EXHIBIT 10(J)
CHANGE IN CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT by and between P.H. Glatfelter Company (the "Company"), and
________________________(the "Employee"), dated as of the ___ day of _________,
2005.
The Board of Directors of the Company (the "Board") has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company and its subsidiaries will have the continued dedication of the Employee,
notwithstanding the possibility, threat, or occurrence of a Change in Control
(as defined below) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Employee by virtue of the personal
uncertainties and risks created by a threatened or pending Change in Control, to
encourage the Employee's full attention and dedication to the Company currently
and in the event of any threatened or pending Change in Control, and to provide
the Employee with compensation arrangements upon a Change in Control that
provide the Employee with individual financial security and which are
competitive with those of other comparably situated companies and, in order to
accomplish these objectives, the Board has authorized the Company to enter into
this Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
1. EFFECTIVE DATE.
(a) The "Effective Date" shall be the first date during the "Change in
Control Period" (as defined in Section 1(b)) on which a Change in Control
occurs. Anything in this Agreement to the contrary notwithstanding, if the
Employee's employment with the Company is terminated prior to the date on which
a Change in Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has
taken steps reasonably calculated to effect a Change in Control or (ii)
otherwise arose in connection with or anticipation of a Change in Control, then
for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination.
(b) The "Change in Control Period" is the period commencing on the
date hereof and ending on the second December 31 immediately following such
date; provided, however, that commencing on the first December 31 immediately
following the date hereof, and on each annual anniversary of such December 31
(such December 31 and each annual anniversary thereof is hereinafter referred to
as the "Renewal Date"), the Change in Control Period shall be automatically
extended so as to terminate two years from such Renewal Date, unless at least 60
days prior to the Renewal Date the Company shall give notice that the Change in
Control Period shall not be so extended.
2. CHANGE IN CONTROL. For the purpose of this Agreement, a "Change in
Control" shall mean:
(a) The acquisition, directly or indirectly, other than from the
Company, by any person, entity or "group" (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), excluding, for this purpose, the Company, its subsidiaries, any
employee benefit plan of the Company or its subsidiaries, and any purchaser or
group of purchasers who are descendants of, or entities controlled by
descendants of, P.H. Glatfelter which acquires beneficial ownership of voting
securities of the Company) (a "Third Party") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors; or
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(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Directors") cease in any twelve (12) month period for any reason to
constitute at least a majority of the Board, provided that any person becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the Incumbent Directors who are directors at the time of such vote
shall be, for purposes of this Agreement, an Incumbent Director; or
(c) Consummation of (i) a reorganization, merger or consolidation, in
each case, with respect to which persons who were the shareholders of the
Company immediately prior to such reorganization, merger or consolidation (other
than the acquiror) do not, immediately thereafter, beneficially own more than
50% of the combined voting power of the reorganized, merged or consolidated
company's then outstanding voting securities entitled to vote generally in the
election of directors, or (ii) a liquidation or dissolution of the Company or
the sale of all or substantially all (but not less than 40% of the gross fair
market value) of the assets of the Company (whether such assets are held
directly or indirectly) to a Third Party.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Employee in
its employ, and the Employee hereby agrees to remain in the employ of the
Company, for the period commencing on the Effective Date and ending on the
second anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period,
(A) the Employee's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least
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commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 90-day period immediately
preceding the Effective Date and
(B) the Employee's services shall be performed at the
location where the Employee was employed immediately preceding the Effective
Date or any office or location less than forty (40) miles from such location.
(ii) During the Employment Period, excluding any periods of
vacation and sick leave to which the Employee is entitled, the Employee agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Employee hereunder, to use the Employee's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Employee to
(A) serve on corporate, civic or charitable boards or
committees,
(B) deliver lectures, fulfill speaking engagements or teach
at educational institutions, and
(C) manage personal investments, so long as such activities
do not significantly interfere with the performance of the Employee's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Employee prior to the Effective Date,
the continued conduct of such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Employee's
responsibilities to the Company.
