, the amount of the Excise Tax
(if any), the net amount of federal, state and local income tax (assuming the
highest applicable marginal rate in each case), the maximum amount of Parachute
Payments that can be paid without triggering the Excise Tax, the amount of any
reduction in the Parachute Payments to be paid by the Company to the Executive
under this Agreement and the item or items (if any) to be reduced, shall be
determined by the Executive or, following his death, his beneficiary or
beneficiaries. The specifics of such determination shall be delivered in
writing to the Company and to the trustee of the Trust referred to in
subparagraph 16(d)(ii) above at the time of the Executive's termination within
three years after a Change in Control, or as soon as practicable thereafter,
(or, in the case of a lump sum payment pursuant to subparagraph 9(d)(ii) after
the retirement of the Executive, at the time of a Change in Control or as soon
as practicable thereafter) by the Executive or, following his death, his
beneficiary or beneficiaries. The reasonable fees and expenses of such tax
counsel and financial advisor as may reasonably be called upon to assist the
Executive or his beneficiary or beneficiaries in the foregoing determinations
shall be paid by the Company. Without limiting the generality of the
immediately preceding sentence, the Executive or his beneficiary or
beneficiaries may select as such financial advisor ▇▇▇▇▇▇ Associates or such
other person or firm as may be serving at the time as the Company's independent
consulting actuary.
22. Notices
-------
All notices, requests, demands and other communications provided for by
this Agreement shall be in writing and shall be sufficiently given if and when
mailed in the continental United States by registered or certified mail, return
receipt requested, or personally delivered to the party entitled thereto at the
address stated below, which address shall be such address as the addressee may
have given most recently by a similar notice. Any such notice shall be deemed
to have been received on the date of delivery.
To the Company: Champion International Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
24
To the Executive: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
23. Arbitration
-----------
Any dispute between the Executive and the Company as to the interpretation
or application of any of the provisions of this Agreement may, at the
Executive's election, be determined by binding arbitration within the greater
New York City metropolitan area or the State of Connecticut in accordance with
the rules of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrator's award in any court of competent jurisdiction.
All fees and expenses of such arbitration shall be paid by the Company subject
to repayment by the Executive if and to the extent that a judgment should be
rendered against him beyond appeal and such fees and expenses were not incurred
by him while acting in good faith.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereto, and the Executive has signed this Agreement,
all as of September 18, 1997.
CHAMPION INTERNATIONAL CORPORATION
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Chairman of the Compensation and
Stock Option Committee
Attest:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇
------------------------
Secretary
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
25
Exhibit A to Agreement between Champion International
Corporation and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated as of September 18, 1997
---------------------------------------------------------------
Exhibit A
---------
[Paragraph 5]
RETIREMENT PLAN FOR SALARIED EMPLOYEES
ELIGIBILITY AND COST
--------------------------------------------------------------------------------
PLAN PARTICIPATION
You are eligible to participate in the Salaried Retirement Plan if:
. You are an active, non-represented, salaried employee or commissioned
salesperson employed by Champion International Corporation (or by any of
its subsidiaries or affiliated corporations which have adopted the plan);
and
. You have received credit for one year of eligibility service. Eligibility
service is counted in the same way as vesting service (see page A-2).
You become a participant on the first day of the month after you meet both
of these requirements. There are no enrollment forms to complete; your
participation begins automatically.
PLAN COST
Champion pays the full cost of your retirement plan by making contributions
to a special retirement fund. The amount of Champion's contributions is
determined with the help of an actuary. An actuary is an independent expert who
determines how much money Champion must put into the fund to cover benefits
provided by the plan. The actuary uses personnel data and the plan itself to
calculate the amount of Champion's contributions.
The assets of the retirement fund are held in trust. The money in the
trust can only be used to pay benefits and administrative costs of the plan. It
cannot be returned to Champion until all benefit commitments have been
satisfied. All benefit payments are made from the assets of the plan.
WHAT "SERVICE" MEANS
--------------------------------------------------------------------------------
In general, "service" means the length of time you work for Champion. But
there are different "types" of service under the retirement plan, used in the
following way: "vesting service" determines when you are entitled to your
benefit; "credited service" determines the amount of your benefit.
VESTING SERVICE
Vesting service determines when you're entitled to receive plan benefits.
It's counted in full years from your first day of work to the date you retire or
leave Champion for another reason. For the plan, 365 days equals a year of
vesting service. Any vesting service you earn while working for an affiliate of
Champion may count under this plan, too.
A-1
On or after January 1, 1976, the following provisions determine how you
receive credit for vesting service:
. You receive vesting service for any period you work for Champion
International Corporation or its subsidiaries.
. If you are absent from work for reasons other than termination, retirement,
discharge, or death, you can receive up to 12 months of vesting service
for:
- periods for which you are paid (excluding periods for which you
receive only unemployment compensation);
- an approved leave of absence without pay, provided you return to work
at or before the end of the leave.
. You receive vesting service for any absence from work -- even if because of
termination or layoff -- if you return within one year.
. You receive vesting service during a military leave.
. You receive vesting service during any period for which you receive
payments for workers' compensation, short-term disability, or long-term
disability; however, if it is determined that you deceptively or
fraudulently received disability payments, vesting service will not be
credited for that period.
. You receive vesting service for any time required to be credited by federal
law.
. Vesting service is not credited during a layoff, unless you return to work
within one year.
. If you participated in the pension plan of a company that is now part of
Champion, your vesting service under that plan will be counted along with
your service under the Champion plan.
CREDITED SERVICE
Credited service is used to calculate the amount of your benefit. In
general, you receive a full year of credited service for each calendar year
(January 1 to December 31) you work for Champion. Your years of credited
service are divided into different classifications, as shown below.
You may also receive credit for years during which you are not actively at
work, for example paid leaves of absence, military leaves, and periods for which
you receive payments for workers' compensation, short-term disability, or long
term disability. However, if it is determined that you deceptively or
fraudulently received disability payments, credited service will not be credited
for that period.
Before January 1, 1976
----------------------
Generally speaking, if your employment has been uninterrupted, you will
have credited service for the number of full years and months from your date of
hire through January 1, 1976. If your service was interrupted by a termination
of
A-2
employment, your service before the termination may be counted. If you need more
information, you can write to Benefits Administration in Hamilton, Ohio.
On or After January 1, 1976
---------------------------
Beginning January 1, 1976, you receive a full year of credited service for
each full calendar year of employment as an eligible employee. If you are not
an eligible employee for the entire year, you receive a partial year of credited
service. The part of the year for which you receive credit is equal your actual
compensation divided by your adjusted compensation for that year. (See pages ▇-
▇ to A-6 for a definitions of actual and adjusted compensation.)
Transfer from hourly to salaried
--------------------------------
If you were an hourly employee who transferred to salaried employee status,
all your years of credited service -- both as an hourly employee and as a
salaried employee -- will be counted once you have remained a salaried employee
for two consecutive years following the transfer.
Service in prior plans
----------------------
If you participated in the pension plan of a company that is now a part of
Champion, your credited service may be recognized along with your service under
the Champion plan. Contact Benefits Administration in Hamilton, Ohio to see how
this provision applies to your specific situation.
BREAK IN SERVICE
A break in service is an interruption of your employment that lasts longer
than 12 consecutive months. The plan has special provisions that may allow you
to retain some or all of your credited and vesting service if you have a break
in service.
Vested employees
----------------
If you are vested in your retirement benefit when your break in service
begins, when you return to Champion you will keep the vesting and credited
service you earned before you left. Your participation in the retirement plan
will continue as of your rehire date. You will not receive credited service for
the years during which you were not employed by the Company.
Non-vested employees
--------------------
If you are not vested when your break in service begins, your vesting and
credited service depend on when you leave and how soon you return. These
provisions are outlined below:
. Before January 1, 1976: if you had a break in service before January 1,
1976, and you were not vested at that time, you should contact Benefits
Administration in Hamilton, Ohio to see whether any of your prior service
will be counted as vesting or credited service.
. From January 1, 1976 through December 31, 1984: if you had a break in
service during the period from January 1, 1976
A-3
through December 31, 1984, and the length of time you were away was less
than your years of service prior to the break, then you retain your
previous years of vesting and credited service.
. On or after January 1, 1985: if you had a break in service on or after
January 1, 1985, and the length of time you were away was less than five
years or less than the period of your prior service, you retain your
previous years of vesting and credited service. In addition, you won't have
a break in service if you're on maternity or paternity leave, as long as
you return to work within two years. Maternity or paternity leave means
you're away from work because of:
. your pregnancy;
. the birth of your child;
. your adoption of a child; or
. caring for your child immediately after birth or adoption.
You will receive vesting service during this period up to a maximum of 12
months.
If you have any questions about the way maternity or paternity leave
affects your service, see your local Benefits Representative.
WHAT DETERMINES YOUR BENEFITS
--------------------------------------------------------------------------------
Your retirement benefit is based on your credited service, your final
average earnings, and your primary Social Security amount.
FINAL AVERAGE EARNINGS
Your final average earnings are your average earnings during whichever of
the following periods produces the highest average:
. Five consecutive calendar years out of the nine calendar years before the
year you leave Champion. (For example, if you leave Champion during 1995,
the nine calendar years would include 1986 through 1994.) If you leave as
of December 31, that calendar year will also be included so that a total of
ten years will be included. (For example, if you leave on December 31,
1995, the years included would be 1986 through 1995.)
. The last five consecutive years you work for Champion.
Your compensation
-----------------
In calculating your final average earnings, the plan uses your actual
compensation, which is your total pay received as an employee during a calendar
year. It includes your contributions to the savings plan, your before-tax
contributions for benefits, payments of deferred compensation, and bonuses
(except Special Bonus Awards). For commissioned salespersons, actual
A-4
compensation is gross commission for the plan year minus expenses for that year.
The following payments are excluded:
- Company contributions to any benefit plan, for example, Champion's matching
contribution to the savings plan;
- any relocation reimbursement;
- severance pay;
- commissions instead of expense reimbursement;
- tuition reimbursement;
- safety awards;
- special bonus awards;
- unused or accrued vacation pay; and
- cash payments of flexible benefits dollars not used to buy benefits.
The maximum earnings that can be used for any year are determined by federal
law. This amount is $150,000 in 1995 and 1996, $160,000 in 1997 and 1998 and is
indexed to increase periodically.
Partial years
-------------
If you are not an eligible employee for the entire calendar year, the plan
uses your adjusted compensation for that year. This is your actual compensation
converted to an annual amount.
For example, if you only worked for six months during the year, and your
actual compensation for that period was $18,000, your adjusted compensation
would be $36,000.
However, if your final year is a partial calendar year, your adjusted
compensation for the last five consecutive years you worked for Champion will
include:
. your compensation for the four consecutive calendar years prior to your
final partial year; plus
. your actual compensation during the final partial year (including any
incentive award); plus
. a pro-rated amount for the remainder of the partial year, based on your
actual compensation in the fifth previous year (excluding any incentive
award).
If you have less than five years of service
-------------------------------------------
If you receive actual compensation for less than five consecutive years,
then your final average earnings will be the average for the years you receive
actual compensation. If your final year is a partial year, it will be
calculated as explained above, using your year of hire in place of the fifth
previous year.
PRIMARY SOCIAL SECURITY AMOUNT
Your primary Social Security amount is an estimate of the amount of Social
Security benefits you have earned during your working career. It does not
include any benefits for which your spouse or family may be eligible.
