Exhibit 10.2
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December 13, 1996
Mr. Michael T. Riordan
Fort Howard Corporation
1919 South Broadway
Green Bay, WI 54304
Dear Mr. Riordan:
WHEREAS, Fort Howard Corporation (the "Company") considers it
essential to its best interests and the best interests of its stockholders to
foster the continuous employment of its key management personnel and,
accordingly, the Company desires to continue to employ Michael T. Riordan
("you" or the "Executive"), upon the terms and conditions hereinafter set
forth;
WHEREAS, the Executive desires to continue to be employed by the
Company, upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the covenants and
agreements hereunder set forth, the parties hereto agree as follows:
1. TERM OF AGREEMENT. This Agreement shall commence as of
January 1, 1997 and shall continue in effect until December 31, 2001;
PROVIDED, HOWEVER, that the term of this Agreement shall automatically be
extended without further action by either party for additional one-year
periods unless, not later than six months prior to the end of the then
effective term, either the Company or the Executive shall have given written
notice that such party does not intend to extend this Agreement. The duration
of the initial term and any subsequent extension is hereinafter referred to as
the "Term."
2. TERMS OF EMPLOYMENT. During the Term, you agree to be a full-
time employee of the Company serving in the position of President and Chief
Executive Officer and to devote substantially all of your working time and
attention to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities associated with your position as
President and Chief Executive Officer of the Company, to use your best efforts
to perform faithfully and efficiently such responsibilities. In addition, you
agree to serve in such other capacities or offices to which you may be
assigned, appointed or elected from time to time by the Board of Directors of
the Company (the "Board"). Nothing herein shall prohibit you from devoting
your time to civic and community activities or managing personal investments,
as long as the foregoing do not interfere with the performance of your duties
hereunder.
3. COMPENSATION. (i) As compensation for your services under
this Agreement, you shall be entitled to receive a base salary plus an annual
incentive compensation bonus ("bonus"), each to be agreed upon from time to
time between you and the Company acting in good faith; PROVIDED, HOWEVER, that
your base salary shall at no time be less than your base salary as of the date
hereof. In addition, you shall be entitled to participate in any additional
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bonus arrangement (an "additional bonus arrangement") which may be agreed upon
from time to time between you and the Company acting in good faith. The
Company shall have the right to reduce prospectively your base salary, bonus
and participation in any additional bonus arrangement, as in effect from time
to time, pursuant to an across-the-board compensation reduction or deferral
program similarly affecting all executive officers of the Company.
(ii) In addition to compensation provided for in Subsection (i) of
this Section 3, the Company agrees to continue in effect (A) any compensation
or benefit plan in which you participate as of the date hereof which is
material to your total compensation, or any substitute plan adopted in place
of any such plan, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan which shall include the bonus and any
additional bonus arrangement) has been made with respect to such plan;
PROVIDED, HOWEVER, that no substitute plan or equitable arrangement shall be
adopted with respect to the Fort Howard Profit Sharing Plan or the Fort Howard
Supplemental Retirement Plan except pursuant to a mutual agreement between you
and the Board, and (B) your ability to participate therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the opportunities provided and the level of your participation
relative to other participants, than exists on the date hereof.
(iii) The Company shall reimburse you for all reasonable travel,
entertainment and other business expenses incurred by you in the performance
of your responsibilities under this Agreement promptly upon receipt of written
substantiation of such expenses. You shall also be paid all additional
amounts necessary to discharge all federal and state tax liabilities incurred
by you that are attributable to all deemed compensation arising as a
consequence of your personal use of property owned or leased by the Company,
including federal and state taxes assessed against such additional
compensation.
4. TERMINATION OF EMPLOYMENT. Your employment may be terminated
by either the Company or you by giving a Notice of Termination, as defined in
Subsection (iv) of this Section 4. If your employment should terminate during
the Term, your entitlement to benefits shall be determined in accordance with
Section 5 hereof.
(i) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you are, or are reasonably likely to become,
unable to perform your duties hereunder for more than six consecutive months
or six months in aggregate during any twelve-month period, your employment may
be terminated for "Disability."
(ii) CAUSE. Termination of your employment for "Cause" shall mean
termination upon (A) the willful and continued failure by you to substantially
perform your duties with the Company in your established position on a full-
time basis (other than any such failure resulting from your Disability and
other than any such actual or anticipated failure after the issuance of a
Notice of Termination by you for Good Reason as defined in Subsections 4(iv)
and 4(iii), respectively) after a written demand for substantial performance
is delivered to you by the Board, which demand specifically identifies the
manner in which the Board believes that you have not substantially performed
your duties, (B) the willful engaging by you in conduct which is significantly
injurious to the Company, monetarily or otherwise, after written demand for
cessation of such conduct is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have
engaged in such conduct and the injury to the Company, (C) your conviction of
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a crime involving moral turpitude, (D) your abuse of illegal drugs or other
controlled substances or your habitual intoxication or (E) the breach of any
of your material obligations hereunder. For purposes of this Subsection, no
act, or failure to act, on your part shall be deemed "willful" unless
knowingly done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best interest of the
Company.