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(iii) During the Employment Period, the Employee shall be subject
to, and shall comply with, the Company's policies regarding sexual harassment,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, confidentiality, non-disclosure, non-competition,
non-disparagement, substance abuse, and conflicts of interest and any other
written policy of the Company, the violation of which could result in
termination of employment.
(b) COMPENSATION.
(i) Base Salary. During the Employment Period, the Employee shall
receive a base salary ("Base Salary") at a monthly rate at least equal to the
highest monthly base salary paid or payable to the Employee by the Company
during the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Base Salary shall be
reviewed at least annually and shall be increased at any time and from time to
time as shall be substantially consistent with increases in base salary awarded
in the ordinary course of business to other key employees of the Company and its
subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions). Any increase in Base Salary shall not serve to limit or reduce any
other obligation to the Employee under this Agreement. Base Salary shall not be
reduced after any such increase.
(ii) Annual Bonus. In addition to Base Salary, the Employee shall
be awarded, for each fiscal year ending during the Employment Period, an annual
bonus (an "Annual Bonus"), either pursuant to the Company's Management Incentive
Plan or otherwise, in cash at least equal to the target bonus paid or payable to
the Employee under the Company's Management Incentive Plan for the last full
fiscal year preceding the fiscal year in which the Effective Date occurs.
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(iii) Incentive, Savings and Retirement Plans. In addition to
Base Salary and Annual Bonus payable as hereinabove provided, the Employee shall
be entitled to participate during the Employment Period in all incentive,
savings and retirement plans, practices, policies and programs applicable to
other key employees of the Company and its subsidiaries (including the 2005
Long-Term Incentive Plan). Such plans, practices, policies and programs, in the
aggregate, shall provide the Employee with compensation, benefits and reward
opportunities at least as favorable as the most favorable of such compensation,
benefits and reward opportunities provided by the Company to the Employee under
such plans, practices, policies and programs as in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Employee, as provided at any time thereafter with respect to other key
employees of the Company and its subsidiaries in the same salary grade (or, if
there are no salary grades, to other key employees of the Company and its
subsidiaries in comparable positions).
(iv) Welfare Benefit Plans. During the Employment Period, the
Employee and/or the Employee's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its subsidiaries
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs), at least as favorable as the most
favorable of such plans, practices, policies and programs of the Company and its
subsidiaries in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee and/or the
Employee's family, as in effect at any time thereafter with respect to other key
employees of the Company and its subsidiaries in the same salary grade (or, if
there are no
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salary grades, to other key employees of the Company and its subsidiaries in
comparable positions).
(v) Expenses. During the Employment Period, the Employee shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred by the Employee in accordance with the most favorable policies,
practices and procedures of the Company and its subsidiaries in effect at any
time during the 90-day period immediately preceding the Effective Date or, if
more favorable to the Employee, as in effect at any time thereafter with respect
to other key employees of the Company and its subsidiaries in the same salary
grade (or, if there are no salary grades, to other key employees of the Company
and its subsidiaries in comparable positions).
(vi) Fringe Benefits. During the Employment Period, the Employee
shall be entitled to fringe benefits in accordance with the most favorable
plans, practices, programs and policies of the Company and its subsidiaries in
effect at any time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Employee, as in effect at any time thereafter
with respect to other key employees of the Company and its subsidiaries in the
same salary grade (or, if there are no salary grades, to other key employees of
the Company and its subsidiaries in comparable positions).
(vii) Vacation. During the Employment Period, the Employee shall
be entitled to paid holidays and vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its subsidiaries as
in effect at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Employee, as in effect at any time
thereafter with respect to other key employees of the Company and its
subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).
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5. TERMINATION.