A-5
To calculate your Social Security amount, the plan estimates your earnings
in the years before you were employed by Champion. Instead of using this
estimate, you can supply Benefits Administration with your actual earnings
history -- obtained from the Social Security Administration -- and have your
primary Social Security benefits recomputed using your actual earnings history.
However, the use of actual earnings could result in a greater or lesser net
retirement plan benefit.
HOW YOUR BENEFITS ARE CALCULATED
Your retirement benefit is calculated using a formula based on your years
of credited service at Champion (page A-3), your final average earnings (page A-
4), and your primary Social Security amount (page A-5).
PLAN FORMULA
The plan formula calculates your benefit as a Single-Life Annuity -- an
annual benefit paid to you on a monthly basis beginning at your normal
retirement date (or your termination date, if later) and continuing for your
lifetime. The annual benefit is calculated in this way:
1.667% of your final average earnings,
times your years of credited service up to a maximum of 30.
MINUS
1.667% of your primary Social Security benefit,
times your years of credited service up to a maximum of 30.
PLUS
If you have more than 30 years of service,
.5% of your final average earnings,
times your years of credited service beyond 30 years.
"How You Receive Plan Payments" beginning on page A-11 has more information on
methods of payment.
EXAMPLE
▇▇▇▇ ▇▇▇▇▇▇▇ has worked for Champion for 35 years. His final average
earnings are $35,000, or $2,916 per month. He is 65 years old, which is his
Social Security retirement age.
$2,916.00 (final average monthly earnings)
X .01667 = $48.610
X 30 years of service
= $1,458.30
---------
MINUS
-----
$1001.00 (monthly primary age 65
Social Security benefit)
X .01667 = $16.683
X 30 years of service
$500.50
-------
PLUS
----
$2,916.00 (final average monthly earnings)
X .005 = $ 14.58
A-6
x 5 years of service with Champion in excess of 30
= $ 72.90
-------
($1,458.30 - $500.50 = $957.80; $957.80 + $72.90 = $1030.70)
Total = $ 1030.70 monthly retirement income from the retirement plan
-----
+ 1001.00 primary monthly Social Security benefit
---------
$2,031.70 Total Monthly Retirement Income
=========
WHEN YOU CAN RETIRE
--------------------------------------------------------------------------------
There are three types of retirement under this plan: normal retirement,
postponed retirement, and early retirement.
NORMAL RETIREMENT
Eligibility
-----------
You are eligible for normal retirement under the plan when you reach
"normal retirement age," which is age 65. If you were hired on or after January
1, 1988, your normal retirement age is the later of age 65 or the fifth
anniversary of your plan participation.
Determining your benefit
------------------------
Your normal retirement benefit is calculated by using the plan formula (see
explanation beginning on page A-6 and example on page A-6), which uses your
years of credited service, final average earnings, and estimated primary Social
Security amount at normal retirement age. You can start receiving your benefits
on the first day of the month coinciding with or following your normal
retirement age.
POSTPONED RETIREMENT
Eligibility
-----------
You may choose to work past your normal retirement age, and postpone your
retirement.
Determining your benefit
------------------------
Your postponed retirement benefit is calculated by using the same formula
as for normal retirement, using your years of credited service, final average
earnings, and estimated primary Social Security at the date of your retirement
(instead of normal retirement age).
You can start receiving your benefits on the first day of the month
coinciding with or following your date of retirement. However, retirement
benefits must begin by April 1 of the year after you reach age 70 1/2, even if
you are still actively at work.
EARLY RETIREMENT
Eligibility
-----------
. Age 55 and Ten-year rule: If you became a plan participant on or after
January 1, 1986, or if you are a former St. Regis employee who became a
participant when the St. Regis plan became part of this plan on October 1,
1985, you are eligible
A-7
for an early retirement benefit once you reach age 55 and have ten years of
vesting service.
. Age 55 : If you were a plan participant before January 1, 1986, you are
eligible for an early retirement benefit once you reach age 55. This rule
does not apply to former St. Regis employees.
Determining your benefit
------------------------
Your early retirement benefit is calculated by using the same formula as
for normal retirement, using your years of credited service, final average
earnings, and estimated primary Social Security amount at your early retirement
date (instead of normal retirement date). You can start receiving your benefits
on the first day of the month coinciding with or following your date of
retirement from Champion (or if you continued employment with a purchaser of any
Champion operation after the sale, then following your date of retirement from a
purchaser or age 65, if sooner).
===============================================================================
If benefits start before you reach age 62, your monthly payment will be
reduced, to take into account that your benefit may be paid over a longer
period.
===============================================================================
The percentage of the formula benefit that is paid depends on your age when
benefits begin. The reduction is 4/10ths of 1% for each month that your
benefits are paid before your 62nd birthday. If your benefits start on or after
your 62nd birthday, your benefits will not be reduced. The chart below shows
the appropriate percentage paid at each age.
=========================================================
EARLY RETIREMENT BENEFIT REDUCTION SCHEDULE
---------------------------------------------------------
Age When Benefits Begin Percent of Benefit Paid
----------------------- -----------------------
---------------------------------------------------------
55 66.4%
56 71.2%
57 76.0%
58 80.8%
59 85.6%
60 90.4%
61 95.2%
62 and older 100%
=========================================================
IF YOU RETURN TO WORK
If you return to work for Champion after you retire, payments from the plan
may change. If you were receiving early retirement benefits, your benefits will
stop. When you retire
A-8
again, your new benefit will be recalculated to take into account any additional
credited service you've earned and the benefits you already received. If you
return to work after normal retirement, benefit payments will continue while
you're working, as long as you work fewer than eight days each month. If you
start working eight or more days each month, you'll receive a notice from
Champion, and benefits will stop. When you leave Champion again, your benefit
will be recalculated, as described earlier.
IF YOU LEAVE CHAMPION
--------------------------------------------------------------------------------
VESTING
Vesting is the process by which you earn a non-forfeitable right to a
benefit through your service with Champion. You are vested in your normal
retirement benefit once you have five years of vesting service. If you leave
before you are vested -- before you complete five years of service with Champion
-- you are not entitled to a benefit under the plan.
BEFORE YOU ARE ELIGIBLE FOR EARLY RETIREMENT
If you terminate employment with Champion before being eligible for early
retirement, but after you are vested, you will be considered a terminated vested
participant.
As a terminated vested participant, you're eligible to receive retirement
benefits beginning at age 65, or as early as age 55 if you meet the requirements
for the "Age 55 and Ten-Year Rule" or "Age 55 Rule" on page A-10. However, if
you continued employment with a purchaser of any Champion operation after the
sale, your terminated vested benefits commence after the date you leave
employment with a purchaser or age 65, if sooner. Terminated vested benefits
paid prior to age 65 will be reduced for each month benefits start before age 65
to take into account that your benefit may be paid over a longer period. The
percentage of your benefit that is paid depends on your age when benefits begin.
The following chart indicates the percent of your benefit that is paid each year
beginning at age 55 through age 65.
A-9
===============================================================
TERMINATED VESTED BENEFIT REDUCTION SCHEDULE
---------------------------------------------------------------
Age When Benefits Begin Percent of Benefit Paid
----------------------- -----------------------
---------------------------------------------------------------
55 50.0%
56 53.3%
57 56.7%
58 60.0%
59 63.3%
60 66.7%
61 73.3%
62 80.0%
63 86.7%
64 93.3%
65 100%
===============================================================
Terminated vested participants are not eligible for the post-retirement
death benefit, or any post-retirement medical plan coverage. However, your
spouse may be entitled to the Pre-Retirement Surviving Spouse Benefit (described
on page A-13).
AFTER YOU ARE ELIGIBLE FOR EARLY RETIREMENT
If you leave Champion after becoming vested and you are eligible for early
retirement, you will be considered an early retired participant and you may
choose to receive retirement benefits beginning on the first day of any calendar
month following your termination, or application for benefits, if later.
Benefits received prior to age 62 will be subject to the reductions described on
page A-8).
IF YOU BECOME DISABLED
--------------------------------------------------------------------------------
If you become disabled, you may continue to earn credited service and
vesting service, if you meet certain qualifications.
If you become disabled and qualify for temporary disability benefits or
long term disability benefits from Champion, you continue to earn years of
credited service and vesting service for as long as you qualify.
However, if it is determined that you deceptively or fraudulently received
disability payments, service will not be credited for the period. Also, service
will not be credited for any period during which your disability benefits cease
due to ineligibility during a period of incarceration.
IF YOU RECOVER FROM YOUR DISABILITY
If you recover from your disability and return to work, the plan will count
your credited service before, during, and after the disability.
If you recover and do not return to work with Champion and you are vested
in your pension benefit, your benefits will be
A-10
calculated as if you left Champion on the date your disability ends. You may
then be eligible for deferred vested or early retirement benefits, depending on
your age and vesting service.
HOW YOU RECEIVE PLAN PAYMENTS
--------------------------------------------------------------------------------
The way your benefits are paid can be just as important to you as the
---
amount that's paid. Because people's needs are different, the plan lets you
------
choose how your benefits will be paid. You have your choice of several payment
options.
Unless you choose differently, your benefits will be paid by a standard
payment form.
. If you're single, your standard payment form is the Single-Life Annuity
----------------
Option.
. If you're married when payments start, your standard payment form is the
-------------------------------------
Joint and 50% Surviving Spouse Annuity Option.
You also have your choice of optional payment forms under the plan.
However, if you're married and choose any payment option other than the standard
form, your spouse must agree to your choice by signing your election form in
front of your local Benefits Representative or a notary public.
If you decide to take a payment option other than your standard form, you
must make your election within 90 days before your retirement.
YOUR PAYMENT OPTIONS
1. Single-Life Annuity Option
This payment form provides a monthly payment to you only for your
lifetime. It will pay you the largest monthly amount because the income
isn't continued to someone else after your death. If you're single, this
is your standard form of payment.
2. Joint and 50% Surviving Spouse Annuity Option
This payment form provides a monthly income to you, with an amount
equal to half of your monthly payments paid to your spouse after your
death. If you're married, this is your standard payment form unless you
and your spouse waive this payment form in writing.
Under this payment form, your payments are reduced because they are
expected to be made over two lifetimes instead of one. The amount of the
reduction is based on your age and your spouse's age when you retire.
After your death, 50% of your benefit will be paid each month for the
lifetime of your spouse. If your spouse dies before you do, your benefit
payments continue in the same amount as before, and no payments are made
after your death.
3. Contingent Annuitant Option
Under this payment option, you may continue all or part of your
monthly benefit to any survivor you name. This method pays a reduced
benefit to you during your lifetime,
A-11
with 50%, 75%, or 100% of that benefit continuing to the survivor you
named. The benefit is reduced because payments are expected to be made over
two lifetimes instead of one. The amount of the reduction is based on the
percentage of your benefit you choose to continue to your survivor, your
age, and your survivor's age. If the survivor you name is not your spouse,
the law restricts the percentage your survivor can receive.
4. Life-Period Certain Option
Under this payment option, plan benefits are paid monthly for your
lifetime, with payments guaranteed for 5, 10, 15, or 20 years. If you die
before the guaranteed number of payments are made, payments in the same
amount are made to your designated survivor for the rest of the guaranteed
period.
For example, if you choose to have payments guaranteed for 15 years
and die after receiving payments for nine years, your survivor would
continue to collect the same benefit for six years -- the remainder of the
guaranteed period. If you die after receiving all payments for the
guaranteed period, no payments are made to your survivor. Monthly benefits
under this method are reduced because they are guaranteed for a certain
period.
