EXHIBIT 10.9
EXECUTIVE SEVERANCE AGREEMENT
This Agreement ("Agreement") is entered into on
_____________, 1999 between REYNOLDS METALS COMPANY, a Delaware
corporation ("Reynolds"), and _______________ ("Executive").
WHEREAS, the maintenance of a strong and experienced
management is essential in protecting and enhancing the best
interests of Reynolds and its stockholders, and in this
connection Reynolds recognizes that, as is the case with many
publicly held corporations, the possibility of a change in
control may arise and may result in the departure or distraction
of management personnel to the detriment of Reynolds and its
stockholders; and
WHEREAS, the Compensation Committee and the Board of
Directors of Reynolds have each determined that appropriate steps
should be taken to reinforce and encourage the continued
attention and dedication of members of management to their
regular duties without distraction arising from a possible change
in control or a proposed or threatened change in control of
Reynolds; and
WHEREAS, should Reynolds become subject to any proposed
or threatened change in control, it is imperative that the Board
be able to call upon management to advise the Board as to whether
such change in control would be in the best interests of Reynolds
and its stockholders, and to take such other actions as the Board
might determine to be appropriate, without concern that
management would be distracted by the personal uncertainties and
risks created by such a proposed or threatened change in control;
and
WHEREAS, the Compensation Committee and the Board have
received from independent consultants information concerning the
adoption of executive severance agreements by other corporations
and from management the estimated cost to Reynolds of adoption of
each of the material provisions of the form of executive
severance agreement presented at the meeting; and
WHEREAS, the Compensation Committee and the Board have
each carefully reviewed the information presented to them and
have determined that the anticipated benefits to Reynolds from
entering into such agreements with key executives designated by
the Compensation Committee, thereby encouraging their continued
attention and dedication to their duties, exceed the anticipated
costs to Reynolds of entering into such agreements; and
WHEREAS, the Compensation Committee and the Board have
each concluded that such agreements are in the best interests of
Reynolds and its stockholders; and
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WHEREAS, Executive is a key executive of Reynolds and
has been selected by the Compensation Committee to enter into
such an agreement with Reynolds;
NOW, THEREFORE, to assure Reynolds that it will have
the continued dedication of Executive and the availability of
Executive's advice and counsel notwithstanding the possibility,
threat or occurrence of a change in control of Reynolds, and to
induce Executive to remain in the employ of Reynolds, and for
other good and valuable consideration, Reynolds and Executive
agree as follows:
1. Services During Certain Events. If a third person
begins a tender or exchange offer, circulates a proxy to
stockholders, or takes other steps to effect a Change in Control
(as defined in Section 2), Executive agrees that Executive shall
not voluntarily leave the employ of Reynolds and shall render the
services contemplated in the recitals to this Agreement, until
the third person has abandoned or terminated such person's
efforts to effect a Change in Control or until a Change in
Control has occurred.
2. Termination Following Change in Control. Except
as provided in Section 4, Reynolds shall provide or cause to be
provided to Executive the rights and benefits described in
Section 3 if Executive's employment by Reynolds is terminated at
any time within three years following a Change in Control:
(a) Termination by Reynolds. By Reynolds for reasons
other than
(i) for Cause (as defined in Section 4); or
(ii) as a result of Executive's death,
permanent disability (as defined in Section 2(f)), or
retirement at or after age 65;
or
(b) Termination by Executive. By Executive following
the occurrence of any of the following events without
Executive's written consent:
(i) the assignment of Executive to any
duties or responsibilities that are adversely
inconsistent with Executive's position, duties,
responsibilities or status immediately preceding such
Change in Control, or a change in Executive's reporting
responsibilities or titles in effect at such time
resulting in a reduction of Executive's
responsibilities or position at Reynolds;
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(ii) the reduction of Executive's annual base
salary (including any deferred portions thereof), or
the failure to increase Executive's annual base salary
at least once in each 15 month period, any such
increase to be at least at substantially the same level
as the increases received by other executives with
similar titles and duties;
(iii) the failure to continue in effect
the incentive plans, employee benefit plans, and other
compensation policies, practices and arrangements in
which Executive or Executive's eligible family members
were eligible to participate or participated
immediately before the Change in Control (including
without limitation, failure to provide Executive with a
number of paid vacation days to which Executive is
entitled on the basis of years of service with Reynolds