(a) DEATH OR DISABILITY. This Agreement shall terminate automatically
upon the Employee's death. If the Company determines in good faith that the
Disability of the Employee has occurred (pursuant to the definition of
"Disability" set forth below), it may give to the Employee written notice of its
intention to terminate, or its intention to cause its subsidiary to terminate,
the Employee's employment. In such event, the Employee's employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Employee (the "Disability Effective Date"), provided that, within 30 days
after such receipt, the Employee shall not have returned to full-time
performance of the Employee's duties. For purposes of this Agreement, a
"Disability" shall occur if the Employee has been unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment for at least 26 consecutive weeks and such impairment is
expected to result in death or to last for a continuous period of not less than
12 months. The Employee must be determined to suffer from a Disability by a
physician selected by the Company or its insurers and acceptable to the Employee
or the Employee's legal representative (such agreement as to acceptability not
to be withheld unreasonably). [Notwithstanding the foregoing, if the Employee is
determined to be disabled for purposes of the Company's Long Term Disability
Plan, if applicable, the Employee shall be considered Disabled for purposes of
this Agreement.]
(b) CAUSE. The Company may terminate the Employee's employment for
"Cause." For purposes of this Agreement, "Cause" means (i) an act or acts of
personal dishonesty taken by the Employee and intended to result in substantial
personal enrichment of the Employee at the expense of the Company, (ii) repeated
violations by the Employee of the Employee's obligations under Section 4(a) of
this Agreement which are demonstrably willful and deliberate on the Employee's
part and which are not remedied in a reasonable period of time
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after receipt of written notice from the Company, (iii) violation by the
Employee of any of the Company's policies, including, but not limited to,
policies regarding sexual harassment, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, confidentiality,
non-disclosure, non-competition, non-disparagement, substance abuse and
conflicts of interest and any other written policy of the Company, which
violation could result in the termination of the Employee's employment; or (iv)
the conviction of the Employee of a felony.
(c) GOOD REASON. The Employee's employment may be terminated by the
Employee for Good Reason. For purposes of this Agreement, "Good Reason" means
(i) the assignment to the Employee of any duties inconsistent in
any respect with the Employee's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement;
(iii) the Company's requiring the Employee to be based at any
office or location other than that described in Section 4(a)(i)(B) hereof,
except for travel reasonably required in the performance of the Employee's
responsibilities;
(iv) any purported termination by the Company of the Employee's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement;
provided that within fifteen (15) days after the occurrence of any of the events
listed in clauses (i), (ii), (iii), (iv) or (v) above the Employee delivers
written notice to the Company of his
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intention to terminate for Good Reason specifying in reasonable detail the facts
and circumstances claimed to give rise to the Employee's right to terminate his
employment for Good Reason and the Company shall not have cured such facts and
circumstances within thirty (30) days after delivery of such notice by the
Employee to the Company (unless the Company shall have waived its right to cure
by written notice to the Employee), and provided further that within fifteen
(15) days after the expiration of such thirty (30) day period or the date of
receipt of such waiver notice, if earlier, the Employee delivers a Notice of
Termination to the Company under Section 5(d) based on the same Good Reason
specified in the notice of intent to terminate delivered to the Company under
this Section 5(c).
For purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Employee shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for Cause or
by the Employee for Good Reason shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 14(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than fifteen (15) days after
the giving of such notice). The failure by the Employee to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason shall not waive any right of the Employee hereunder or preclude the
Employee from asserting such fact or circumstance in enforcing his rights
hereunder.