5. Full Cash Refund Annuity Option
This payment option provides you with a monthly benefit for your life
with a guarantee that the total annuity value (determined at time of
retirement) will be paid.
If you die before receiving monthly payments equal to the annuity
value, the difference between what has been paid to you and the actual
annuity value will be paid to your beneficiary in a lump sum, in monthly
payments, or a combination of both. If you die after the monthly payments
you have received equal or exceed the annuity value, no additional payments
will be made after your death. There is a reduction in your benefit to
compensate for the possible benefits to your beneficiary.
6. Social Security Adjustment Option
If you retire before you are eligible for your primary benefit under
Social Security (either at age 62 or Social Security retirement age), this
option may be of interest to you. The Social Security retirement age is
gradually increasing from age 65 to age 67, depending on your date of
birth. This option permits you to have your retirement benefit adjusted,
to provide a constant total income (your retirement benefits and Social
Security income) both before and after your Social Security benefit begins.
Under this option, you will receive a larger amount from the
retirement plan before your Social Security benefit
A-12
begins and a smaller amount from the retirement plan after your Social
Security benefit begins.
This option does not provide a benefit to anyone after your death.
7. Lump-sum Payment
If your retirement benefit is less than $50 a month when calculated as
a Single-Life Annuity, or if the lump-sum value of your benefit is less
than or equal to $3,500, your benefit may be paid in a single lump sum.
CHOOSING A PAYMENT OPTION
The payment option you choose goes into effect on the date benefits start.
If you're rejecting your standard payment form, you must choose or change
payment methods within 90 days before benefits start.
WHEN YOUR BENEFITS ARE PAID
Usually, you receive your retirement benefit in monthly payments, with
checks drawn on the first of every month. The date your retirement benefit
starts depends on when you retire and when you want payments to start.
Although you may choose to have your retirement benefit start earlier,
payments must begin by April 1 of the year after you reach age 70 1/2.
----
PAYING TAXES ON YOUR BENEFITS
Benefits you receive from the plan are considered taxable income. Federal
tax law requires Champion to automatically withhold taxes on your benefits
before they're paid to you, unless you specifically request otherwise in
writing. The amount that Champion withholds depends on your filing status and
the number of exemptions you claim.
IF YOU DIE BEFORE RETIREMENT
Once you are vested, the retirement plan provides for continuing income to
your spouse in certain circumstances.
PRE-RETIREMENT SURVIVING SPOUSE BENEFIT
If you and your spouse have been married for at least one year on the date
of your death, the Pre-Retirement Surviving Spouse Benefit is payable in the
event that you die before your benefit payments begin.
The Pre-Retirement Surviving Spouse Benefit is a monthly benefit equal to
the monthly amount your spouse would have received under the Joint and 50%
Surviving Spouse Annuity (described on page A-11).
. If your death occurs at or after the earliest date you could take early
retirement under the plan, the benefit is determined as though you had
retired the day before your death.
A-13
. If your death occurs before the earliest date you could take early
retirement under the plan, the benefit is determined as though you had left
Champion the day before your death and elected to start receiving pension
benefits at the earliest possible date.
Payment will begin on the earliest date you could have commenced your
benefit.
Once the Pre-Retirement Surviving Spouse Benefit becomes payable, it will
be paid for the remainder of your spouse's lifetime even if your spouse
remarries. When your spouse dies, the benefit will cease.
For terminated vested participants, there is a charge for this coverage in
the form of a reduction in your pension benefit. The reduction is based on the
number of years the coverage is in effect. The maximum reduction is 8%, and the
reduction factors are related to age at coverage, as follows:
====================================================================
TERMINATED VESTED, PRE-RETIREMENT
SURVIVING SPOUSE
BENEFIT REDUCTION SCHEDULE
--------------------------------------------------------------------
Age Range Reduction per Year
--------- ------------------
--------------------------------------------------------------------
35-44 .1%
45-54 .2%
55-64 .5%
65 and older 0%
====================================================================
Coverage under the Pre-Retirement Surviving Spouse Benefit and the
resulting charge to terminated vested employees does not apply:
. For any period of time during which you are not married.
. For any period of time during which a valid waiver of the Pre-Retirement
Surviving Spouse Benefit coverage is in effect. You can waive this coverage
by completing a form -- requiring your signature and your spouse's
notarized or properly witnessed signature -- specifically electing not to
have the coverage.
IF YOU DIE AFTER RETIREMENT
--------------------------------------------------------------------------------
If you retire from Champion, the plan pays a lump sum death benefit to your
beneficiary when you die. This benefit is in addition to any other continuing
income you provide to a survivor through your plan payment options.
RETIREMENT BEFORE AGE 62
If you retire before age 62, your beneficiary will receive a post-
retirement death benefit of $5,000 upon your death.
A-14
RETIREMENT ON OR AFTER AGE 62
If you retire at or after age 62, your beneficiary will be entitled to a
post-retirement death benefit when you die. If you retire after age 65, the
percentage will be determined as if you retired at age 65. The minimum benefit
in any year is $5,000.
================================================================================
LUMP-SUM DEATH BENEFIT REDUCTION SCHEDULE
Year of Retirement Your Post-retirement Death Benefit
------------------ ----------------------------------
First year 100% of your final average earnings
Second year 80% of your final average earnings
Third year 60% of your final average earnings
Fourth year 40% of your final average earnings
Fifth year 20% of your final average earnings
Six year and thereafter $5,000
================================================================================
APPLYING FOR BENEFITS
--------------------------------------------------------------------------------
You should talk to your local Benefits Representative about information on
applying for benefits at least 90 days before you plan to retire. Someone will
help you fill out the application form and explain your rights under the plan.
If Benefits Administration requests, you may be asked to provide the
following information:
. proof of your age and your spouse's age;
. your Social Security number and/or your spouse's Social Security number;
and
. proof of your marriage.
If you die before retirement, Champion will help your beneficiary apply for
any benefits which may be due.
IF A BENEFIT IS DENIED
You or your beneficiary is entitled to a full review if a benefit is
denied, in whole or in part. For information on the process for reviewing
denied benefits, see the "General Information" section.
SITUATIONS AFFECTING YOUR PLAN BENEFITS
--------------------------------------------------------------------------------
Champion's Salaried Retirement Plan is designed to provide you with a
monthly income after you retire. But some situations could affect your plan
benefits.
. No benefits are payable if you leave Champion permanently for any reason
before you are vested (see page A-9).
A-15
. If you don't notify Champion when you plan to retire or leave Champion,
payments will begin only after your application for benefits is received
and approved.
. If you don't keep your most recent address on file and Champion can't
locate you, benefit payments may be delayed.
. If you continued employment with a purchaser of any Champion operation
after a sale, payments can not commence until after the date you leave
employment with a purchaser or age 65, if sooner.
. If it is determined that you deceptively or fraudulently received
disability payments, service will not be credited for that period.
ASSIGNMENT OF BENEFITS
Your retirement benefits belong to you and may not be sold, assigned,
transferred, pledged, or garnisheed, under most circumstances.
If you become divorced or separated, certain court orders could require
that part of your benefit be paid to someone else -- your spouse or children,
for example. This is known as a Qualified Domestic Relations Order. As soon as
you're aware of any court proceedings which may affect your retirement benefit,
contact your local personnel or Benefits Representative.
If you (or your beneficiary) are unable to care for your own affairs, any
payments due may be paid to someone who is authorized to conduct your affairs.
This may be a relative or a court-appointed guardian.
OTHER INFORMATION YOU SHOULD KNOW
--------------------------------------------------------------------------------
If the plan changes or ends, certain laws apply which protect part or all
of your plan benefits.
Champion reserves the right to end, suspend, or amend the plan at any time,
in whole or in part. The Pension and Employee Benefits Committee is authorized
to take any of these actions. Termination of the plan is unlikely, however, if
circumstances make it impossible or inadvisable to continue the plan, benefits
would be paid as described below.
IF THE PLAN IS TERMINATED
If the plan is terminated, or if there is a partial termination affecting
you, you will immediately be 100% vested as of the termination date. Benefits
will be paid, according to law, as described below. No money in the fund can be
returned to Champion until all required benefit commitments have been satisfied.
Trust fund assets would be used first to provide benefits to retirees,
beneficiaries, and active participants.
PENSION BENEFIT GUARANTY CORPORATION (PBGC)
Benefits under the Champion Salaried Retirement Plan are guaranteed by the
Pension Benefit Guaranty Corporation, a federal
A-16
government agency, if the plan terminates. Generally, this agency guarantees
most vested normal retirement benefits, early retirement benefits, and certain
disability and survivors' pensions. However, it does not guarantee all types of
benefits under covered plans, and the amount of protection is subject to certain
limitations.
The agency guarantees vested benefits at the level in effect on the date of
plan termination. However, if a plan has been in effect less than five years
before plan termination, or if benefits have been increased in the five years
before termination, the whole amount of the plan's vested benefits or the
benefit increase may not be guaranteed. In addition, there is a ceiling, which
is adjusted periodically, on the amount of monthly benefit the PBGC guarantees.
For more information on the PBGC insurance protection and its limitations,
ask the Plan Administrator or the PBGC. Inquiries to the PBGC should be
addressed to The Pension Benefit Guaranty Corporation; ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.;
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇; Attention: Control Branch. The PBGC also may be
reached by calling (▇▇▇) ▇▇▇-▇▇▇▇.
ADDITIONAL PLAN INFORMATION
--------------------------------------------------------------------------------
LIMITATIONS ON BENEFITS
The federal tax laws place limitations on the amount of benefits that may
be received from the plan.
As a general rule, your total annual benefit from this plan and any other
plans cannot exceed 100% of your compensation. There is also a dollar limit
that federal tax laws place on your annual benefit payable at Social Security
normal retirement age. The dollar limit is indexed to increase each year. This
amount would be reduced for early retirement, optional forms of benefit
payments, and/or participation in other retirement or savings plans.
TAX CONSIDERATIONS
Generally speaking, your retirement income from Champion is taxable as
ordinary income to you under current Internal Revenue Service regulations.
As for your Social Security retirement income, separate tax rules govern
its taxability. As a result, your Social Security retirement income may or may
not be taxable to you.
Unless you elect otherwise, taxes will be withheld from your benefit
payments under the Salaried Retirement Plan.
In all cases, it is advisable to seek competent tax advice during your
first year of retirement in order to become completely aware of the tax filing
requirements and your tax liabilities.
ANNUAL BENEFIT STATEMENT
A-17
Once a year, you will receive a statement telling you, among other things:
. Whether you have a vested right to a retirement benefit at normal
retirement age;
. If you are vested, what your benefits would be at normal retirement if you
stopped working under the plan as of the statement date; and
.
If you are not vested, how many more years you have to work in order to become
vested in a retirement benefit.
You can request this statement by writing to the Vice President, Benefits.
However, such a request cannot be made more often than once a year.
FINANCIAL INFORMATION LINE
The Financial Information Line is an automated voice-response system that
is accessible from any touch tone phone. A personal identification number (PIN)
keeps your inquiries confidential; only you can gain access to information about
your pension or your savings accounts.
Call the Financial Information Line Monday through Friday, 7:30 a.m. to
10:00 p.m., or Saturday and Sunday, 9:00 a.m. to 2:30 p.m. All hours are
Eastern Standard Time.
. Using a touch tone phone, dial one of the Financial Information Line access
numbers: either ▇-▇▇▇-▇▇▇-▇▇▇▇ or Chamcon 868-4844.