(iii) GOOD REASON. For purposes of this Agreement, "Good Reason"
shall mean the occurrence, without your express written consent, of any of the
following circumstances unless such circumstances are fully corrected prior to
the Date of Termination specified in the Notice of Termination, as such terms
are defined in Subsections (v) and (iv) of this Section 4, respectively, given
in respect thereof:
(A) the assignment to you of any duties inconsistent with your
status as an executive officer of the Company or your removal from any
office specified in Section 2 hereof;
(B) any reduction in your base salary as in effect from time to
time, except for across-the-board salary reductions similarly affecting
all executive officers;
(C) the failure by the Company to pay or provide to you within
seven (7) days of your written demand any amount of base salary or bonus
or any benefit which is due, owing and payable to you pursuant to the
terms of any applicable arrangement or policy or pursuant to the terms
hereof, except pursuant to an across-the-board compensation deferral
similarly affecting all executive officers, or to pay to you any portion
of an installment of deferred compensation due under any deferred
compensation program of the Company;
(D) except in the case of across-the-board reductions or
eliminations similarly affecting all executive officers or as otherwise
contemplated under Section 3 hereof, the failure by the Company to (I)
continue in effect any compensation plan in which you participate which
is material to your total compensation, including but not limited to the
Company's plans currently in effect or hereafter adopted, and any plans
adopted in substitution therefor, (II) continue to provide you with
benefits substantially similar, in aggregate, to the Company's life
insurance, medical, dental, health, accident or disability plans in which
you are participating at the date of this Agreement or (III) continue to
provide you with the number of paid vacation days to which you are
eligible on the basis of years of service with the Company in accordance
with the Company's normal vacation policy in effect at the date of this
Agreement;
(E) the relocation of the Company's principal executive office to
a location more than fifty miles distant from its current location, or
the Company's requiring you to perform services at a location that would
be a violation of the terms of Section 6 hereof;
(F) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 7 hereof; or
(G) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the requirements
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of Subsection (iv) of this Section 4, and for purposes of this Agreement,
no such purported termination shall be effective.
Your continued employment with the Company shall not constitute
consent to, or a waiver of rights with respect to, any circumstances
constituting Good Reason hereunder.
(iv) NOTICE OF TERMINATION. Any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 8 hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.
(v) DATE OF TERMINATION, ETC. "Date of Termination" shall mean
(A) if your employment is terminated for Disability pursuant to Subsection (i)
of this Section 4, thirty (30) days after Notice of Termination is given
(PROVIDED that you shall not have returned to the full-time performance of
your duties during such thirty (30) day period), (B) if your employment is
terminated by reason of your death, the date of your death, and (C) if your
employment is terminated by the Company for Cause, by you for Good Reason or
by either party for any other reason (other than Disability or death), the
date specified in the Notice of Termination (which, in the case of a
termination by the Company for Cause shall not be less than fifteen (15) days,
and in the case of a termination by you for Good Reason, shall not be less
than thirty (30) nor more than sixty (60) days, respectively, from the date
such Notice of Termination is given).
5. COMPENSATION UPON TERMINATION OR DURING DISABILITY. Upon
termination of your employment with the Company during the Term, you shall be
entitled to the following benefits:
(i) If your employment is terminated for Disability, you shall
receive until the third anniversary of the Date of Termination all
compensation payable to you under the Company's disability and medical
plans and programs, as in effect on the date of such termination plus an
additional payment from the Company (if necessary) such that the
aggregate amount received by you in the nature of salary continuation
from all sources equals your base salary at the date in effect on the
date of such termination. After the third anniversary of the Date of
Termination, your benefits shall be determined under the Company's
retirement, insurance and other compensation programs then in effect in
accordance with the terms of such programs, PROVIDED that such terms
shall not be less advantageous to you than the terms of such programs
in effect as of the date hereof. The obligations of the Company under
this Section 5(i) shall be terminated by your death after becoming
Disabled and prior to the third anniversary of the Date of Termination.
(ii) (A) If your employment shall be terminated (I) by the Company
for Cause, or (II) by you other than for Good Reason, the Company shall
pay you your full base salary through the Date of Termination, at the
rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation or benefit plans
of the Company (excluding, in the case of termination by the Company for
Cause, any bonus and vacation pay and any entitlement under any
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additional bonus arrangement otherwise payable to you pursuant to the
terms of the applicable plan or program of the Company, and in the case
of your voluntary termination other than for Good Reason, excluding any
bonus pay and any entitlement under any additional bonus arrangement) at
the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(B) If your employment shall be terminated by reason of your
death, the Company shall pay your estate your full base salary through
the Date of Termination and for a period of 12 whole calendar months
thereafter plus, if the Date of Termination shall not occur on the first
day of a calendar month, the balance of the month in which the Date of
Termination occurs, at the rate in effect at the time of your death, plus
any accrued bonus or entitlement under any additional bonus arrangement
prorated for the portion of the bonus measurement period occurring prior
to the date of your death, plus all other amounts to which you are
entitled under any compensation or benefit plans of the Company at the
date of your death, and the Company shall have no further obligation to
you, your beneficiaries or your estate under this Agreement.