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(e) DATE OF TERMINATION. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date specified therein as
permitted by Section 5(d), as the case may be; provided, however, that (i) if
the Employee's employment is terminated by the Company or a subsidiary of the
Company other than for Cause or Disability, the Date of Termination shall be the
date on which the Company or such subsidiary notifies the Employee of such
termination and (ii) if the Employee's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Employee or the Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Employee's employment is terminated during the
Employment Period by reason of the Employee's death, this Agreement shall
terminate without further obligations to the Employee's legal representatives
under this Agreement, other than those obligations accrued or earned and vested
(if applicable) by the Employee as of the Date of Termination, including, for
this purpose (i) the Employee's full Base Salary through the Date of Termination
at the rate in effect on the Date of Termination, (ii) subject to Section 6(e),
any compensation previously deferred by the Employee (together with any accrued
interest thereon) and not yet paid by the Company and any accrued vacation pay
not yet paid by the Company (such amounts are hereinafter referred to as
"Accrued Obligations"). Subject to Section 6(e), all such Accrued Obligations
shall be paid to the Employee's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days after the Date of Termination.
(b) DISABILITY. If the Employee's employment is terminated during the
Employment Period by reason of the Employee's Disability, this Agreement shall
terminate without further obligations to the Employee, other than Accrued
Obligations. Subject to Section
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6(e), all such Accrued Obligations shall be paid
to the Employee in a lump sum in cash within 30 days after the Date of
Termination.
(c) TERMINATION FOR CAUSE; TERMINATION BY EMPLOYEE OTHER THAN FOR GOOD
REASON. If, during the Employment Period, the Employee's employment is
terminated for Cause or the Employee terminates employment other than for Good
Reason, this Agreement shall terminate without further obligations to the
Employee, other than Accrued Obligations. Subject to Section 6(e), all such
Accrued Obligations shall be paid to the Employee in a lump sum in cash within
30 days after the Date of Termination.
(d) TERMINATION FOR GOOD REASON; TERMINATION BY THE COMPANY OTHER THAN
FOR CAUSE, DISABILITY OR DEATH. If, during the Employment Period, the Company
terminates the Employee's employment other than for Cause, Disability, or death,
or if the Employee terminates his employment for Good Reason:
(i) subject to section 6(e), the Company shall pay to the
Employee the Accrued Obligations;
(ii) the Company shall pay as a severance benefit to the Employee
in a lump sum in cash (less applicable withholdings) the aggregate of the
following amounts:
(A) the product of the Annual Bonus paid to the Employee for
the last full fiscal year before the Date of Termination and a fraction, the
numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365; and
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(B) the product of (x) two [three in the case of the CEO]
and (y) the sum of (1) the Employee's annual Base Salary at the highest rate in
effect at any time during the period beginning 90 days before the Effective Date
through the Date of Termination and (2) the Annual Bonus paid to the Employee
for the last full fiscal year before the Date of Termination.
Payment of the Accrued Obligations (subject to section 6(e)), and
the lump amount described in this clause (ii) shall be made within 30 days after
the Date of Termination, provided however, that if the Employee is a "specified
employee" within the meaning of Section 409A(a)(2)(B)(i) of the Code, payment of
the lump sum amount described in clause (ii) of this Section 6(d) shall be made
within 30 days following the date which is six (6) months following the
Employee's separation from service following a Notice of Termination (or, if
earlier, the Employee's death) if the Company reasonably determines that the
aggregate amount of (1) payments under clauses (ii) and (iv) of this Section
6(d), (2) the portion, if any, of the welfare benefits described in clause (iii)
of this Section 6(d) provided on an after-tax basis including the cash payment,
if any, in lieu of providing certain welfare benefits described in clause (iii)
of this Section 6(d), (3) the Gross-up Payment, if any, under Section 9 of this
Agreement, and (4) payments, if any, under any other Company-provided separation
pay arrangement, represent the payment of non-qualified deferred compensation
subject to the requirements of Section 409A of the Code.