in accordance with Reynolds' vacation policy in effect
on the date of the Change in Control), or the failure
to continue Executive's participation on substantially
the same basis, both in terms of the amount of benefit
provided and the level of participation relative to
other participants;
(iv) the failure to pay to Executive any
portion of current compensation within 7 days of the
date such compensation is due, or to pay to Executive
any portion of an installment of deferred compensation
under any deferred compensation program within 30 days
of the date such compensation is due, but in any event,
if such compensation is due within a reasonable period
after the end of a calendar year, by the end of
February following such year end;
(v) the transfer of Executive to a location
more than 50 miles from Executive's location at the
time of the Change in Control, or a material increase
in the amount of travel normally required of Executive
in connection with Executive's employment by Reynolds;
(vi) the good faith determination by
Executive that due to the Change in Control (including
any changes in circumstances at Reynolds that directly
or indirectly affect Executive's position, duties,
responsibilities or status as in effect immediately
preceding such Change in Control) Executive is no
longer able effectively to discharge Executive's duties
and responsibilities; (For purposes of this Section
3(b), any such good faith determination by Executive
shall be conclusive and binding.);
(vii) any material breach by Reynolds of
any provision of this Agreement;
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(viii) any purported termination of
Executive's employment that is not effected pursuant to
a Notice of Termination satisfying the requirements of
Section 2(d) hereof (and, if applicable, the
requirements of Section 2(e) hereof), which purported
termination shall not be effective for purposes of this
Agreement; [or]or
(ix) any failure by Reynolds to obtain the
assumption of this Agreement by any successor to
Reynolds; [or]Reynolds.
anything in this Agreement to the contrary
notwithstanding, a termination of employment by
Executive for any reason during the 30-day period
immediately following the first anniversary of the
Change in Control.Any good faith determination by
Executive of the occurrence of any of the events
specified in paragraphs (i) through (ix) of this
Section 2(b) shall be conclusive and binding.
(c) Change in Control. For purposes of this
Agreement, a "Change in Control" shall mean the occurrence
of any of the following:
(i) Any Person (as defined below) becomes
the Beneficial Owner (as defined below), directly or
indirectly, of 15% or more of Reynolds' common stock,
unless such Person (A) is not deemed an "Acquiring
Person" in accordance with Section 1(a) of the Rights
Agreement (as defined below), or (B) became a
Beneficial Owner of 15% or more of Reynolds common
stock in a transaction that did not constitute a Change
in Control under Section 2(c)(iii) hereof;
(ii) During any period of two consecutive
years, individuals who at the beginning of such period
constitute the Board (as defined below), and any new
directors (other than a director designated by a person
who has entered into an agreement with Reynolds to
effect a transaction described in Sections 2(c)(i),
(iii) or (iv)) whose election by the Board or
nomination for election by Reynolds' shareholders was
approved by a vote of at least two-thirds of the
directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute at least a
majority of the members of the Board;
(iii) The effective date of a merger or
consolidation of Reynolds or any of its subsidiaries
with any other entity, other than a merger or
consolidation which would result in the voting
securities of Reynolds outstanding immediately before
such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted
into voting securities of theparent or surviving entity
or of any other corporation or entity that as a result
of such transaction owns entity)Reynolds or all or
substantially all of the assets of Reynolds, either
directly or through one or more
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subsidiaries (a "parent entity")) more than 51%
of the combined voting power of the voting securities
of the parent or surviving entity outstanding
immediately after such merger or
consolidation and with the power to elect at least a
majority of the board of directors or other governing
body of such parent or surviving entity;
(iv) The approval by the shareholders of
Reynolds of a complete liquidation of Reynolds or an
agreement for the sale or disposition by Reynolds of
all or substantially all of Reynolds' assets; andor
(v) There occurs any other event of a nature
that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or
form) under the 1934 Act (as defined below), whether or
not Reynolds is then subject to such reporting
requirement.
(vi) Certain Definitions. For purposes of
this Section 2(c), the following terms shall have the
following meanings:
(A) "Person" shall have the
meaning as set forth in Sections 13(d) and 14(d)
of the 1934 Act (as defined below); provided
however, that Person shall exclude (i) Reynolds,
(ii) any trustee or other fiduciary holding
securities under an employee benefit plan of
Reynolds, and (iii) any corporation owned,
directly or indirectly, by the shareholders of
Reynolds in substantially the same proportions as
their ownership of stock of Reynolds.