. Enter your Social Security number.
. Enter your PIN.
. Identify the type of information you are seeking by pressing "2" for
pension or "3" for savings.
If you choose the pension option, you'll be able to:
. Receive a pension estimate for any age in the future.
. Get written confirmation of up to five pension estimates mailed to your
home within several days.
. Receive general information on retirement options; how to retire; and
various pension plan provisions, such as eligibility, vesting, and early
retirement.
FIDUCIARIES
The individuals who are responsible for the operation and administration of
employee benefit plans are called "fiduciaries." The fiduciaries will continue
to operate and administer the plans in a reasonable and prudent manner with the
exclusive interest of you and other plan participants and beneficiaries in mind.
A-18
Exhibit B to Agreement between Champion International
Corporation and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated as of September 18, 1997
---------------------------------------------------------------
Exhibit B
---------
[subparagraph 6(a)]
LONG-TERM DISABILITY INSURANCE OPTIONS SUMMARY CHART
--------------------------------------------------------------------------------
---------------------------------------------------------------------------------
LONG-TERM DISABILITY INSURANCE OPTIONS
---------------------------------------------------------------------------------
Assures Continuation of
Option This Amount of Earnings
------ -----------------------
1 50%
2 60%
3 70%
---------------------------------------------------------------------------------
ENROLLMENT
--------------------------------------------------------------------------------
Coverage for temporary disability is automatic; you decide what level of
long-term disability coverage best meets your needs.
TEMPORARY AND LONG-TERM DISABILITY COVERAGE
You're eligible for coverage if you're an active, non-represented, salaried
employee of Champion. Your coverage will begin automatically on the first day
you are actively at work. You are not eligible for coverage while you are on a
family care leave of absence or on any leave of absence.
Champion pays the full cost of your temporary disability insurance
coverage; it is not part of the flexible benefits program.
For long-term disability coverage you have three levels of coverage to
choose from (see page B-1). You must complete a Flexible Benefits Enrollment
Form indicating your choice of coverage.
================================================================================
If your earnings change during the year, your coverage
amount and your price for coverage will remain the same
through the end of the year.
================================================================================
The plan is "self-funded." This means that Champion pays plan benefits
from Company funds. Champion also processes claims and approves all benefit
payments.
HOW DISABILITY COVERAGE WORKS
--------------------------------------------------------------------------------
TEMPORARY DISABILITY
If you are ill or injured, Champion's temporary disability plan will pay
you a weekly benefit for up to 180 days for any one illness or injury.
B-1
For the first seven calendar days you are absent due to disability, your
regular pay will continue at the discretion of local management. (You are
responsible for notifying your local Benefits Representative if you are not able
to return to work after seven days.) Beginning on the eighth day, the temporary
disability plan pays 100% of your earnings. For this plan, earnings is defined
as your base pay in effect at the time of the disability. (If you are a
Nationwide commissioned sales representative, the definition of earnings is
different and you should contact your local Benefits Representative for
details.)
Temporary disability benefits continue as long as you are disabled through
the 180th day of your disability, or until you retire, whichever happens first.
Qualifying for benefits
-----------------------
To qualify for temporary disability benefits, you must complete a request
for disability claim form and have a signed statement from your physician
certifying that you cannot perform the regular duties of your job. These
statements, must be completed, signed, and returned to your local Benefits
Representative by the eighth day of your disability.
You may be asked to furnish additional physician's statements. Also, from
time to time, you may be required to have an examination by a Champion-appointed
physician at Champion's expense.
===============================================================================
If you are asked by Benefits Administration to submit to an
examination by a Champion-appointed physician and, after
being examined, there is a difference of opinion as to
whether you qualify for temporary disability benefits, the
decision of Benefits Administration is final and conclusive.
===============================================================================
Periods of disability
----------------------
You receive temporary disability benefits from the eighth through the 180th
day of each period of disability. If you return to work after receiving
temporary disability benefits, and within two weeks you become disabled again
from the same cause (or related cause), both absences will be considered as one
period of disability. However, if you return to work for at least two or more
weeks between absences, your second absence will be considered a second period
of disability.
Payment frequency
-----------------
Temporary disability benefits are paid on the same basis as regular payroll
checks.
Payroll deductions
------------------
Any payroll deductions which you authorized as an active employee will
continue while you are receiving temporary
B-2
disability benefits. Such payroll deductions include federal, state, and local
taxes; Social Security taxes; deductions for your benefits; and savings plan
contributions.
LONG-TERM DISABILITY
The long-term disability (LTD) plan provides you with a source of income if
you become disabled and can't work for an extended period of time. For the
first 180 days of disability, your pay is continued through Champion's temporary
disability plan. After this period, you can have a percentage of your earnings
continued through the long-term disability plan.
You can choose from three coverage options, each of which continues a
percentage of your earnings if you are totally disabled and can't work. For
this plan, earnings is defined as the higher of your previous year's flexible
benefits earnings or benefit earnings.
The percentage the plan guarantees to pay (50%, 60%, or 70% of earnings) is
a combination of all disability benefits -- such as benefits for you or your
family from Social Security, or income from workers' compensation -- and
payments from the Champion plan. The Champion plan benefit will never be less
than $50 per month after other offsets have been made.
Your benefits continue for as long as you remain totally disabled, up to
age 65. If your disability begins after age 60, your benefits may be paid for
five years or until your date of recovery, whichever occurs first.
Qualifying for benefits
-----------------------
During the first 24 months.
To qualify for the first 24 months of long-term disability benefits, you
must be under the regular care of a physician and your physician must certify
that you are unable to perform any part of your regular job.
However, you may be requested to perform a job other than your regular
position as long as it is within the limitations as outlined by your attending
physician.
Beyond 24 months.
For long-term disability benefits to continue beyond 24 months, you must be
considered totally and permanently disabled. This means that you are unable to
do any job for which you are reasonably qualified by your training, education,
and experience.
Your physician -- and in certain cases a physician appointed by the Plan
Supervisor -- must certify your disability. And, statements from the physician
may be requested periodically during your long-term disability if they are
needed to facilitate a review of your disability condition.
B-3
========================================================================
If you are asked by Benefits Administration to submit to an
examination by a Champion-appointed physician and, after
being examined, there is a difference of opinion as to
whether you qualify for long-term disability benefits, the
decision of Benefits Administration is final and conclusive.
========================================================================
Periods of disability
---------------------
If you return to work after receiving long-term disability benefits, and
you become disabled again within six months for the same or a related cause,
both absences will be considered as one period of disability and long-term
disability plan benefits will begin again immediately. However, if you return
to work for at least six months between absences, your second absence will be
considered a new period of temporary disability.
Payment frequency
-----------------
Long-term disability benefits are paid monthly. Payments are made to
disabled employees on the first of each month, covering the prior month.
Payroll deductions
------------------
Applicable federal and state taxes may be deducted from your long-term
disability benefit. If you have an outstanding savings plan loan balance when
you go on long-term disability, you may elect to have loan repayments deducted
from your long-term disability benefit. You will automatically be transferred
to the lowest deductible medical and dental plans, and any required
contributions for coverage will be deducted from your monthly long-term
disability check.
Group life insurance coverage continues, but contributions end. All other
contributions and benefit coverages will also end.
OTHER INFORMATION ABOUT YOUR DISABILITY BENEFITS
--------------------------------------------------------------------------------
There are some special provisions that can affect the way your disability
benefits are paid.
BENEFITS FROM OTHER SOURCES
If you are receiving disability payments from other sources, Champion will
adjust the amount of your payment so that you don't receive less than the plan's
$50 minimum monthly benefit from -- all income sources. Champion's disability
benefit will be reduced by:
. any amounts paid or payable under workers' compensation or any
occupational disease act or law;
. any amounts paid or payable under the state-sponsored temporary
disability plans of California, Hawaii, New York,
B-4
New Jersey, Rhode Island, and Puerto Rico, or any other state or federal
disability law in effect at the time of disability;
. the amount paid or payable to you and your family from Social Security
disability and/or retirement plans;
. 50% of the amount of any earned income from rehabilitative employment
performed during your disability period and 100% of any other earned income;
and
. any commissions paid during your disability period, except commissions paid
instead of expense reimbursement.
WHEN BENEFITS AREN'T PAID
Disability benefits will not be paid for:
. Any period during which you are not under the regular care of a physician,
or if a physician determines that you no longer qualify for benefits;
. Periods during which you fail to comply with the plan;
. Any period during which you are incarcerated for any reason (however,
benefit eligibility may resume after your release from incarceration if you
otherwise qualify at that time);
. Disability due to or attributable to:
- intentionally self-inflicted injury or attempted suicide while sane or
insane;
- illness or injury while committing a felony;
- war or any act of war, declared or undeclared;
- military, naval, or any service in the armed forces of any country; or
- a disability or illness caused by an accident related to employment
other than with Champion.
ALCOHOL OR OTHER SUBSTANCE ABUSE REHABILITATION
The disability plans will provide benefits during periods of alcohol or
other substance abuse rehabilitation if you are receiving care and treatment
from a licensed doctor. All services must be received in an approved substance
abuse treatment facility.
An approved substance abuse treatment facility is one that is accredited by
the National Institute on Alcohol Abuse and Alcoholism, the American Hospital
Association, or the Joint Council on Hospital Accreditation. It may also be a
facility that is recognized for treatment to aid in the recovery from alcohol or
other substance abuse and which is approved by an appropriate state agency.
REHABILITATIVE WORK INCOME
The disability plans support your participation in rehabilitative work
programs. While you are receiving temporary or long-term disability benefits,
you can increase your income during the first 30 months you are disabled by
doing rehabilitative work.
B-5
For the plans, rehabilitative work means participation in an approved
rehabilitation program in any occupation in which you are employed for wage or
profit. Any work you do while you are unable to fully perform your own job
qualifies as rehabilitative work as long as such work is approved by the Plan
Supervisor.
If you accept rehabilitative employment, and this employment is approved by
Champion, your disability benefits will not stop. If the rehabilitative
employment is outside of Champion, your disability benefits will be reduced by
50% of what you have earned during your rehabilitation. If the rehabilitative
employment is within Champion, your disability benefits will be reduced by 100%
of what you have earned.
WHEN AND HOW BENEFITS ARE PAID
--------------------------------------------------------------------------------
To receive benefits from either of the disability plans, you must submit a
claim as well as written proof of your disability, and you must be under the
regular care of a doctor. To file a claim, contact your local Benefits
Representative.
PAYMENT OF BENEFITS
Temporary disability benefits are paid on the same basis as your regular
payroll check. Long-term disability benefits are paid on the first of each
month, covering the prior month.
PAYING TAXES ON YOUR BENEFITS
When you receive temporary disability benefits, income taxes are withheld
from your payments. Social Security taxes are withheld until the end of your
sixth month of disability. The price you pay for long-term disability coverage
is deducted from your pay on an after-tax basis. As a result, the benefits you
receive from the plan are not taxable when you receive them.
IF A CLAIM FOR BENEFITS IS DENIED
If a claim is denied, in whole or in part, you are entitled to a full
review. For information on the process for reviewing denied claims, see the
"General Information" section.
APPLICATION FOR BENEFIT PAYMENT
A signed application form, including physician's statements must be filed
with the Plan Supervisor within one year after the occurrence of the event for
which a claim for disability benefits is made. Failure to file the required
application within the one-year period will completely discharge the disability
plans and Champion.