(iii) for a period of two years [three in the case of the CEO]
after the Date of Termination, or such longer period as any plan, program,
practice or policy may provide, the Company shall continue group medical,
prescription, dental, disability, salary continuance, group life, accidental
death and dismemberment and travel accident insurance benefits to the Employee
and/or the Employee's family at levels substantially equal to those
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which would have been provided to them in accordance with the Company's plans,
programs, practices and policies with respect to such benefits if the Employee's
employment had not been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company and its subsidiaries in effect
during the 90-day period immediately preceding the Date of Termination or, if
more favorable to the Employee, as in effect at any time thereafter with respect
to other key employees in the same salary grade (or, if there are no salary
grades, to other key employees of the Company and its subsidiaries in comparable
positions) and their families; provided, however, that the Company may, at its
election, pay to the Employee an amount in cash equal to the Company's cost of
providing any of such benefits for such period, in lieu of continuing to provide
the benefits. For purposes of eligibility for post-retirement benefits pursuant
to such plans, practices, programs and policies and for purposes of health
benefit continuation coverage pursuant to Section 601 et seq of ERISA ("COBRA"),
the Employee shall be considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such period.
(iv) in the event that the Employee has not, as of the Date of
Termination, earned sufficient vesting service to have earned (A) a
nonforfeitable interest in his matching contribution account under the P.H.
Glatfelter Company 401(k) Retirement Savings Plan (the "401(k) Plan"), and (B) a
nonforfeitable interest in his accrued benefit under the terms of the P.H.
Glatfelter Company Retirement Plan for Salaried Employees (the "Retirement
Plan") and, if applicable, the Restoration Pension (the "Restoration Pension")
or the Final Average Compensation Pension (the "FAC Pension") under the terms of
the P.H. Glatfelter Supplemental Early Retirement Plan and/or the Management
Incentive Plan Adjustment Supplement (the "MIP Adjustment Supplement") under the
P.H. Glatfelter Company Supplemental Management Pension Plan (or any successors
to those plans), the Company shall pay to the Employee a lump
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sum in cash (less applicable withholdings) in an amount equal to the sum of:
(A) the Employee's unvested matching contribution account
under the 401(k) Plan, valued as of the Date of Termination; and
(B) the actuarial present value of the Employee's unvested
normal retirement pension under the Retirement Plan and, as applicable, the
Restoration Pension, the FAC Pension and the MIP Adjustment Supplement, based on
the Employee's accrued benefit under those plans as of the Date of Termination,
as determined by the Company's actuary utilizing actuarial equivalency factors
for determining single sum amounts under the terms of the Retirement Plan.
Payment of the lump sum amount described in this clause (iii) shall be
made within 30 days after the Date of Termination, provided however, that if the
Employee is a "specified employee" within the meaning of Section
409A(a)(2)(B)(i) of the Code, payment shall be made within 30 days following the
date which is six (6) months following the Employee's separation from service
following a Notice of Termination (or, if earlier, the Employee's death) if the
Company reasonably determines that the aggregate amount of (1) payments under
clauses (ii) and (iv) of this Section 6(d), (2), the portion, if any, of the
welfare benefits described in clause (iii) of this Section 6(d) provided on an
after-tax basis including the cash payment, if any, in lieu of providing certain
welfare benefits described in clause (iii) of this Section 6(d), (3) the
Gross-Up Payment, if any, under Section 9 of this Agreement, and (4) payments,
if any, under any other Company-provided separation pay arrangement, represent
the payment of non-qualified deferred compensation subject to the requirements
of Section 409A of the Code.
In the event that the Employee should return to employment with the
Company and acquire a vested, nonforfeitable interest in any of the plans with
respect to which the
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payment in this clause (iv) is determined, the Employee shall return an amount
equal to the payment made under this subsection, within 30 days of demand by the
Company.
(v) If the Employee is, as of the Date of Termination, a
participant in the P.H. Glatfelter Company Supplemental Management Pension Plan
(the "SMPP") with at least five years of vesting service (as measured for
purposes of the Retirement Plan), then the Company shall be obligated to
contribute funds, to the extent it has not already done so, to the Trust serving
as a funding vehicle for that plan (the P.H. Glatfelter Company Nonqualified
Plans Master Trust) as follows:
(A) If the Employee is a participant in the MIP Adjustment
Supplement under the SMPP, the Company shall fund the Trust with sufficient
assets to pay the Employee's accrued benefit under the MIP Adjustment Supplement
within five days of the Date of Termination.