(B) "Beneficial Owner" shall have
the meaning given to such term in Rule 13d-3 under
the 1934 Act; provided however, that Beneficial
Owner shall exclude any Person otherwise becoming
a Beneficial Owner by reason of the shareholders
of Reynolds approving a merger of Reynolds with
another entity.
(C) "Rights Agreement" shall mean
the Amended and Restated Rights Agreement dated as
of March 8, 1999 between Reynolds and ChaseMellon
Shareholder Services, L.L.C., as initially in
effect.
(D) "1934 Act" shall mean the
Securities Exchange Act of 1934, as amended.
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(E) "Board" shall mean the board
of directors of Reynolds.
(d) Notice of Termination. Any purported termination
of Executive's employment under Section 2(a) (other than
termination due to death or retirement at or after age 65
which shall terminate Executive's employment automatically)
shall be communicated by written Notice of Termination to
Executive given in accordance with Section 9(l). Any
termination of Executive's employment under Section 2(b)
shall be communicated by written Notice of Termination to
Reynolds in accordance with Section 9(l). "Notice of
Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
(e) Date of Termination. "Date of Termination" shall
mean
(i) if Executive's employment is terminated
due to Executive's death, the date of Executive's
death;
(ii) if Executive's employment is terminated
due to retirement at or after age 65, the date of
Executive's retirement;
(iii) if Executive's employment is
terminated for permanent disability, 30 days after
Notice of Termination is given (provided that Executive
shall not have returned to full-time performance of
Executive's duties during such 30 day period);
(iv) if Executive's employment is terminated
by Executive pursuant to Section 2(b), the date
specified in the Notice of Termination, which shall be
at least 30 days from the date such Notice of
Termination is given; and
(v) if Executive's employment is terminated
for Cause, the date specified in the Notice of
Termination, which shall be at least 30 days from the
date such Notice of Termination is given.
Notwithstanding anything to the contrary contained
herein, if within 15 days after any Notice of Termination is
given, Executive notifies Reynolds that a dispute exists
concerning termination for Cause or permanent disability,
then the Date of Termination shall be the date on which the
dispute is finally determined, either by mutual written
agreement of Executive and Reynolds, or otherwise; provided
however, the Date of Termination shall be extended by a
notice of dispute only if
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such notice is given in good faith and Executive pursues
the resolution of such dispute with reasonable diligence.
(f) Definition of "permanent disability". For
purposes of this Agreement, "permanent disability" shall
mean a physical or mental infirmity which impairs
Executive's ability to substantially perform Executive's
duties under this Agreement and which continues for a period
of at least 12 consecutive months.
3. Rights and Benefits upon Termination. If
Executive's employment is terminated under any of the
circumstances set forth in Section 2 ("Termination"), Reynolds
agrees to provide or cause to be provided to Executive the
following rights and benefits:
(a) Salary and Incentive. Executive shall receive
within five business days of the Date of Termination a lump
sum payment in cash in an amount equal to three times
Executive's Earnings (as defined in this Section 3(a));
provided however, that if there are fewer than 36 months
remaining from the Date of Termination to the date when
Executive reaches age 65, the amount calculated pursuant to
this Section 3(a) shall be reduced by multiplying such
amount by a fraction, the numerator of which is the number
of months (including any fraction of a month) remaining to
age 65 and the denominator of which is 36.
For purposes of this Section 3(a), "Earnings" shall
mean the sum of (i) Executive's annual base salary (at the
rate in effect at the Date of Termination, or, if greater,
at the rate in effect immediately preceding the Change in
Control), plus (ii) an amount equal to the highest cash
target incentive opportunity established for Executive for
1998 or any future calendar year (without regard to any
possible deferred portions thereof). Earnings shall not
include any income attributable to options granted and
dividends on shares acquired pursuant to any stock option
plan maintained by Reynolds for its employees.
For purposes of Section 3(a) and Section 3(c), "highest
cash target incentive opportunity" means the largest "target
incentive opportunity" (as opposed to the "maximum incentive
opportunity") established for Executive's salary grade for
any year under the Reynolds Metals Company Performance
Incentive Plan and, if applicable, the Reynolds Metals
Company Supplemental Incentive Plan or under any successor
or replacement annual variable compensation plan(s).