HOW DISABILITY AFFECTS YOUR OTHER BENEFITS
--------------------------------------------------------------------------------
When you're away from work because of a disability, your other benefits
could be affected.
While you're receiving temporary disability benefits from Champion, no
changes will be made to your other Champion benefits.
B-6
If you are receiving long-term disability payments, you are not eligible to
participate in Champion's flexible benefits program. However, you will
have the following benefit coverages: (provided you make the required
contributions) core level of medical coverage until you become
eligible for Medicare, at which time, your coverage will be provided
under the Medicare Supplemental Plan; core level of dental coverage;
and your core level of group life insurance coverage. All other
flexible coverages cease. If you have medical coverage under an HMO
when you begin long-term disability, you can continue that coverage if
you continue to meet the HMO's eligibility rules.
If you are on temporary or long-term disability and are receiving benefits
from the Champion plan, you continue to earn credit for service under the
retirement plan and the savings plan.
If you are not receiving benefits from the Champion disability plans for
any reason specified on beginning on page B-7, then you will not earn credit for
service during that period for retirement and savings plan purposes.
If you become totally and permanently disabled, as defined on page B-3, the
full value of your savings account is available to you after 30 months.
SITUATIONS AFFECTING YOUR DISABILITY BENEFITS
--------------------------------------------------------------------------------
Your Champion disability coverage is designed to provide you with income
protection you can rely on. But some situations could cause a loss or delay of
plan benefits. The most important of those situations are summarized here.
WHEN BENEFITS ARE DELAYED OR NOT PAID
. Benefits may be delayed until you notify the appropriate person of
your disability. However, benefits may be payable if you can show
that the delay was unavoidable.
. If your address changes while you're receiving benefits, and you
don't notify Champion, benefits will be delayed.
. If your plan benefits are overpaid or underpaid, benefit payments will be
adjusted until there is no more overpayment or underpayment.
. If you do not provide satisfactory medical evidence of your
disability, benefits could stop.
. If your disability ends, payments stop.
WHEN COVERAGE ENDS
Your disability coverage will end if:
. you leave Champion;
. you no longer meet or comply with the terms, provisions, and/or
requirements for participation in the plan;
. you retire;
B-7
. you enter the armed forces of any country on a full-time basis; or
. the plan ends.
Unlike some of your other insurance, disability coverage can't be converted
to an individual policy when your coverage ends.
OTHER INFORMATION YOU SHOULD KNOW
--------------------------------------------------------------------------------
Here is some important information about your disability benefit plans.
IF THE PLAN IS ENDED OR MODIFIED
Champion reserves the right to end, suspend, or amend the plan at any time,
in whole or in part. If any material changes are made, however, some claims may
still be paid.
SUBROGATION RIGHTS
If you recover any charges for covered expenses from a third party (for
instance, an auto policy or as a result of a lawsuit), the amount of the benefit
which Champion's plan will pay will be reduced by the amount you recover. If
benefits have already been paid, you will have to reimburse Champion.
ATTACHMENT OF BENEFITS
To the extent permitted by law, all rights and benefits under this plan are
exempt from execution, attachment, garnishment, or other legal process from your
debts or liabilities.
MISREPRESENTATION AND/OR FRAUD
Misrepresentation of material facts or other fraudulent or negligent
actions may result in disciplinary action including, but not limited, to your
termination of employment, loss of plan coverage, or even legal action. Willful
fraud will be prosecuted at the discretion of Champion.
B-8
Exhibit C to Agreement between Champion International
Corporation and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated as of September 18, 1997
---------------------------------------------------------------
Exhibit C
---------
[subparagraph 8(a)(ii)(y)]
Schedule of Certain Benefit Coverages during the
Severance Payment Period under Subparagraph 8(a)(i)
after a Termination following a Change in Control
---------------------------------------------------
` Disability: Same as for active employees.
` Medical: Difference between active employee
medical benefit and retiree medical
benefit, if any.
` Dental: Same as for active employees.
For other benefit coverages after termination following a Change in
Control, see subparagraph 8(a)(ii)(x) and (z).
Exhibit D to Agreement between Champion International
Corporation and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated as of September 18, 1997
---------------------------------------------------------------
Exhibit D
---------
[subparagraph 10(g)]
Schedule of Payments and Benefits upon
a Breach after Cessation of Employment
--------------------------------------
` Severance: 2 years termination payments (or the unpaid balance
thereof); however, payments not to cover the period, if
any, after the last day of the month next preceding the
Executive's normal retirement date under the Company's
pension plan. Payments are based on highest total of salary
and annual bonus for any calendar year of employment.
` Retirement: (A) In the case of a breach during a period in which the
Company is making payments under subparagraph 8(a)(i) above
by reason of a "termination" as defined in subparagraph
8(b) above, all allowances under subparagraph 9(b)(i) and
(ii) hereof without regard to the offsets set forth in
subparagraph 9(b)(iii) hereof in excess of the respective
benefits payable to the Executive and his spouse under the
#001 Plan. If the Executive does not have a spouse at the
time as of which the lump sum calculation is being made,
then such calculation shall be made on the assumption that
he had a spouse, his own age, at such time; (B) In the case
of a breach other than during the period referred to in
clause (A) above, all allowances under subparagraph 9(b)(i)
and (ii) or (iv) above, whichever in fact is applicable,
(or the unpaid balance thereof) without regard to the
offsets set forth in subparagraph 9(b)(iii) above in excess
of the respective benefits payable to the Executive and his
spouse or other Beneficiary under the #001 Plan.
` Disability: Same as for active employees, during the 2 year termination
payment period or balance thereof.
` Medical: Difference between active employee medical benefit and
retiree medical benefit, during the 2 year termination
payment period or balance thereof.
` Dental: Same as for active employees, during the 2 year termination
payment period or balance thereof.
Exhibit E to Agreement between Champion International
Corporation and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated as of September 18, 1997
---------------------------------------------------------------
Exhibit E
---------
[Intentionally left blank]
Exhibit F to Agreement between Champion International
Corporation and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated as of September 18, 1997
---------------------------------------------------------------
Exhibit F
---------
[subparagraph 16(d)]
FORM OF TRUST AGREEMENT
TRUST AGREEMENT
TRUST AGREEMENT (the "Trust"), dated as of February 19, 1987, by and
between Champion International Corporation, a New York corporation (the
"Company"), and Connecticut National Bank (the "Trustee").
WHEREAS, the Company is obligated under the individual agreements set
forth on Exhibit I (together with any additional agreements included on Exhibit
I pursuant to Section 2.01(c) hereof, the "Agreements") to make specified
payments to certain of the Company's executives (together with any additional
executives and retired executives included on Exhibit I pursuant to Section
2.01(c) hereof, the "Executives"); and
WHEREAS, the aforesaid obligations of the Company are not funded or
otherwise secured, and the Company has agreed, to the extent practicable, to
assure that the future payment of certain of said obligations will not be
improperly withheld in the event that a "Change in Control" (as defined herein)
of the Company should occur; and
WHEREAS, for purposes of assuring that such payments will not be
improperly withheld, the Company desires to deposit with the Trustee, subject
only to the claims of the Company's existing or future general creditors in the
event of bankruptcy or insolvency (as hereinafter provided), amounts of cash or
marketable securities sufficient to fund such payments;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the parties hereto agree
as follows:
ARTICLE I
THE AGREEMENTS
--------------
SECTION 1.01 Agreements. The agreements subject to this Trust
----------
consist of the Agreements listed from time to time on Exhibit I hereof
respectively. The Company shall continue to be liable to the Executives to make
all payments required under the terms of such Agreements to the extent such
payments have not been made pursuant to this Trust.
ARTICLE II
TRUST AND THE TRUST CORPUS
--------------------------
SECTION 2.01 Trust.
-----
(a) The Company will deliver to the Trustee to be held in trust
hereunder, concurrently with the execution of this
Trust, the sum of $100 in cash, and upon the occurrence of a "Potential Change
in Control" (as defined in Section 3.02), (i) an additional amount in cash (or
in marketable securities having a fair market value equal to such amount, or
some combination thereof) representing the sum of the amounts, determined as
provided in Section 4.02, which is estimated to be sufficient to fund the
Company's obligations to pay to the Executives certain amounts and benefits due
to them pursuant to the Agreements and (ii) an amount estimated by the Trustee
to be sufficient to pay all of the Trustee's fees and expenses hereunder with
respect to the period of time that this Trust Agreement shall be in effect.
(b) The payment by the Company pursuant to Section 2.01(a)(i)
hereof shall be accompanied by a Payment Schedule for each Executive as required
by Section 4.02(a) hereof.
(c) The Company may, subject to the provisions of Section
2.01(d), from time to time prior to the occurrence of a Change in Control revise
Exhibit I in order to include thereon (A) additional Executives, and (B)
additional Agreements with respect to any Executive. If a revised Exhibit I is
delivered to the Trustee with respect to any Executive upon or after the
occurrence of a Potential Change in Control, the Company will deliver to the
Trustee, concurrently with such revised Exhibit I:
(x) a Payment Schedule or a revised Payment Schedule, as
applicable, with respect to such Executive which
complies with Section 4.02(a) and which sets forth the
additional amount delivered to the Trustee with respect
to such Executive, and
(y) an amount which is estimated to be sufficient when
added to the amount or amounts previously delivered to
the Trustee to fund the Company's obligations under the
Payment Schedule or the revised Payment Schedule, as
applicable, pursuant to such Executive's Agreements.
Such Payment Schedule or revised Payment Schedule shall be effective in
accordance with the provisions of Section 4.02(b). A revised Exhibit I shall be
effective upon the later of (C) receipt by Trustee of such revised Exhibit I and
(D) receipt by the Trustee of all amounts required under this Section 2.01(c),
if any, and such revised Exhibit I shall supersede any and all such Exhibits
previously delivered to the Trustee.
(d) In no event may Exhibit I be revised to eliminate any
Executive or any Agreements with respect to any
Executive without such Executive's written consent, except as provided in the
following sentence. Prior to the occurrence of a Change in Control, the Company
shall deliver instructions to the Trustee to delete the name of, and the
Agreements with respect to, an Executive from Exhibit I promptly following the
termination of his employment with the Company prior to the occurrence of a
Change in Control. The Trustee shall make such deletions and shall be able to
rely upon such instructions and shall have no duty to inquire with respect to
the termination of such Executive's employment with the Company. The deletions
described in the immediately preceding sentence may not be made with respect to
instructions delivered to the Trustee on or after the occurrence of a Change in
Control of the Company. Notwithstanding the foregoing, following a Potential
Change in Control the Company may, in its discretion, add retired Executives and
their agreements with the Company to Exhibit I in accordance with Section
2.01(c) to assure that the payment of certain amounts payable by the Company to
such retired Executives under such agreements will not be improperly withheld
following a Change in Control.
SECTION 2.02 Trust Corpus.
------------
(a) As used herein, the term "Trust Corpus" shall mean the
amounts delivered to the Trustee as described in Section 2.01 and 4.02(b) hereof
in whatever form held or invested as provided herein. The Trust Corpus shall be
held, invested and reinvested by the Trustee in cash or marketable securities
only in accordance with this Section 2.02. The Trustee shall use its good faith
efforts to invest or reinvest from time to time all or such part of the Trust
Corpus as it believes prudent under the circumstances in either one or a
combination of the following investments:
(i) investments in direct obligations of the United
States of America or agencies of the United States of America or
obligations unconditionally and fully guaranteed as to principal
and interest by the United States of America, in each case
maturing within one year or less from the date of acquisition; or
(ii) investments in negotiable certificates of
deposit (in each case maturing within one (1) year or less from
the date of acquisition) issued by a commercial bank organized
and existing under the laws of the United States of America or
any state thereof having a combined capital and surplus of at
least $1,000,000,000, including the Trustee's banking department;
provided, however, that the Trustee shall not be liable for any failure to
-----------------
maximize the income earned on that portion of the
Trust Corpus as is from time to time invested or reinvested as set forth above,
nor for any loss of income due to liquidation of any investment which the
Trustee, in its sole discretion, believes necessary to make payments or to
reimburse expenses under the terms of this Trust.