(iii) If your employment shall be terminated (a) by the Company
other than for Cause or Disability or (b) by you for Good Reason, then
you shall be entitled to the benefits provided below:
(A) the Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given (or, if greater, at the rate in effect 30 days
prior to the time Notice of Termination is given), plus all other
amounts which you have accrued under any compensation or benefit
plans of the Company, including, without limitation, any bonus
pursuant to the Company's Management Incentive Plan and any
entitlement under any additional bonus arrangement accrued through
the Date of Termination for the portion of the applicable bonus
measurement period occurring prior to the Date of Termination, at
the time such payments are due, except as otherwise provided below;
(B) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay to you
your full base salary at the rate in effect immediately prior to the
time Notice of Termination is given (or, if greater, at the rate in
effect 30 days prior to the time Notice of Termination is given),
payable periodically in accordance with past payroll practices,
until the third anniversary of the Date of Termination;
(C) in lieu of any further bonus payments and any entitlements
under any additional bonus arrangement for periods subsequent to the
Date of Termination, the Company shall pay to you a bonus payable in
each January following the Date of Termination in respect of the
previous calendar year equal to the quotient obtained by aggregating
the bonuses received by you pursuant to the Company's Management
Incentive Plan and any additional bonus arrangement in respect of
the three calendar years ending prior to the Date of Termination
(the "Bonus Period") and dividing such sum by three, with each such
January bonus payment adjusted to reflect any changes in the
Consumer Price Index since the midpoint of the period commencing on
the first day of the Bonus Period and ending on the Date of
Termination. Such bonus shall be paid in respect of each calendar
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year or portion thereof ending after the Date of Termination until
the third anniversary of the Date of Termination, and shall be
prorated for partial years, if any, including, without limitation,
the portion of the calendar year occurring after the Date of
Termination and the final calendar year in respect of which any such
January bonus is payable pursuant to this Section 5(iii)(C);
(D) until the third anniversary of the Date of Termination,
you will continue to participate in all other compensation and
benefit plans (including perquisites) in which you were
participating immediately prior to the time Notice of Termination is
given, or comparable plans substituted therefor, including, without
limitation, the Fort Howard Supplemental Retirement Plan and the
Supplemental Retirement Agreement between you and the Company;
PROVIDED, HOWEVER, that if you are ineligible (E.G., by operation of
law or the terms of the applicable plan) to continue to participate
in any such plan the Company shall provide you with a comparable
level of compensation or benefits;
(E) The Company shall pay to you all reasonable legal fees and
expenses incurred by you as a result of such termination (including
all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement), except any such
fees or expenses incurred by you in seeking to enforce a claim which
is determined by the arbitrator, pursuant to Section 11, to have
been frivolous in nature or not brought or pursued in good faith;
(F) In order to assist you in obtaining new employment, the
Company shall provide you with outplacement services, including
access to an office and secretarial assistance for a period not to
exceed 12 months and at a cost not to exceed $12,000; and
(G) If you should die after the termination of employment and
prior to the end of the period of payment provided for in paragraphs
(B), (C) and (D) hereof, the Company shall pay your estate any
amounts that are or become payable pursuant to any of such
paragraphs until the end of the Term.
(iv) You shall not be required to mitigate the amount of any payment
provided for in subsection (iii) of this Section 5 by seeking other
employment, and the amount of any payment provided for in this Section 5
shall not be reduced by any compensation earned by you as a result of
your employment by another employer; PROVIDED, HOWEVER, that any medical
or dental welfare benefit otherwise receivable by you pursuant to
Subsection 5(iii)(D) shall be reduced to the extent a comparable benefit
of the same type would normally be made available to you during the
applicable period of benefit continuation set forth in such Subsection,
and any such benefit actually received by you shall be reported to
the Company.
(v) In addition to all other amounts payable to you under this
Section 5, you shall be entitled to receive all benefits payable to you
under any plan or agreement of the Company relating to retirement
benefits, including, without limitation, the Supplemental Retirement Plan
and the Supplemental Retirement Agreement between you and the Company.
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6. LOCATION. Your services shall be performed at the Company's
current headquarters location, or at such other place within a fifty-mile
radius of such current location as the Board may from time to time deem
appropriate. Notwithstanding the foregoing, you shall be required to travel
to the extent necessary to the performance of your responsibilities under this
Agreement. You shall use Company owned or leased aircraft for purposes of
such travel whenever practicable, and the Company recognizes that it may from
time to time be necessary, appropriate, desirable or convenient for you to be
accompanied in such travel by persons who are not employees of the Company,
including your spouse and other members of your family.
7. SUCCESSORS; BINDING AGREEMENT. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume 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. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall entitle you to compensation from the Company in the same amount and on
the same terms as you would be entitled to hereunder if you were to terminate
your employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, the "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.
8. NOTICES. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed
to the respective addresses set forth on the first page of this Agreement,
PROVIDED that all notices to the Company shall be directed to the attention of
the Board with copies to the Secretary of the Company, or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
9. NONCOMPETITION. (i) Until the Date of Termination, you agree
not to enter into competitive endeavors and not to undertake any commercial
activity which is contrary to the best interests of the Company or its
affiliates, including becoming an employee, owner (except for passive
investments of not more than one percent of the outstanding shares of, or any
other equity interest in, any company or entity listed or traded on a national
securities exchange or in an over-the-counter securities market), officer,
agent or director of (a) any firm or person engaged in the operation of a
business engaged in the acquisition of industrial businesses or (b) any firm
or person which (i) directly competes with a line or lines of business of the
Company or any subsidiary of the Company accounting for ten percent (10%) or
more of the Company's or such subsidiary's gross sales, revenues or earnings
before taxes, (ii) derives ten percent (10%) or more of such firm's or
person's gross sales, revenues or earnings before taxes from a line or lines
of business which directly competes with the Company or any subsidiary of the
Company or (iii) is a distributor of any of the products of the Company or any
subsidiary of the Company, where the distribution of such products accounts
for ten percent (10%) or more of such firm's or person's gross sales, revenues
or earnings before taxes. Notwithstanding any provision of this Agreement to
the contrary, you agree that your breach of the provisions of this
Section 9(i) shall permit the Company to terminate your employment for Cause.
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(ii) After the Date of Termination and during any period that you
continue to be paid your salary (including any other payments in lieu of
salary) pursuant to Section 5 hereof, you agree not to become an employee,
owner (except for passive investments of not more than one percent of the
outstanding shares of, or any other equity interest in, any company or entity
listed or traded on a national securities exchange or in an over-the-counter
securities market), officer, agent or director of any firm or person which (i)
directly competes with a business of the Company or any subsidiary of the
Company producing any class of products accounting for ten percent (10%) or
more of the Company's or such subsidiary's gross sales, revenues or earnings
before taxes or (ii) is a distributor of any of the products of the Company or
any subsidiary of the Company, where the distribution of such products
accounts for ten percent (10%) or more of such firm's or person's gross sales,
revenues or earnings before taxes. During the period of payment provided in
Section 5 hereof, you will be available, consistent with other
responsibilities that you may then have, to answer questions and provide
advice to the Company. Notwithstanding anything in this Agreement to the
contrary, you agree that, from and after any breach by you of the provisions
of this Section 9(ii), the Company shall cease to have any obligations to make
payments to you under this Agreement.