(b) Stock Options. If Executive has any outstanding
options that will remain exercisable after Termination to
the extent the Compensation
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Committee approves, then approval shall be deemed
to be granted as of Executive's Termination;
(c) Retirement Benefits. Executive shall receive
within five business days of the Date of Termination a lump
sum payment in cash in an amount equal to the actuarial
present value of the excess of (i) what would be Executive's
accrued age 65 benefit calculated pursuant to the applicable
formula in Reynolds' New Retirement Program for Salaried
Employees ("New Retirement Program") (as in effect at the
Date of Termination or, if more favorable to Executive, as
in effect immediately preceding the Change in Control), if
Executive were given additional credited service and age for
a period of 36 months following Termination (or such lesser
period as shall remain until Executive reaches age 65), with
annual earnings during the additional period determined as
if (A) Executive's annual base salary at the rate in effect
at the Date of Termination, or, if greater, immediately
preceding the Change in Control, were continued as base
salary for the additional period and (B) an amount equal to
the highest cash target incentive opportunity established
for Executive for 1998 or any subsequent calendar year
(without regard to any possible deferred portions thereof)
were paid to Executive on the third Friday of each February
of the additional period, such annual earnings to be
computed without regard to statutory restrictions on
benefits accrued or payable under qualified plans, over (ii)
Executive's accrued age 65 benefit, if any, payable under
the New Retirement Program, including any benefit payable
under Reynolds' Benefit Restoration Plan for New Retirement
Program. For purposes of this Section 3(c), actuarial
equivalents shall be computed as of the end of the 36 month
period and shall be determined using the same methods and
assumptions used under the New Retirement Program at the
Date of Termination or the date of a Change in Control,
whichever results in the greater amount.
(d) Welfare Benefit Plans. To the extent Executive is
eligible thereunder, Executive (and Executive's eligible
family members, to the extent applicable) shall continue to
be covered by (i) any group term, supplemental and/or split
dollar life insurance plan in effect for Executive on the
Date of Termination and (ii) the health care, accident and
disability benefit plans of Reynolds in effect on the Date
of Termination for employees in the same class or category
as Executive, subject in each case to the terms of such
plans and to Executive's making any required contributions
thereto, to the extent contributions are required of active
employees. If Executive is, or Executive's previously
eligible family members are, not eligible to continue to be
so covered under the terms of any such benefit plan or
program, or if Executive is, or Executive's eligible family
members are, eligible but the benefits applicable to
Executive or Executive's family members are not
substantially equivalent to the benefits
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applicable to Executive or Executive's family members
immediately prior to the Date of Termination, then, for
a period of 36 months following the Date of
Termination (or until Executive reaches age 65,
if sooner), Reynolds shall either (x) provide
such substantially equivalent benefits, or such
additional benefits as may be necessary to make the benefits
applicable to Executive and Executive's family members
substantially equivalent to those in effect before the Date
of Termination, through other sources, or (y) provide
Executive with a lump sum payment in such amount that, after
all taxes on that amount are paid, shall be equal to the
cost to Executive of providing such benefit coverage for
Executive and Executive's eligible family members; provided
however, that if during such period Executive should enter
into the employ of another company or firm which provides
substantially similar benefit coverage for Executive and
Executive's eligible family members, Executive's
participation in the comparable benefit provided by Reynolds
either directly or through other sources shall cease.
Unless Executive and Executive's eligible family members are
covered through the plan of another employer, at the
termination of the health care benefits coverage described
in this Section 3(d), Executive and Executive's eligible
family members shall be entitled to convert such coverage to
an individual policy to the extent this conversion privilege
is available; if such an individual policy is not then
available, Executive and Executive's eligible family members
shall be entitled to continuation coverage pursuant to
Section 4980B of the Internal Revenue Code of 1986, as
amended (the "Code"), and under any other applicable law, to
the extent required by such laws, as if Executive had
terminated employment with Reynolds on the date such health
care benefits coverage terminates. The lump sum shall be
determined on a present value basis using the interest rate
provided in Section 1274(b)(2)(B) of the Code on the Date of
Termination. In addition, the "Rule of 90" age and service-
based premium requirement under the Reynolds Retiree Health
Care Plan shall be waived to the extent it would otherwise
apply to Executive. Nothing contained in this Section 3(d)
shall be deemed to require or permit termination or
restriction of Executive's coverage under any plan or
program of Reynolds or any successor plan or program thereto
to which Executive is entitled under the terms of such plan
or program, whether at the end of the aforementioned
36-month period or at any other time.