(B) If the Employee is eligible to elect to receive the
Early Retirement Supplement under the SMPP, the Company shall fund the Trust
with sufficient assets to pay the Employee's accrued benefit under the Early
Retirement Supplement, within five days following the later to occur of (1) the
Date of Termination or (2) the benefit commencement date with respect to the
Employee's Early Retirement Supplement.
(vi) The Company shall have no obligation under this Section 6(d)
unless the Employee executes and delivers to the Company a valid general release
agreement in a form reasonably acceptable to the Company in which the Employee
releases the Company from any and all possible liability, including, without
limitation, any and all liability based on the Employee's employment or the
termination of his employment; provided, however, that nothing in such release
shall include any release of the Company's indemnification obligations to or for
the benefit of the Employee.
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(vii) Notwithstanding the foregoing, any payment to an Employee
under this Section 6(d) or Section 9 of this Agreement which is determined by
the Company to constitute the payment of non-qualified deferred compensation as
defined in Section 409A of the Code shall be paid in accordance with the
requirements and limitations of Section 409A of the Code and the regulatory
guidance thereunder.
(e) PREVIOUSLY DEFERRED COMPENSATION. If the Employee has previously
deferred compensation under a plan or arrangement not described above which has
not yet been paid by the Company, the Employee's right to payment of such
compensation shall be considered vested and nonforfeitable as of the Date of
Termination. Such deferred compensation shall be paid to the Employee in
accordance with the terms of the deferred compensation plan or arrangement
subject to the applicable requirements of Code Section 409A.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Employee's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by the
Company or its subsidiaries and for which the Employee may qualify, nor shall
anything herein limit or otherwise affect such rights as the Employee may have
under any stock option, restricted stock, restricted stock unit, performance
share or other agreements with the Company or any of its subsidiaries. Amounts
which are vested benefits or which the Employee is otherwise entitled to receive
under any plan, policy, practice or program of the Company or any of its
subsidiaries at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program.
8. FULL SETTLEMENT. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Employee or
others. In no event shall the Employee be
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obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Employee under any of the provisions of this
Agreement.
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Employee of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether a Gross-Up Payment
is required and the amount of such Gross-Up Payment, shall be made by a firm of
independent accountants selected by the Audit Committee of the Board, which firm
may, if consistent with applicable securities laws, be the firm of independent
accountants engaged to audit the Company's financial statements (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and the Employee within 15 business days after the Date of Termination or such
earlier time as is requested by the Company. The initial Gross-Up Payment, if
any, as determined pursuant to this Section 9(b), shall be paid to the Employee
within five days of the
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receipt of the Accounting Firm's determination (or, if later, within five (5)
business days after the earliest date payment can be made consistent with
Section 409A of the Code with respect to a "specified person" described in Code
section 409A(a)(2)(B)(i)). If the Accounting Firm determines that no Excise Tax
is payable by the Employee, it shall furnish the Employee with an opinion that
he has substantial authority not to report any Excise Tax on his federal income
tax return. Any determination by the Accounting Firm shall be binding upon the
Company and the Employee. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that a Gross-Up Payment which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 9(c) and the Employee
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Employee.