(iii) You acknowledge and agree that damages for breach of the
covenant not to compete in this Section 9 will be difficult to determine and
will not afford a full and adequate remedy, and therefore agree that the
Company, in addition to any other remedies that may otherwise be available for
a breach of this Section 9 (including, without limitation, as set forth in
Section 9(ii) above, by seeking actual damages pursuant to Section 11 hereof
and pursuant to awards under the Company's 1995 Stock Incentive Plan), may
seek specific enforcement of the covenant not to compete in any court of
competent jurisdiction, including, without limitation, by the issuance of a
temporary or permanent injunction, without the necessity of a bond. You and
the Company agree that the provisions of this covenant not to compete are
reasonable. However, should any court or arbitrator determine that any
provision of this covenant not to compete is unreasonable, either in period of
time, geographical area, or otherwise, the parties agree that this covenant
not to compete should be interpreted and enforced to the maximum extent which
such court or arbitrator deems reasonable.
(iv) The provisions of this Section 9 shall supersede the covenants
restricting competition by the Executive set forth in (i) Article VII of the
Company's Management Equity Plan and any applicable agreement entered into
between the Company and the Executive pursuant thereto and (ii) Article IX of
the Amended and Restated Management Equity Participation Agreement, dated as
of August 8, 1988, between the Company and the other parties signatory
thereto, as amended and supplemented from time to time.
10. CONFIDENTIALITY. (i) You shall not knowingly disclose or
reveal to any unauthorized person, during or after the Term, any trade secret
or other confidential information relating to the Company or any of its
affiliates, or any of their respective businesses or principals, such as,
without limitation, dealers' or distributors' lists and manufacturing
processes, and you confirm that such information is the exclusive property of
the Company and its affiliates. You agree to hold as the Company's property
all memoranda, books, papers, letters and other data, and all copies thereof
or therefrom, in any way relating to the business of the Company and its
affiliates, whether made by you or otherwise coming into your possession and,
on termination of your employment, or on demand of the Company at any time, to
deliver the same to the Company.
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(ii) Any ideas, processes, characters, productions, schemes,
titles, names, formats, adaptations, plots, slogans, catchwords, incidents,
treatment, and dialogue which you may conceive, create, organize, prepare or
produce during the period of your employment and which ideas, processes, etc.
relate to any of the businesses of the Company, shall be owned by the Company
and its affiliates whether or not you should in fact execute an assignment
thereof to the Company, but you agree to execute any assignment thereof or
other instrument or document which may be reasonably necessary to protect and
secure such rights to the Company.
(iii) You shall comply in all respects with the terms of the
Employees' Agreement with regard to Proprietary Information Including
Inventions, Patents, Copyrights, Trade Secrets and Confidential Information
between you and the Company.
(iv) Notwithstanding anything in this Agreement to the contrary,
you agree that from and after any breach by you of the provisions of this
Section 10 during any period of payment provided in Section 5 hereof, the
Company shall cease to have any obligations to make payments to you under this
Agreement.
11. ARBITRATION. (i) Except as contemplated by Section 9(iii) and
Section 11(iii) hereof, any dispute or controversy arising under or in
connection with this Agreement that cannot be mutually resolved by the parties
to this Agreement and their respective advisors and representatives shall be
settled exclusively by arbitration in New York, New York before one arbitrator
of exemplary qualifications and stature, who shall be selected jointly by an
individual to be designated by the Company and an individual to be selected by
you, or if such two individuals cannot agree on the selection of the
arbitrator, who shall be selected by the American Arbitration Association.
(ii) The parties agree to use their best efforts to cause (A) the
two applicable individuals set forth in the preceding Section 11(i), or, if
applicable, the American Arbitration Association, to appoint the arbitrator
within 30 days of the date that a party hereto, after the issuance of a Notice
of Termination hereunder, notifies the other party that a dispute or
controversy exists that necessitates the appointment of an arbitrator, and (B)
any arbitration hearing to be held within 30 days of the date of selection of
the arbitrator and, as a condition to his or her selection, such arbitrator
must consent to be available for a hearing at such time.
(iii) Judgment may be entered on the arbitrator's award in any court
having jurisdiction; PROVIDED, HOWEVER, that you shall be entitled to seek
specific performance of your right to be paid and to participate in benefit
programs until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement. The Company
and you hereby agree that the arbitrator shall be empowered to enter an
equitable decree mandating specific enforcement of the terms of this
Agreement.
(iv) The Company shall bear all expenses of the arbitrator incurred
in any arbitration hereunder. The Company shall also pay your reasonable
legal fees in connection with such arbitration as you incur them; PROVIDED
that in the event you seek arbitration and the arbitrator determines that your
claims are frivolous in nature or were not brought or pursued in good faith,
you will promptly return to the Company all amounts paid by the Company for
such fees.
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12. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by you and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth in
this Agreement. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York. Any
payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law. The obligations of
the Company under Section 5 and your obligations under Sections 9 and 10
hereof shall survive the expiration of the Term of this Agreement.
13. VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
14. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
15. ENTIRE AGREEMENT. This Agreement and the other agreements
expressly referred to herein contain the entire agreement by the parties with
respect to the matters covered herein and supersede any prior agreement
(including, without limitation, any prior employment agreement), condition,
practice, custom, usage and obligation with respect to such matters insofar as
any such prior agreement, condition, practice, custom, usage or obligation
might have given rise to any enforceable right.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our agreement on this subject.