(b) The Trust is intended to be grantor trust within the meaning
of Section 671 of the Internal Revenue Code of 1986, as amended (the "Code"),
and except as hereinafter provided, all interest and other income earned on the
investment of the Trust Corpus shall be the property of the Company and shall
not constitute a part of the Trust Corpus. Except as provided in Section
4.02(a), the interest and other income earned in any calendar quarter shall be
paid over to the Company by the Trustee as promptly as practicable after the end
of such calendar quarter.
(c) All losses of principal in respect of, and expenses
(including, as provided in Section 5.01(g) hereof, any expenses of the Trustee)
charged against, the Trust Corpus shall be for the account of the Company and
the Company shall be obligated to promptly reimburse the Trust Corpus for any
loss in principal amount of, or expense charged against, the Trust Corpus except
to the extent that such amounts have been applied to reduce amounts payable to
the Company pursuant to Section 2.02(b) hereof. To the extent any such losses
and expenses are not reimbursed by the Company, the aggregate amount payable to
an Executive under the applicable Payment Schedule shall be reduced by a portion
of such losses and expenses, as determined on a pro rata basis.
ARTICLE III
CHANGE IN CONTROL
-----------------
SECTION 3.01 Definition of Change in Control.
-------------------------------
For purposes of this Trust, a Change in Control of the Company shall be deemed
to have occurred if
(a) any "person" (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the combined voting power of the
Company's then outstanding securities;
(b) during any period within two (2) consecutive years (not
including any period prior to the Company's 1987 Annual Meeting of Shareholders)
there shall cease to be a majority of the Board of Directors comprised as
follows: individuals who at the beginning of such period constitute the Board of
Directors and any new director(s) whose election by the Board of Directors or
nomination for election by the Company'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;
or
(c) the shareholders of the Company approve (i) a plan of
complete liquidation of the Company or (ii) the sale or other disposition of all
or substantially all the Company's assets.
SECTION 3.02 Definition of a Potential Change in Control. For
-------------------------------------------
purposes of this Trust, a Potential Change in Control shall be deemed to have
occurred if
(a) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control of the Company;
(b) any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control of the Company;
(c) any person, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing ten percent (10%) or more of the combined voting power of the
Company's then outstanding securities; or
(d) the Board of Directors adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control of the
Company has occurred.
SECTION 3.03 Notification of the Trustee. The Company shall notify
---------------------------
the Trustee of the occurrence of a Potential Change in Control and the Company
shall or an Executive may notify the Trustee of the occurrence of a Change in
Control, and the Trustee may rely on such notice or on any other actual notice,
satisfactory to the Trustee, of such a change or potential change which the
Trustee may receive. The Trustee shall have no obligation to make an
independent determination as to the occurrence of a Potential Change in Control
or Change in Control.
ARTICLE IV
RELEASE OF THE TRUST CORPUS
---------------------------
The Trustee shall hold the Trust Corpus in its possession under the
provisions of this Trust Agreement until authorized to deliver the Trust Corpus
or any specified portion thereof as follows:
SECTION 4.01 Delivery to the Company.
-----------------------
(a) Any amount in excess of $100 delivered to the Trustee
pursuant to Section 2.01 hereof or otherwise constituting part of the Trust
Corpus shall be returned to the Company, unless within six (6) months of such
delivery to the Trustee a Change in Control shall have occurred. Such six month
period shall be
renewed (i) for any Potential Change in Control which occurs during any initial
six month period or (ii) by a resolution adopted by the Board of Directors and
delivered to the Trustee by the Company to the effect that such an initial six
month period (or a six month period that is renewed in accordance with clause
(i) of this Section 4.01(a)) shall start anew.
(b) Any amount held by the Trustee for the benefit of an
Executive shall be paid to the Company immediately following the final payment
of all amounts payable to such Executive pursuant to the terms of the
Executive's Agreement, as certified to the Trustee by the Executive.
(c) Upon the termination of the Trust as provided in the first
sentence of Section 6.01(a), the Trustee shall pay to the Company the amount of
the Trust Corpus, less all payments, expenses, taxes and other charges under
this Trust Agreement as of such date of termination, provided that in the event
that the Trust shall continue with respect to one or more Executives in
accordance with the provisions of Section 6.01(b), the Trustee shall pay to the
Company the amount that would have been payable to the Company if the Trust had
terminated as provided in Section 6.01(a), less (i) the amounts subject to
litigation or arbitration for each such Executive, as certified to the Trustee
by each such Executive, and (ii) an amount estimated by the Trustee to be
sufficient to pay all of the Trustee's fees and expenses with respect to the
additional period of time that the Trust shall continue in effect pursuant to
Section 6.01(b).
SECTION 4.02 Deliveries to Executives.
------------------------
(a) The Company shall deliver to the Trustee, upon the
occurrence of a Potential Change in Control, a separate schedule for each
Executive (the "Payment Schedule") indicating (x) the amounts delivered to the
Trustee for the benefit of each such Executive pursuant to Section 2.01(a)(i) in
accordance with such Executive's Agreements and (y) the amounts payable in
respect of such Executive, or providing a formula or instructions acceptable to
the Trustee for determining the amounts so payable. The Payment Schedule shall
include instructions as to the amount of interest, if any, accruing in respect
of an Executive and such instructions may be revised from time to time prior to
the occurrence of a Change in Control. Each Payment Schedule also shall be
delivered by the Company to such Executive. The aggregate payment to be made
hereunder to an Executive by the Trustee shall not exceed the aggregate amount
delivered to the Trustee for the benefit of such Executive as indicated in the
Payment Schedule applicable to such Executive. The Trustee shall make payments
to each Executive under the Payment Schedule applicable to such Executive upon
receipt by the Trustee of a written request for payment signed by the Executive
or, following his death, his beneficiary or beneficiaries. Such request shall
set forth each of the following items: (i) the specific amount of payment
requested, (ii) the specific Agreement or Agreements and the specific section or
sections of such Agreements under which such payment is to be made, (iii) the
existence or absence of any "excess parachute payment" (as defined in Section
280G of the Code) respecting the amount payable to such Executive in accordance
with the applicable Payment Schedule and (iv) the amount of any reduction in the
amount otherwise payable to such Executive in accordance with the applicable
Payment Schedule and the item or items to be reduced, if any. The Trustee shall
rely upon such written request in making payments under the Payment Schedule and
shall have no duty to inquire into the amounts, instructions or formulas set
forth in the Payment Schedule or the Executive's right to such payments.
(b) The Company may from time to time after the occurrence of a
Potential Change in Control deliver concurrently to the Trustee (i) a revised
Payment Schedule with respect to any Executive which sets forth the aggregate
amounts payable with respect to such Executive and (ii) an amount which is
estimated to be sufficient when added to the amount or amounts previously
delivered to the Trustee to fund the Company's obligations pursuant to such
Executive's Agreements. A revised Payment Schedule shall be effective upon the
later of (x) receipt by the Trustee of such revised Payment Schedule and (y)
receipt by the Trustee of all amounts required under Section 4.02(b)(ii) and
such revised Payment Schedule shall supersede any and all Payment Schedules
previously delivered by the Company to the Trustee with respect to such
Executive.
(c) Except as provided in this Section 4.02(c), a revised
Payment Schedule may not reduce the amounts payable with respect to an Executive
pursuant to the prior Payment Schedule for such Executive except with the
written consent of such Executive.
(i) After a Potential Change in Control and before a Change in
Control, the Company shall deliver to the Trustee, promptly
following the termination of an Executive's employment with the
Company, a revised Payment Schedule with respect to such
Executive which deletes all of the amounts set forth on the prior
Payment Schedule for such Executive. The Trustee may rely upon
such revised Payment Schedule and shall have no duty to inquire
with respect to the termination of such Executive's employment
with the Company. The Trustee shall return to the Company all
amounts previously delivered by the Company to the Trustee for
the benefit of such Executive.
Notwithstanding the foregoing, following a Potential Change in
Control the Company may, in its discretion, deliver Payment
Schedules for retired Executives in accordance with Section
4.02(a) hereof.
(ii) After a Potential Change in Control and before a Change in
Control, the Company may deliver a revised Payment Schedule with
respect to an Executive which reduces the amounts payable in
respect of such Executive pursuant to his prior Payment Schedule
as the result of a more accurate calculation by the Company of
the amount of the benefits to which such Executive is entitled
pursuant to his Agreements. The Trustee may rely on such revised
Payment Schedule and shall have no duty to inquire with respect
to said calculation. The Trustee shall return to the Company an
amount equal to such reduction.
A revised Payment Schedule of the type described in this Section 4.02(c) may not
be delivered to, or honored by, the Trustee on or after the occurrence of a
Change in Control of the Company. A revised Payment Schedule shall be effective
upon its receipt by the Trustee and shall supersede any and all Payment
Schedules previously delivered by the Company to the Trustee with respect to
such Executive.
(d) The Trustee shall be permitted to withhold from any payment
due to an Executive hereunder the amount required by law to be so withheld under
federal, state and local withholding requirements or otherwise, and shall pay
over to the appropriate government authority the amounts so withheld. The
Trustee may rely on instructions from the Company as to any required withholding
and shall be fully protected under Section 5.01(g) hereof in relying on such
instructions.
(e) Except as otherwise provided herein, in the event of any
final determination by the Internal Revenue Service or a court of competent
jurisdiction, which determination is not appealable or the time for appeal or
protest of which has expired, or the receipt by the Trustee of a substantially
unqualified opinion of tax counsel selected by the Trustee with the written
consent of the Company, which determination determines, or which opinion
concludes, that the Executives or any particular Executive, is subject to
federal income taxation on amounts held in Trust hereunder prior to the
distribution to the Executives or Executive of such amounts, the Trustee shall,
on receipt by the Trustee of such opinion or notice of such determination, pay
to each Executive the portion of the Trust Corpus includible in such Executive's
federal gross income.
SECTION 4.03 Deliveries to Creditors of the Company. It is the
--------------------------------------
intent of the parties hereto that the Trust Corpus is and shall remain at all
times subject to the claims of the general creditors of the Company in the event
of bankruptcy or insolvency as hereinafter provided, but in no other event.
Accordingly, the Company shall not create a security interest in the Trust
Corpus in favor of the Executives or any creditor. If the Trustee receives the
notice provided for in Section 4.04 hereof, or otherwise receives actual notice
that the Company is insolvent or bankrupt as defined in Section 4.04 hereof, the
Trustee will make no further distributions of the Trust Corpus to any of the
Executives but will deliver the entire amount of the Trust Corpus only as a
court of competent jurisdiction, or duly appointed receiver or other person
authorized to act by such a court, may direct to make the Trust Corpus available
to satisfy the claims of the Company's general creditors. The Trustee shall
resume holding the Trust Corpus under the terms hereof and resume any
distribution of Trust Corpus to the Executives under the terms hereof, upon no
less than thirty (30) days advance notice to the Company, if it determines that
the Company was not, or is no longer, bankrupt or insolvent. Unless the Trustee
has actual knowledge of the Company's bankruptcy or insolvency, the Trustee
shall have no duty to inquire whether the Company is bankrupt or insolvent.