(e) Vehicle. Within five business days of
Termination, Reynolds shall transfer to Executive, free and
clear of any liens or encumbrances, the ownership of the
vehicle, if any, provided by Reynolds to Executive at the
Date of Termination. After transfer of ownership, Executive
shall be solely responsible for maintaining the vehicle.
(f) Other Benefit Plans and Perquisites. The specific
arrangements referred to in this Section 3 are not intended
to exclude
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Executive's participation in other benefit plans
or enjoyment of other perquisites which are available to
executive personnel generally in the class or category of
Executive or to preclude such other compensation or benefits
as may be authorized from time to time by the Board of
Directors of Reynolds or by its Compensation Committee;
provided however, that any payments hereunder shall be in
lieu of, and not in addition to, any amounts that would
otherwise be payable to Executive upon termination of
employment pursuant to Reynolds' Termination Allowance
Policy or any successor severance pay plan.
(g) Excise Taxes. If Executive becomes entitled to
payments ("CIC Payments") from Reynolds or any Successor (as
defined below) that are subject to the tax ("Excise Tax")
imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), Executive shall receive at
the time specified below an additional amount ("Gross-Up
Payment") such that the net amount retained by Executive,
after deduction of any Excise Tax on the CIC Payments and
any federal, state and local income tax and Excise Tax upon
the payment provided for by this Section 3(g), shall be
equal to the CIC Payments (net of any required payroll
withholding taxes on the CIC Payments themselves). For
purposes of determining whether any payments will be subject
to the Excise Tax and the amount of such Excise Tax, (i) any
payments or benefits received or to be received by Executive
in connection with a Change in Control or Executive's
Termination (whether pursuant to the terms of this Agreement
or under any other plan, arrangement or agreement with
Reynolds, with any person whose actions result in a Change
in Control, or with any person affiliated with Reynolds or
such person (all such persons other than Reynolds,
"Successors")) shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
Section 280G(b)(1) shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by
Reynolds' independent auditors and acceptable to Executive
such other payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code in excess of the
base amount within the meaning of Section 280G(b)(3) of the
Code, or are otherwise not subject to the Excise Tax, (ii)
the amount of the payments which shall be treated as subject
to the Excise Tax shall be equal to the lesser of (A) the
total amount of the payments or (B) the amount of excess
parachute payments within the meaning of Section 280G(b)(1)
(after applying clause (i) above), and (iii) the value of
any non-cash benefits or any deferred payment or benefit
shall be determined by Reynolds' independent auditors in
accordance with the principles of Sections 280G(d)(3) and
(4) of the Code. For purposes of determining the amount of
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the Gross-Up Payment, Executive shall be deemed to pay
federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and
locality of Executive's residence on the Date of
Termination, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state
and local taxes.
If the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the Date of
Termination, Executive shall repay to Reynolds at the time
that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable
to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and
local income tax imposed on the Gross-Up Payment being
repaid by Executive if such repayment results in a reduction
in Excise Tax and/or a federal and state and local income
tax reduction) plus interest received by Executive
attributable to any Excise Tax refund. If the Excise Tax is
determined to exceed the amount taken into account hereunder
at the Date of Termination (including by reason of any
payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), Reynolds
shall make an additional gross-up payment in respect of such
excess (plus any interest payable with respect to such
excess) at the time that the amount of such excess is
finally determined.
The Gross-Up Payment shall be made not later than the
fifth business day following the Date of Termination;
provided however, that if the amount of such payment cannot
be finally determined on or before such day, Reynolds shall
pay Executive on such day an estimate as determined in good
faith by Reynolds of the minimum amount of such payment and
shall pay the remainder of such payment (together with
interest at the rate provided in Section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth day after the Date
of Termination. If the amount of the estimated payments
exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by Reynolds to Executive
payable on the fifth business day after demand by Reynolds
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
Anything herein to the contrary notwithstanding, any
Gross-Up Payment otherwise due to Executive hereunder shall
be reduced by the amount of any similar type of gross-up
payments already received by Executive from Reynolds or any
Successor outside this Agreement.
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(h) No Duty to Mitigate. Executive's entitlement to
benefits hereunder shall not be governed by any duty to
mitigate Executive's damages by seeking further employment
nor offset by any compensation which Executive may receive
from future employment.
(i) Payment Obligations Absolute. Reynolds'
obligation to pay or cause to be paid to Executive the
benefits and to make the arrangements provided in this
Section 3 shall be absolute and unconditional and shall not
be affected by any circumstances, including without
limitation any breach or alleged breach of Section 5, any
setoff, counterclaim, recoupment, defense or any other right
which Reynolds may have against Executive or anyone else.