Sincerely,
FORT HOWARD CORPORATION
By: /s/ Donald H. DeMeuse
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Name: Donald H. DeMeuse
Title: Chairman of the Board
Agreed to this 17th day
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of December, 1996
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By /s/ Michael T. Riordan
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Michael T. Riordan
December 13, 1996
Ms. Kathleen J. Hempel
Fort Howard Corporation
1919 South Broadway
Green Bay, WI 54304
Dear Ms. Hempel:
WHEREAS, Fort Howard Corporation (the "Company") considers it
essential to its best interests and the best interests of its stockholders to
foster the continuous employment of its key management personnel and,
accordingly, the Company desires to continue to employ Kathleen J. Hempel
("you" or the "Executive"), upon the terms and conditions hereinafter set
forth;
WHEREAS, the Executive desires to continue to be employed by the
Company, upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the covenants and
agreements hereunder set forth, the parties hereto agree as follows:
1. TERM OF AGREEMENT. This Agreement shall commence as of
January 1, 1997 and shall continue in effect until December 31, 1999;
PROVIDED, HOWEVER, that the term of this Agreement shall automatically be
extended without further action by either party for additional one-year
periods unless, not later than six months prior to the end of the then
effective term, either the Company or the Executive shall have given written
notice that such party does not intend to extend this Agreement. The duration
of the initial term and any subsequent extension is hereinafter referred to as
the "Term."
2. TERMS OF EMPLOYMENT. During the Term, you agree to be a full-
time employee of the Company serving in the position of Vice Chairman and
Chief Financial Officer and to devote substantially all of your working time
and attention to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities associated with your position as
Vice Chairman and Chief Financial Officer of the Company, to use your best
efforts to perform faithfully and efficiently such responsibilities. In
addition, you agree to serve in such other capacities or offices to which you
may be assigned, appointed or elected from time to time by the Board of
Directors of the Company (the "Board"). Nothing herein shall prohibit you
from devoting your time to civic and community activities or managing personal
investments, as long as the foregoing do not interfere with the performance of
your duties hereunder.
3. COMPENSATION. (i) As compensation for your services under
this Agreement, you shall be entitled to receive a base salary plus an annual
incentive compensation bonus ("bonus"), each to be agreed upon from time to
time between you and the Company acting in good faith; PROVIDED, HOWEVER, that
your base salary shall at no time be less than your base salary as of the date
hereof. In addition, you shall be entitled to participate in any additional
bonus arrangement (an "additional bonus arrangement") which may be agreed upon
2
from time to time between you and the Company acting in good faith. The
Company shall have the right to reduce prospectively your base salary, bonus
and participation in any additional bonus arrangement, as in effect from time
to time, pursuant to an across-the-board compensation reduction or deferral
program similarly affecting all executive officers of the Company.
(ii) In addition to compensation provided for in Subsection (i) of
this Section 3, the Company agrees to continue in effect (A) any compensation
or benefit plan in which you participate as of the date hereof which is
material to your total compensation, or any substitute plan adopted in place
of any such plan, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan which shall include the bonus and any
additional bonus arrangement) has been made with respect to such plan;
PROVIDED, HOWEVER, that no substitute plan or equitable arrangement shall be
adopted with respect to the Fort Howard Profit Sharing Plan or the Fort Howard
Supplemental Retirement Plan except pursuant to a mutual agreement between the
Chief Executive Officer of the Company and the Board, and (B) your ability to
participate therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the opportunities provided and the
level of your participation relative to other participants, than exists on the
date hereof.
(iii) The Company shall reimburse you for all reasonable travel,
entertainment and other business expenses incurred by you in the performance
of your responsibilities under this Agreement promptly upon receipt of written
substantiation of such expenses. You shall also be paid all additional
amounts necessary to discharge all federal and state tax liabilities incurred
by you that are attributable to all deemed compensation arising as a
consequence of your personal use of property owned or leased by the Company,
including federal and state taxes assessed against such additional
compensation.
4. TERMINATION OF EMPLOYMENT. Your employment may be terminated
by either the Company or you by giving a Notice of Termination, as defined in
Subsection (iv) of this Section 4. If your employment should terminate during
the Term, your entitlement to benefits shall be determined in accordance with
Section 5 hereof.
(i) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you are, or are reasonably likely to become,
unable to perform your duties hereunder for more than six consecutive months
or six months in aggregate during any twelve-month period, your employment may
be terminated for "Disability."
(ii) CAUSE. Termination of your employment for "Cause" shall mean
termination upon (A) the willful and continued failure by you to substantially
perform your duties with the Company in your established position on a full-
time basis (other than any such failure resulting from your Disability and
other than any such actual or anticipated failure after the issuance of a
Notice of Termination by you for Good Reason as defined in Subsections 4(iv)
and 4(iii), respectively) after a written demand for substantial performance
is delivered to you by the Board, which demand specifically identifies the
manner in which the Board believes that you have not substantially performed
your duties, (B) the willful engaging by you in conduct which is significantly
injurious to the Company, monetarily or otherwise, after written demand for
cessation of such conduct is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have
3
engaged in such conduct and the injury to the Company, (C) your conviction of
a crime involving moral turpitude, (D) your abuse of illegal drugs or other
controlled substances or your habitual intoxication or (E) the breach of any
of your material obligations hereunder. For purposes of this Subsection, no
act, or failure to act, on your part shall be deemed "willful" unless
knowingly done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best interest of the
Company.