SECTION 4.04 Notification of Bankruptcy or Insolvency. The Company,
----------------------------------------
through its Board of Directors and Chief Executive Officer, shall advise the
Trustee promptly in writing of the Company's bankruptcy or insolvency. The
Company shall be deemed to be bankrupt or insolvent in the following
circumstances:
(a) The Company is subject to a pending proceeding as a debtor under
the Bankruptcy Reform Act of 1978, as amended; or
(b) The Company shall generally not pay its debts as such debts
become due or shall cease to pay its debts in the ordinary course of business.
ARTICLE V
TRUSTEE
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SECTION 5.01 Trustee.
-------
(a) The duties and responsibilities of the Trustee shall be
limited to those expressly set forth in this Trust, and no implied covenants or
obligations shall be read into this Trust against the Trustee.
(b) If all or any part of the Trust Corpus is at any time
attached, garnished, or levied upon by any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any order, judgment or decree
shall be made or entered by a court affecting such property or any part thereof,
then and in any of such events the Trustee is
authorized, in its sole discretion, to rely upon and comply with any such order,
judgment or decree, and it shall not be liable to the Company or any Executive
by reason of such compliance even though such order, judgment or decree
subsequently may be reversed, modified, annulled, set aside or vacated.
(c) The Trustee shall maintain such books, records and accounts
as may be necessary for the proper administration of the Trust Corpus,
including, without limitation, as provided in Article II hereof, and shall
render to the Company, on or prior to each January 31 following the date of this
Trust until the termination of this Trust (and on the date of such termination),
an accounting with respect to the Trust Corpus as of the end of the then most
recent calendar year (and as of the date of such termination). The Trustee will
at all times maintain a separate bookkeeping account for each Executive to which
it will credit each amount delivered by the Company to the Trustee with respect
to such Executive. Upon the written request of an Executive or the Company, the
Trustee shall deliver to such Executive or the Company, as the case may be, a
written report setting forth the amount held in the Trust for such Executive (or
each Executive if such request is made by the Company) and a record of the
deposits made with respect thereto by the Company. Unless the Company or any
Executive shall have filed with the Trustee written exceptions or objections to
any such statement and account within one hundred eighty (180) days after
receipt thereof, the Company or the Executive shall be deemed to have approved
such statement and account, and in such case the Trustee shall be forever
released and discharged with respect to all matters and things reported in such
statement and account as though it had been settled by a decree of a court of
competent jurisdiction in an action or proceeding to which the Company and the
Executive were parties.
(d) The Trustee shall not be liable for any act taken or omitted
to be taken hereunder if taken or omitted to be taken by it in good faith,
absent the gross negligence or wilful misconduct of the Trustee. The Trustee
shall also be fully protected in relying upon any notice given hereunder which
it in good faith believes to be genuine and executed and delivered in accordance
with this Trust.
(e) The Trustee may consult with legal counsel to be selected by
it, and the Trustee shall not be liable for any action taken or suffered by it
in accordance with the advice of such counsel.
(f) The Trustee shall be reimbursed by the Company for its
reasonable expenses incurred in connection with the performance of its duties
hereunder and shall be paid reasonable fees for the performance of such duties
in the manner provided by paragraph (g) of this Section 5.01.
(g) The Company agrees to indemnify and hold harmless the
Trustee from and against any and all damages, losses, claims or expenses as
incurred (including expenses of investigation and fees and disbursements of
counsel to the Trustee and any taxes imposed on the Trust Corpus or income of
the Trust) arising out of or in connection with the performance by the Trustee
of its duties hereunder, other than such damages, losses, claims or expenses
arising out of the Trustee's gross negligence or wilful misconduct. Any amount
payable to the Trustee under paragraph (f) of this Section 5.01 or this
paragraph (g) shall be paid by the Company promptly upon demand therefor by the
Trustee or, in the event that the Company fails to make such payment, from the
Trust Corpus. In the event that payment is made hereunder to the Trustee from
the Trust Corpus, the Trustee shall promptly notify the Company in writing of
the amount of such payment. The Company agrees that, upon receipt of such
notice, it will deliver to the Trustee to be held in the Trust an amount in cash
(or in marketable securities or in some combination thereof) equal to any
payments made from the Trust Corpus to the Trustee pursuant to paragraph (f) of
this Section 5.01 or this paragraph (g). The failure of the Company to transfer
any such amount shall not in any way impair the Trustee's right to
indemnification, reimbursement and payment pursuant to paragraph (f) of this
Section 5.01 or this paragraph (g).
SECTION 5.02 Successor Trustee. The Trustee may resign and be
-----------------
discharged from its duties hereunder at any time by giving notice in writing of
such resignation to the Company and each Executive specifying a date (not less
than thirty (30) days after the giving of such notice) when such resignation
shall take effect. Promptly after such notice, the Company (or, if a Change in
Control shall previously have occurred, Executive(s) having at least 65%
percent of all amounts then held in the Trust credited to their accounts) shall
appoint a successor trustee, such trustee to become Trustee hereunder upon the
resignation date specified in such notice. If the Company fails to appoint a
successor trustee or if such Executive(s) are unable to so agree upon a
successor trustee within thirty (30) days after such notice, the Trustee shall
be entitled, at the expense of the Company, to petition a United States
District Court or any of the courts of the State of New York having
jurisdiction to appoint its successor. The Trustee shall continue to serve
until its successor accepts the trust and receives delivery of the Trust
Corpus. The Company (or, if a Change in Control shall previously have
occurred, Executive(s) having at least 65% percent of all amounts then held in
the Trust credited to their accounts) may at any time substitute a new trustee
by giving fifteen (15) days notice thereof to the
Trustee then acting. In the event of such removal or resignation, the Trustee
shall duly file with the Company and, on and after a Change in Control, the
Executives a written statement or statements of accounts and proceedings as
provided in Section 5.01(c) hereof for the period since the last previous
annual accounting of the Trust, and if written objection to such account is not
filed as provided in Section 5.01(c) hereof, the Trustee shall to the maximum
extent permitted by applicable law be forever released and discharged from all
liability and accountability with respect to the propriety of its acts and
transactions shown in such account. The Trustee and any successor thereto
appointed hereunder shall be a commercial bank which is not an affiliate of the
Company, but which is a national banking association or established under the
laws of one of the states of the United States, and which has equity in excess
of $100 million.
SECTION 5.03 Settlement of Accounts. Notwithstanding any other
----------------------
provision of this Agreement, in the event of the termination of the Trust, or
the resignation or discharge of the Trustee, the Trustee shall have the right
to a settlement of its accounts, which accounting may be made, at the option of
the Trustee, either (a) by a judicial settlement in a court of competent
jurisdiction; or (b) by agreement of settlement, release and indemnity from the
Company to the Trustee.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
SECTION 6.01 Termination.
-----------
(a) Except as provided in Section 6.01(b) of this Agreement,
this Trust shall terminate forty-two months after the occurrence of a Change in
Control, or, if earlier, upon the earliest of either of the following events:
(i) the exhaustion of the Trust Corpus; or (ii) the final payment of all amounts
payable to all of the Executives pursuant to the Agreements, as certified to the
Trustee by each Executive. Promptly upon termination of this Trust, any
remaining portion of the Trust Corpus, less all payments, expenses, taxes and
other charges under this Trust Agreement as of such date of termination, shall
be paid to the Company.
(b) Notwithstanding any other provision of this Agreement, in
the situation where the payments under an Executive's Agreements are the
subject of litigation or arbitration, and if the Trust Corpus has not been
exhausted with respect to such Executive, the Trust shall not terminate and the
funds held in the Trust with respect to such Executive shall continue to be
held by the Trustee until the final resolution of such litigation or
arbitration. The Trustee may assume that no Agreement of an Executive is the
subject of such litigation or arbitration unless the Trustee receives written
notice from an
Executive or the Company with respect to such litigation or arbitration. The
Trustee may rely upon written notice from an Executive as to the final
resolution of such litigation or arbitration. Following such final resolution,
the Trust shall terminate with respect to each Executive described in this
Section 6.01(b) upon the earliest of either of the following events: (i) the
exhaustion of the Trust Corpus held by the Trustee with respect to such
Executive; or (ii) the final payment of all amounts payable to the Executive
pursuant to such Executive's Agreements, as certified to the Trustee by such
Executive. Promptly upon termination of this Trust with respect to an
Executive described in Section 6.01(b), any remaining portion of the Trust
Corpus held by the Trustee with respect to such Executive shall be paid to the
Company. At such time as the Trust shall be terminated with respect to all
such Executives, the Trust Corpus, less all payments, expenses, taxes and other
charges attributable to the extension of the Trust term beyond the termination
date described in Section 6.01(a), shall be paid promptly to the Company.
SECTION 6.02 Amendment and Waiver. Except as provided in Sections
--------------------
2.01(c),(d) and 4.02(b),(c), this Trust may not be amended except by an
instrument in writing signed on behalf of the parties hereto together with the
written consent of Executives having at least 65% of all amounts then held in
the Trust credited to their accounts. The parties hereto, together with the
consent of Executives having at least 65% of all amounts then held in the Trust
credited to their accounts, may at any time waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto or an Executive to any such waiver shall be valid if set forth in an
instrument in writing signed on behalf of such party or Executive. This Trust
may not be amended nor may compliance with any provisions hereunder be waived
except by an instrument in writing signed on behalf of the parties hereto and by
at least seventy-five percent (75%) of the Executives in the situation where,
prior to such amendment or waiver, no payment has been made by the Company
pursuant to Section 2.01(a)(i) that is then held by the Trustee.
Notwithstanding the foregoing, any such amendment or waiver may be made prior to
a Change in Control by written agreement of the parties hereto without obtaining
the consent of the Executives if such amendment or waiver does not adversely
affect the rights of the Executives hereunder. Except as provided in Sections
2.01(c),(d) and 4.02(b),(c), no amendment or waiver relating to this Trust may
be made (i) with respect to the amount of funds to be delivered by the Company
to the Trustee with respect to an Executive or by the Trustee to such Executive,
or the timing of such deliveries or (ii) which amends Section 6.01, unless such
Executive, in the case of clause (i) or, all
Executives in the case of clause (ii), agree in writing to such amendment or
waiver.
ARTICLE VII
GENERAL PROVISIONS
------------------
SECTION 7.01 Further Assurances. The Company shall, at any time and
------------------
from time to time, upon the reasonable request of the Trustee, execute and
deliver such further instruments and do such further acts as may be necessary or
proper to effectuate the purposes of this Trust.
SECTION 7.02 Certain Provisions Relating to this Trust. (a) This
-----------------------------------------
Trust sets forth the entire understanding of the parties with respect to the
subject matter hereof and supersedes any and all prior agreements, arrangements
and understandings relating thereto. This Trust shall be binding upon and inure
to the benefit of the parties and their respective successors and legal
representatives.