(c) The Employee shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Employee knows of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Employee shall not pay such claim
prior to the expiration of the thirty-day period following the date on which it
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies
the Employee in writing prior to the expiration of such period that it desires
to contest such claim, the Employee shall:
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(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim,
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, if in compliance
with applicable securities laws, either direct the Employee to pay the tax
claimed and ▇▇▇ for a refund or contest the claim in any permissible manner, and
the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Employee to pay such claim and ▇▇▇ for a refund, the Company
shall advance the amount of such payment to the
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Employee, on an interest-free basis, and shall indemnify and hold the Employee
harmless, on an after-tax basis, from any Excise Tax or income tax, including
interest or penalties with respect thereto, imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Employee with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Employee shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the
Company pursuant to Section 9(c), the Employee becomes entitled to receive any
refund with respect to such claim, the Employee shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 9(c), a determination is made that
the Employee shall not be entitled to any refund with respect to such claim and
the Company does not notify the Employee in writing of its intent to contest
such denial of refund prior to the expiration of thirty days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
10. CONFIDENTIAL INFORMATION. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries, and their
respective businesses, which shall
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have been obtained by the Employee during the Employee's employment by the
Company or any of its subsidiaries and which shall not be or become public
knowledge (other than by acts by the Employee or his representatives in
violation of this Agreement). After termination of the Employee's employment
with the Company, the Employee shall not, without the prior written consent of
the Company, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 10 constitute a basis for
deferring or withholding any amounts otherwise payable to the Employee under
this Agreement.
11. SUCCESSORS.
(a) This Agreement is personal to the Employee and without the prior
written consent of the Company shall not be assignable by the Employee otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Employee's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company (whether such
assets are held directly or indirectly) to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
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12. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or any breach hereof, shall be settled in accordance with the
terms of this Section 12. All claims by the Employee for benefits under this
Agreement shall first be directed to and determined by the Board and shall be in
writing. Any denial by the Board of a claim for benefits under this Agreement
shall be delivered to the Employee in writing within thirty (30) days and shall
set forth the specific reasons for the denial and the specific provisions of
this Agreement relied upon. The Board shall afford a reasonable opportunity to
the Employee for a review of the decision denying a claim and shall further
allow the Employee to appeal to the Board a decision of the Board within thirty
(30) days after notification by the Board that the Employee's claim has been
denied. Any further dispute, controversy or claim arising out of or relating to
this Agreement, or the interpretation or alleged breach hereof, shall be settled
by arbitration in accordance with Employment Dispute Resolution Rules of the
American Arbitration Association (or such other rules as may be agreed upon by
the Employee and the Company). The place of the arbitration shall be
Philadelphia, Pennsylvania and judgment upon the award rendered by the
arbitrator(s) may be entered by any court having jurisdiction thereof. Such an
award shall be binding and conclusive upon the parties hereto.
13. LEGAL EXPENSES. The Company agrees to reimburse the Employee, to the
full extent permitted by law, for all costs and expenses (including without
limitation reasonable attorneys' fees) which the Employee may reasonably incur
as a result of any contest of the validity or enforceability of, or the
Company's liability under, any provision of this Agreement, plus in each case
interest at the applicable Federal rate provided for in Section 7872(f)(2) of
the Code; provided, however, that such payment shall be made only if the
Employee prevails on at least one material issue.
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14. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) Any notices required or permitted to be given hereunder shall be
sufficient if in writing, and if delivered by hand, or sent by registered or
certified mail, return receipt requested, or overnight delivery using a national
courier service, or by facsimile or electronic transmission, with confirmation
as to receipt, to the Company at the address set forth below and to the Employee
at the address set forth in the personnel records of the Company, or such other
address as either party may from time to time designate in writing to the other,
and shall be deemed given as of the date of the delivery or mailing:
P.H. ▇▇▇▇▇▇▇▇▇▇ Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
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(e) The Employee's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision hereof.
(f) This Agreement contains the entire understanding of the Company
and the Employee with respect to the subject matter hereof and supersedes all
other agreements or understandings between the Company and the Employee relating
to the subject matter hereof, but only during the Employment Period.
IN WITNESS WHEREOF, the Employee has hereunto set his hand and, pursuant to
the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name and on its behalf, all as of the day and
year first above written.
----------------------------------------
[Employee]
P.H. ▇▇▇▇▇▇▇▇▇▇ COMPANY
By
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