(iii) GOOD REASON. For purposes of this Agreement, "Good Reason"
shall mean the occurrence, without your express written consent, of any of the
following circumstances unless such circumstances are fully corrected prior to
the Date of Termination specified in the Notice of Termination, as such terms
are defined in Subsections (v) and (iv) of this Section 4, respectively, given
in respect thereof:
(A) the assignment to you of any duties inconsistent with your
status as an executive officer of the Company or your removal from any
office specified in Section 2 hereof;
(B) any reduction in your base salary as in effect from time to
time, except for across-the-board salary reductions similarly affecting
all executive officers;
(C) the failure by the Company to pay or provide to you within
seven (7) days of your written demand any amount of base salary or bonus
or any benefit which is due, owing and payable to you pursuant to the
terms of any applicable arrangement or policy or pursuant to the terms
hereof, except pursuant to an across-the-board compensation deferral
similarly affecting all executive officers, or to pay to you any portion
of an installment of deferred compensation due under any deferred
compensation program of the Company;
(D) except in the case of across-the-board reductions or
eliminations similarly affecting all executive officers or as otherwise
contemplated under Section 3 hereof, the failure by the Company to
(I) continue in effect any compensation plan in which you participate
which is material to your total compensation, including but not limited
to the Company's plans currently in effect or hereafter adopted, and any
plans adopted in substitution therefor, (II) continue to provide you with
benefits substantially similar, in aggregate, to the Company's life
insurance, medical, dental, health, accident or disability plans in which
you are participating at the date of this Agreement or (III) continue to
provide you with the number of paid vacation days to which you are
eligible on the basis of years of service with the Company in accordance
with the Company's normal vacation policy in effect at the date of this
Agreement;
(E) the relocation of the Company's principal executive office to
a location more than fifty miles distant from its current location, or
the Company's requiring you to perform services at a location that would
be a violation of the terms of Section 6 hereof;
(F) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 7 hereof; or
4
(G) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the requirements
of Subsection (iv) of this Section 4, and for purposes of this Agreement,
no such purported termination shall be effective.
Your continued employment with the Company shall not constitute
consent to, or a waiver of rights with respect to, any circumstances
constituting Good Reason hereunder.
(iv) NOTICE OF TERMINATION. Any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 8 hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.
(v) DATE OF TERMINATION, ETC. "Date of Termination" shall mean
(A) if your employment is terminated for Disability pursuant to Subsection (i)
of this Section 4, thirty (30) days after Notice of Termination is given
(PROVIDED that you shall not have returned to the full-time performance of
your duties during such thirty (30) day period), (B) if your employment is
terminated by reason of your death, the date of your death, and (C) if your
employment is terminated by the Company for Cause, by you for Good Reason or
by either party for any other reason (other than Disability or death), the
date specified in the Notice of Termination (which, in the case of a
termination by the Company for Cause shall not be less than fifteen (15) days,
and in the case of a termination by you for Good Reason, shall not be less
than thirty (30) nor more than sixty (60) days, respectively, from the date
such Notice of Termination is given).
5. COMPENSATION UPON TERMINATION OR DURING DISABILITY. Upon
termination of your employment with the Company during the Term, you shall be
entitled to the following benefits:
(i) If your employment is terminated for Disability, you shall
receive until the third anniversary of the Date of Termination all
compensation payable to you under the Company's disability and medical
plans and programs, as in effect on the date of such termination plus an
additional payment from the Company (if necessary) such that the
aggregate amount received by you in the nature of salary continuation
from all sources equals your base salary at the date in effect on the
date of such termination. After the third anniversary of the Date of
Termination, your benefits shall be determined under the Company's
retirement, insurance and other compensation programs then in effect in
accordance with the terms of such programs, PROVIDED that such terms
shall not be less advantageous to you than the terms of such programs in
effect as of the date hereof. The obligations of the Company under this
Section 5(i) shall be terminated by your death after becoming Disabled
and prior to the third anniversary of the Date of Termination.
(ii) (A) If your employment shall be terminated (I) by the
Company for Cause, or (II) by you other than for Good Reason, the Company
shall pay you your full base salary through the Date of Termination, at
the rate in effect at the time Notice of Termination is given, plus all
other amounts to which you are entitled under any compensation or benefit
5
plans of the Company (excluding, in the case of termination by the
Company for Cause, any bonus and vacation pay and any entitlement under
any additional bonus arrangement otherwise payable to you pursuant to the
terms of the applicable plan or program of the Company, and in the case
of your voluntary termination other than for Good Reason, excluding any
bonus pay and any entitlement under any additional bonus arrangement) at
the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(B) If your employment shall be terminated by reason of your
death, the Company shall pay your estate your full base salary through
the Date of Termination and for a period of 12 whole calendar months
thereafter plus, if the Date of Termination shall not occur on the first
day of a calendar month, the balance of the month in which the Date of
Termination occurs, at the rate in effect at the time of your death, plus
any accrued bonus or entitlement under any additional bonus arrangement
prorated for the portion of the bonus measurement period occurring prior
to the date of your death, plus all other amounts to which you are
entitled under any compensation or benefit plans of the Company at the
date of your death, and the Company shall have no further obligation to
you, your beneficiaries or your estate under this Agreement.