(b) If by the end of the eight-month period following the date
hereof, or such later date as the Company and the Trustee shall agree, counsel
is unable to deliver to the Company a favorable opinion that is satisfactory to
the Company, substantially to the effect that
(i) the Company will be treated as the owner of the Trust
under Section 677 of the Code and Section 1.677(a)-1(d) of the
regulations. Under Section 671, the Company must include all of
the income, deductions and credits against tax of the Trust in
computing its own taxable income and credits, and
(ii) the transfer of assets to the Trust will not constitute a
transfer of property for purposes of Section 83 of the Code or
Section 1.83-3(e) of the regulations, and
(iii) under Section 451 of the Code, amounts will be includible
in the gross income of the Executives only in the taxable year or
years in which such amounts are actually distributed or made
available by the Trustee,
the Trust shall immediately terminate and the amount of the Trust Corpus, less
all payments, expenses, taxes and other charges under this Trust Agreement, if
any, as of such date, shall be returned to the Company as soon as possible.
Upon termination of the Trust, the Executives shall have no rights under this
Trust Agreement.
(c) This Trust shall be governed by and construed in accordance
with the laws of the State of New York, other than and without reference to any
provisions of such laws regarding choice of laws or conflict of laws.
(d) In the event that any provision of this Trust or the
application thereof to any person or circumstances shall
be determined by a court of proper jurisdiction to be invalid or unenforceable
to any extent, the remainder of this Trust, or the application of such provision
to persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each provision of this Trust
shall be valid and enforced to the fullest extent permitted by law.
(e) The article and section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement.
SECTION 7.03 Alienation. The right of any Trust Beneficiary (as
----------
hereinafter defined) to any benefit or to any payment hereunder shall not be
subject to alienation or assignment.
SECTION 7.04 Arbitration. Any dispute between the Executives and
-----------
the Company or the Trustee as to the interpretation or application of the
provisions of this Trust and amounts payable hereunder may, at the election of
any party to such dispute (or, if more than one (1) Executive is such a party,
at the election of seventy-five percent (75%) of such Executives), be determined
by binding arbitration within the greater New York City metropolitan area or the
State of Connecticut in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court of competent jurisdiction. All fees and expenses of such
arbitration shall be paid by the Trustee and considered an expense of the Trust
under Section 5.01(g).
SECTION 7.05 Notices. Any notice, report, demand or waiver required
-------
or permitted hereunder shall be in writing and shall be given personally or by
prepaid registered or certified mail, return receipt requested, addressed as
follows:
If to the Company: Champion International Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
If to the Trustee: Connecticut National Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Employee Benefits
Administration - MSN 215
If to an Executive, to the address of such Executive as listed next to his name
on Exhibit I hereto.
A notice shall be deemed received upon the date of delivery if given
personally or, if given by mail, upon the receipt thereof. A change of address
may be given by any party to another by similar notice.
SECTION 7.06 Trust Beneficiaries. Each Executive is an intended
-------------------
beneficiary ("Trust Beneficiary") under this Trust, and as a Trust Beneficiary
shall be entitled to enforce all terms and provisions hereof with the same force
and effect as if such person had been a party hereto. The term Trust
Beneficiary shall, to the extent provided in the Agreements respecting a
deceased Executive, also mean the legal representative of the estate of such
deceased Executive and the surviving spouse of the deceased Executive or
beneficiary designated by such Executive in accordance with the terms of such
Agreements.
IN WITNESS WHEREOF, the parties have executed this Trust as of the
date first written above.
CHAMPION INTERNATIONAL CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and Chief Executive
Officer
CONNECTICUT NATIONAL BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Executive Vice-President
Exhibit I
AGREEMENTS BETWEEN CHAMPION INTERNATIONAL
CORPORATION AND CERTAIN EXECUTIVES
Agreement and
Name and Address Title Date of Agreement
----------------- ----- -----------------
Mr. L. ▇▇▇▇▇ ▇▇▇▇▇▇▇ Executive Vice President October 18, 1990:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ -▇▇▇▇▇▇▇▇▇*
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Senior Vice President and October 18, 1990:
One Champion Plaza General Counsel -Agreement*
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
▇▇. ▇▇▇▇ ▇. Childers Senior Vice President- November 16, 1995:
One Champion Plaza Organizational -Agreement
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Development and -Agreement Relating to Legal
Human Resources Expenses
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Senior Vice President September 18, 1997:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ -▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. Senior Vice President November 16, 1995:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ -▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
▇▇. ▇▇▇ ▇. ▇▇▇▇▇▇ Executive Vice President October 18, 1990:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ -▇▇▇▇▇▇▇▇▇**
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇ Vice President and October 18, 1990:
One Champion Plaza Secretary -Agreement*
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President and Managing November 16, 1995:
One Champion Plaza Director of -Agreement
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Champion Papel e -Agreement Relating to Legal
Celulose Ltda. Expenses
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇ Vice President and November 16, 1995:
One Champion Plaza Treasurer -Agreement
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Vice President -October 18, 1990:
One Champion Plaza Finance -Agreement*
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. Executive Vice President October 18, 1990:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ -▇▇▇▇▇▇▇▇▇*
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
Mr. Kenwood ▇. ▇▇▇▇▇▇▇ Vice Chairman and October 18, 1990:
One Champion Plaza Executive Officer -Agreement*
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President and October 18, 1990:
One Champion Plaza Controller -Agreement*
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Chairman and Chief September 18, 1997:
One Champion Plaza Executive Officer -Agreement
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ Executive Vice President October 18, 1990:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ -▇▇▇▇▇▇▇▇▇*
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -Agreement Relating to Legal
Expenses
_____________________
* As amended September 19, 1991
** As amended September 19, 1991 and November 21, 1996
2
AMENDMENT TO
TRUST AGREEMENT DATED AS OF
FEBRUARY 19, 1987 BETWEEN CHAMPION
INTERNATIONAL CORPORATION AND CONNECTICUT NATIONAL BANK
-------------------------------------------------------
This Amendment between Champion International Corporation, a New York
corporation (the "Company"), and Connecticut National Bank (the "Trustee") is
effective as of August 18, 1988 and amends the Trust Agreement dated as of
February 19, 1987 between the Company and the Trustee (the "Trust").
WHEREAS, the Company and the Trustee have entered into the Trust; and
WHEREAS, the Company and the Trustee wish to amend the Trust in order to
(1) ensure that it is in compliance with the rule against perpetuities and with
applicable restraints on alienation, and (2) clarify the circumstances in which
interest earned on the investment of Trust Corpus may be paid to the Executives;
and
WHEREAS. all of the Executives have agreed in writing to this Amendment as
required by Section 6.02 of the Trust;
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Section 4.01 of the Trust is hereby amended by adding a new
subsection (d) thereto, as follows:
"(d) Notwithstanding any provision of this Agreement, upon termination
of the Trust as provided in Section 6.01(c) the Trustee shall pay to the Company
all amounts held hereunder."
2. The second, third and fourth sentences of Section 4.02(a) of the
Trust are hereby amended in their entirety to read as follows:
"Each Payment Schedule also shall be delivered by the Company to
such Executive. The Payment Schedule shall include instructions
as to the amount of interest (if any) to accrue for the benefit
of an Executive, from the date on which the Trustee receives a
written request for payment signed by the Executive (or his
beneficiary or beneficiaries) as hereinafter provided until the
date on which such payment is made, in respect of such payment;
such instructions may be revised from time to time prior to the
occurrence of a Change in Control. The aggregate payment to be
made hereunder to an Executive by the Trustee shall not exceed
the aggregate amount delivered to the Trustee for the benefit of
such Executive, plus interest (if any) thereon as described in
the immediately preceding sentence, all as indicated in the
Payment Schedule applicable to such Executive."
3. Subsection (a) of Section 6.01 of the Trust is hereby amended to
delete the first nine words thereof (i.e., "Except as provided in Section
6.01(b) of this Agreement,") and to substitute the following therefor: "Except
as provided in Sections 6.01(b) and 6.01(c) of this Agreement,".
4. Subsection (b) of Section 6.01 of the Trust is hereby amended to
delete the first seven words thereof (i.e., "Notwithstanding any other
provision of this Agreement,") and to substitute the following therefor:
Notwithstanding any other provision of this Agreement except Section 6.01(c),".
5. Section 6.01 of the Trust is hereby amended by adding a new
subsection (c) thereto, as follows:
"(c) Notwithstanding any other provision of this
Agreement, this Trust shall terminate in all events and under all
circumstances not later than twenty-one years after the death of
the last survivor of the Executives who were included on Exhibit
I hereto at the time this Trust was executed, such Executives
being ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Kenwood ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. Promptly upon
termination of this Trust pursuant to this Section 6.01(c), the
Trustee shall pay to the Company all amounts held hereunder."
6. All capitalized terms used herein and not defined herein shall
have the meanings assigned to them in the Trust.
7. Except as amended hereby, all of the provisions of the Trust shall
continue in full force and effect without change.
2
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
CHAMPION INTERNATIONAL CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Chairman and Chief Executive Officer
CONNECTICUT NATIONAL BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Vice President
AGREED TO:
/s/ ▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------- ---------------------------
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇. ▇. ▇▇▇▇▇
------------------------- ---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ /s/ Kenwood ▇. ▇▇▇▇▇▇▇
------------------------- ---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Kenwood ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇
------------------------- ---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------- ---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
3
Exhibit G to Agreement between Champion International
Corporation and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated as of September 18, 1997
---------------------------------------------------------------
Exhibit G
---------
[subparagraph 16(d)]
Schedule of Amounts to be Deposited in Trust
Upon a Potential Change in Control*
--------------------------------------------
For Active Employees
--------------------
` Severance: 2 years termination payments; however, payments not to
cover the period, if any, after the last day of the month
next preceding the Executive's normal retirement date under
the Company's pension plan. Payments are based on highest
total of salary and annual bonus for any calendar year of
employment.
` Retirement: All allowances under subparagraph 9(b)(i) and (ii) hereof,
without regard to the offsets set forth in subparagraph
9(b)(iii) hereof, as if the Executive had continued in the
employ of the Company until the date on which he shall
attain the age of 62, in excess of the respective benefits
payable to the Executive and his spouse under the #001
Plan. If the Executive does not have a spouse at the time
as of which the lump sum calculation is being made, then
such calculation shall be made on the assumption that he
had a spouse, his own age, at such time.
` Disability: Same as for active employees for the 2 year termination
payment period (or balance thereof).
` Medical: Difference between active employee medical benefit and
retiree medical benefit for the 2 year termination payment
period (or balance thereof).
` Dental: Same as for active employees for the 2 year termination
payment period (or balance thereof).
` Options: Fund for those options referred to in sub-paragraph
8(a)(iii) hereof. "Spread" to be calculated on the basis of
the closing price
________________
* This Exhibit G does not reflect the possible reduction provided for in
subparagraph 16(d)(v) hereof.
of Common Shares of the Company as reported in "New York
Stock Exchange Composite Transactions" of the Eastern
Edition of The
---
Wall Street Journal for the trading day immediately after
-------------------
the Potential Change in Control.
` Contingently
Credited Shares: Fund for those contingently credited shares referred to in
subparagraph 8(a)(iii) hereof in an amount per share equal
to the closing price of Common Shares of the Company as
reported in "New York Stock Exchange Composite
Transactions" of the Eastern Edition of The Wall Street
---------------
Journal for the trading day immediately after the
-------
Potential Change in Control.
` Legal Expenses: An amount equal to twelve times the monthly base salary
paid at time of deposit into trust. For Retired Employees
` Retirement: If the Executive (or, in the event of his death, his spouse
or other Beneficiary) and Company agree, fund for unpaid
balance of excess retirement allowance and payments, if
any, and excess survivor retirement allowance and payments,
if any, as defined in subparagraph 9(d)(iii) hereof.
2