(iii) If your employment shall be terminated (a) by the Company
other than for Cause or Disability or (b) by you for Good Reason, then
you shall be entitled to the benefits provided below:
(A) the Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given (or, if greater, at the rate in effect 30 days prior
to the time Notice of Termination is given), plus all other amounts which
you have accrued under any compensation or benefit plans of the Company,
including, without limitation, any bonus pursuant to the Company's
Management Incentive Plan and any entitlement under any additional bonus
arrangement accrued through the Date of Termination for the portion of
the applicable bonus measurement period occurring prior to the Date of
Termination, at the time such payments are due, except as otherwise
provided below;
(B) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay to you your
full base salary at the rate in effect immediately prior to the time
Notice of Termination is given (or, if greater, at the rate in effect 30
days prior to the time Notice of Termination is given), payable
periodically in accordance with past payroll practices, until the third
anniversary of the Date of Termination;
(C) in lieu of any further bonus payments and any entitlements
under any additional bonus arrangement for periods subsequent to the Date
of Termination, the Company shall pay to you a bonus payable in each
January following the Date of Termination in respect of the previous
calendar year equal to the quotient obtained by aggregating the bonuses
received by you pursuant to the Company's Management Incentive Plan and
any additional bonus arrangement in respect of the three calendar years
ending prior to the Date of Termination (the "Bonus Period") and dividing
such sum by three, with each such January bonus payment adjusted to
reflect any changes in the Consumer Price Index since the midpoint of the
6
period commencing on the first day of the Bonus Period and ending on the
Date of Termination. Such bonus shall be paid in respect of each
calendar year or portion thereof ending after the Date of Termination
until the third anniversary of the Date of Termination, and shall be
prorated for partial years, if any, including, without limitation, the
portion of the calendar year occurring after the Date of Termination and
the final calendar year in respect of which any such January bonus is
payable pursuant to this Section 5(iii)(C);
(D) until the third anniversary of the Date of Termination, you
will continue to participate in all other compensation and benefit plans
(including perquisites) in which you were participating immediately prior
to the time Notice of Termination is given, or comparable plans
substituted therefor, including, without limitation, the Fort Howard
Supplemental Retirement Plan and the Supplemental Retirement Agreement
between you and the Company; PROVIDED, HOWEVER, that if you are
ineligible (E.G., by operation of law or the terms of the applicable
plan) to continue to participate in any such plan the Company shall
provide you with a comparable level of compensation or benefits;
(E) The Company shall pay to you all reasonable legal fees and
expenses incurred by you as a result of such termination (including all
such fees and expenses, if any, incurred in contesting or disputing any
such termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement), except any such fees or expenses incurred by
you in seeking to enforce a claim which is determined by the arbitrator,
pursuant to Section 11, to have been frivolous in nature or not brought
or pursued in good faith;
(F) In order to assist you in obtaining new employment, the
Company shall provide you with outplacement services, including access to
an office and secretarial assistance for a period not to exceed 12 months
and at a cost not to exceed $12,000; and
(G) If you should die after the termination of employment and
prior to the end of the period of payment provided for in paragraphs (B),
(C) and (D) hereof, the Company shall pay your estate any amounts that
are or become payable pursuant to any of such paragraphs until the end of
the Term.
(iv) You shall not be required to mitigate the amount of any
payment provided for in subsection (iii) of this Section 5 by seeking
other employment, and the amount of any payment provided for in this
Section 5 shall not be reduced by any compensation earned by you as a
result of your employment by another employer; PROVIDED, HOWEVER, that
any medical or dental welfare benefit otherwise receivable by you
pursuant to Subsection 5(iii)(D) shall be reduced to the extent a
comparable benefit of the same type would normally be made available to
you during the applicable period of benefit continuation set forth in
such Subsection, and any such benefit actually received by you shall be
reported to the Company.
(v) In addition to all other amounts payable to you under this
Section 5, you shall be entitled to receive all benefits payable to you
under any plan or agreement of the Company relating to retirement
benefits, including, without limitation, the Supplemental Retirement Plan
and the Supplemental Retirement Agreement between you and the Company.
7
6. LOCATION. Your services shall be performed at the Company's
current headquarters location, or at such other place within a fifty-mile
radius of such current location as the Board may from time to time deem
appropriate. Notwithstanding the foregoing, you shall be required to travel
to the extent necessary to the performance of your responsibilities under this
Agreement. You shall use Company owned or leased aircraft for purposes of
such travel whenever practicable, and the Company recognizes that it may from
time to time be necessary, appropriate, desirable or convenient for you to be
accompanied in such travel by persons who are not employees of the Company,
including your spouse and other members of your family.
7. SUCCESSORS; BINDING AGREEMENT. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume 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. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall entitle you to compensation from the Company in the same amount and on
the same terms as you would be entitled to hereunder if you were to terminate
your employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, the "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.
8. NOTICES. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed
to the respective addresses set forth on the first page of this Agreement,
PROVIDED that all notices to the Company shall be directed to the attention of
the Board with copies to the Secretary of the Company, or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
9. NONCOMPETITION. (i) Until the Date of Termination, you agree
not to enter into competitive endeavors and not to undertake any commercial
activity which is contrary to the best interests of the Company or its
affiliates, including becoming an employee, owner (except for passive
investments of not more than one percent of the outstanding shares of, or any
other equity interest in, any company or entity listed or traded on a national
securities exchange or in an over-the-counter securities market), officer,
agent or director of (a) any firm or person engaged in the operation of a
business engaged in the acquisition of industrial businesses or (b) any firm
or person which (i) directly competes with a line or lines of business of the
Company or any subsidiary of the Company accounting for ten percent (10%) or
more of the Company's or such subsidiary's gross sales, revenues or earnings
before taxes, (ii) derives ten percent (10%) or more of such firm's or
person's gross sales, revenues or earnings before taxes from a line or lines
of business which directly competes with the Company or any subsidiary of the
Company or (iii) is a distributor of any of the products of the Company or any
subsidiary of the Company, where the distribution of such products accounts
for ten percent (10%) or more of such firm's or person's gross sales, revenues
or earnings before taxes. Notwithstanding any provision of this Agreement to
8
the contrary, you agree that your breach of the provisions of this
Section 9(i) shall permit the Company to terminate your employment for Cause.
(ii) After the Date of Termination and during any period that you
continue to be paid your salary (including any other payments in lieu of
salary) pursuant to Section 5 hereof, you agree not to become an employee,
owner (except for passive investments of not more than one percent of the
outstanding shares of, or any other equity interest in, any company or entity
listed or traded on a national securities exchange or in an over-the-counter
securities market), officer, agent or director of any firm or person which (i)
directly competes with a business of the Company or any subsidiary of the
Company producing any class of products accounting for ten percent (10%) or
more of the Company's or such subsidiary's gross sales, revenues or earnings
before taxes or (ii) is a distributor of any of the products of the Company or
any subsidiary of the Company, where the distribution of such products
accounts for ten percent (10%) or more of such firm's or person's gross sales,
revenues or earnings before taxes. During the period of payment provided in
Section 5 hereof, you will be available, consistent with other
responsibilities that you may then have, to answer questions and provide
advice to the Company. Notwithstanding anything in this Agreement to the
contrary, you agree that, from and after any breach by you of the provisions
of this Section 9(ii), the Company shall cease to have any obligations to make
payments to you under this Agreement.
(iii) You acknowledge and agree that damages for breach of the
covenant not to compete in this Section 9 will be difficult to determine and
will not afford a full and adequate remedy, and therefore agree that the
Company, in addition to any other remedies that may otherwise be available for
a breach of this Section 9 (including, without limitation, as set forth in
Section 9(ii) above, by seeking actual damages pursuant to Section 11 hereof
and pursuant to awards under the Company's 1995 Stock Incentive Plan), may
seek specific enforcement of the covenant not to compete in any court of
competent jurisdiction, including, without limitation, by the issuance of a
temporary or permanent injunction, without the necessity of a bond. You and
the Company agree that the provisions of this covenant not to compete are
reasonable. However, should any court or arbitrator determine that any
provision of this covenant not to compete is unreasonable, either in period of
time, geographical area, or otherwise, the parties agree that this covenant
not to compete should be interpreted and enforced to the maximum extent which
such court or arbitrator deems reasonable.
(iv) The provisions of this Section 9 shall supersede the covenants
restricting competition by the Executive set forth in (i) Article VII of the
Company's Management Equity Plan and any applicable agreement entered into
between the Company and the Executive pursuant thereto and (ii) Article IX of
the Amended and Restated Management Equity Participation Agreement, dated as
of August 8, 1988, between the Company and the other parties signatory
thereto, as amended and supplemented from time to time.
10. CONFIDENTIALITY. (i) You shall not knowingly disclose or
reveal to any unauthorized person, during or after the Term, any trade secret
or other confidential information relating to the Company or any of its
affiliates, or any of their respective businesses or principals, such as,
without limitation, dealers' or distributors' lists and manufacturing
processes, and you confirm that such information is the exclusive property of
the Company and its affiliates. You agree to hold as the Company's property
9
all memoranda, books, papers, letters and other data, and all copies thereof
or therefrom, in any way relating to the business of the Company and its
affiliates, whether made by you or otherwise coming into your possession and,
on termination of your employment, or on demand of the Company at any time, to
deliver the same to the Company.
(ii) Any ideas, processes, characters, productions, schemes,
titles, names, formats, adaptations, plots, slogans, catchwords, incidents,
treatment, and dialogue which you may conceive, create, organize, prepare or
produce during the period of your employment and which ideas, processes, etc.
relate to any of the businesses of the Company, shall be owned by the Company
and its affiliates whether or not you should in fact execute an assignment
thereof to the Company, but you agree to execute any assignment thereof or
other instrument or document which may be reasonably necessary to protect and
secure such rights to the Company.
(iii) You shall comply in all respects with the terms of the
Employees' Agreement with regard to Proprietary Information Including
Inventions, Patents, Copyrights, Trade Secrets and Confidential Information
between you and the Company.
(iv) Notwithstanding anything in this Agreement to the contrary,
you agree that from and after any breach by you of the provisions of this
Section 10 during any period of payment provided in Section 5 hereof, the
Company shall cease to have any obligations to make payments to you under this
Agreement.
11. ARBITRATION. (i) Except as contemplated by Section 9(iii) and
Section 11(iii) hereof, any dispute or controversy arising under or in
connection with this Agreement that cannot be mutually resolved by the parties
to this Agreement and their respective advisors and representatives shall be
settled exclusively by arbitration in New York, New York before one arbitrator
of exemplary qualifications and stature, who shall be selected jointly by an
individual to be designated by the Company and an individual to be selected by
you, or if such two individuals cannot agree on the selection of the
arbitrator, who shall be selected by the American Arbitration Association.
(ii) The parties agree to use their best efforts to cause (A) the
two applicable individuals set forth in the preceding Section 11(i), or, if
applicable, the American Arbitration Association, to appoint the arbitrator
within 30 days of the date that a party hereto, after the issuance of a Notice
of Termination hereunder, notifies the other party that a dispute or
controversy exists that necessitates the appointment of an arbitrator, and (B)
any arbitration hearing to be held within 30 days of the date of selection of
the arbitrator and, as a condition to his or her selection, such arbitrator
must consent to be available for a hearing at such time.
(iii) Judgment may be entered on the arbitrator's award in any court
having jurisdiction; PROVIDED, HOWEVER, that you shall be entitled to seek
specific performance of your right to be paid and to participate in benefit
programs until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement. The Company
and you hereby agree that the arbitrator shall be empowered to enter an
equitable decree mandating specific enforcement of the terms of this
Agreement.
(iv) The Company shall bear all expenses of the arbitrator incurred
10
in any arbitration hereunder. The Company shall also pay your reasonable
legal fees in connection with such arbitration as you incur them; PROVIDED
that in the event you seek arbitration and the arbitrator determines that your
claims are frivolous in nature or were not brought or pursued in good faith,
you will promptly return to the Company all amounts paid by the Company for
such fees.
12. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by you and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth in
this Agreement. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York. Any
payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law. The obligations of
the Company under Section 5 and your obligations under Sections 9 and 10
hereof shall survive the expiration of the Term of this Agreement.
13. VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
14. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
15. ENTIRE AGREEMENT. This Agreement and the other agreements
expressly referred to herein contain the entire agreement by the parties with
respect to the matters covered herein and supersede any prior agreement
(including, without limitation, any prior employment agreement), condition,
practice, custom, usage and obligation with respect to such matters insofar as
any such prior agreement, condition, practice, custom, usage or obligation
might have given rise to any enforceable right.
11
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our agreement on this subject.
Sincerely,
FORT HOWARD CORPORATION
By /s/ Michael T. Riordan
-----------------------------
Name: Michael T. Riordan
Title: President and
Chief Executive Officer
Agreed to this 27th day
----
of December, 1996
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By /s/ Kathleen J. Hempel
-----------------------
Kathleen J. Hempel