All amounts payable by or on behalf of Reynolds hereunder
shall be paid without notice or demand. Each and every
payment made hereunder by or on behalf of Reynolds shall be
final and Reynolds and its subsidiaries shall not, for any
reason whatsoever, seek to recover all or any part of such
payment from Executive or from whoever shall be entitled
thereto.
4. Conditions to the Obligations of Reynolds.
Reynolds shall have no obligation to provide or cause to be
provided to Executive the rights and benefits described in
Section 3 hereof if either of the following events shall occur:
(a) Termination for Cause. Reynolds shall terminate
Executive's employment for Cause. For purposes of this
Agreement, termination of employment for "Cause" shall mean
termination solely for conviction of a felony or willful
engagement in illegal conduct which is materially and
demonstrably injurious to Reynolds; provided however,
Executive may not be deemed terminated for Cause unless and
until Reynolds has delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board
finding that, in the Board's good faith opinion, Executive
is guilty of conduct defined as justifying termination for
Cause and specifying the particulars thereof in reasonable
detail.
(b) Resignation as Director and/or Officer.
Executive shall not, promptly after the Date of Termination
and upon receiving a written request to do so, resign as a
director and/or officer of Reynolds and of each subsidiary
and affiliate of Reynolds for which Executive is then
serving as a director and/or officer.
5. Confidentiality; Non-Solicitation; Cooperation;
Consultancy.
(a) Confidentiality. Executive agrees that at all
times following Termination, Executive shall not, without the
prior written consent of Reynolds, disclose to any person, firm
or corporation any confidential information of
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Reynolds or its subsidiaries which is now known to Executive or
which hereafter may become known to Executive as a result
of Executive's employment or association with Reynolds and which
is helpful to a competitor in any material respect; provided
however, that the foregoing shall not apply to confidential
information which becomes publicly disseminated by means other
than a breach of this Agreement.
(b) Non-Solicitation. Executive agrees that for a
period of three years following the Date of Termination (or until
Executive reaches age 65, whichever is sooner) Executive shall
not induce or attempt to induce, either directly or indirectly,
any management or executive employee of Reynolds or of any of its
subsidiaries to terminate such employee's employment.
(c) Cooperation. Executive agrees that, at all times
following Termination, Executive shall furnish such information
and render such assistance and cooperation as may reasonably be
requested in connection with any litigation or legal proceedings
concerning Reynolds or any of its subsidiaries (other than any
legal proceedings concerning Executive's employment). In
connection with such cooperation, Reynolds shall pay or reimburse
Executive for reasonable expenses actually incurred.
(d) Consultation. Executive agrees that for a period
of 36 months following the Date of Termination (or until
Executive reaches age 65, if sooner), Executive shall be
available to Reynolds and its subsidiaries for consultation with
senior officers of Reynolds and of its subsidiaries; provided
however, that Executive shall not be required to perform such
consulting services (i) for more than five days in any month and
(ii) for more than 30 hours in any month. It is expressly agreed
that Executive's consulting services will be required at such
time and such places as will result in the least inconvenience to
Executive, taking into consideration Executive's other business
commitments during such period which may obligate Executive to
honor such other commitments prior to Executive's rendering
services hereunder. It is further agreed that Executive's
consulting services shall be rendered by personal consultation at
Executive's principal residence or office, wherever maintained,
or by correspondence through mail, telephone, facsimile,
electronic mail or other similar modes of communication at times,
including weekends and evenings, most convenient to Executive.
Reynolds and Executive agree that if during such period Executive
should engage in full-time employment, Executive shall not be
required to consult at times that will conflict with Executive's
responsibilities with respect to such employment or if
Executive's employer denies Executive permission to act as a
consultant. In connection with such consulting services,
Reynolds shall pay or reimburse Executive for reasonable expenses
actually incurred.
(e) Remedies for Breach. It is recognized that
damages in the event of breach of paragraphs (a) and (b) of this
Section 5 by Executive would be
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difficult, if not impossible, to ascertain, and it
is therefore agreed that Reynolds, in addition to and
without limiting any other remedy or right it may have,
shall have the right to an injunction or other equitable relief
in any court of competent jurisdiction, enjoining any such
breach. The existence of this right shall not preclude Reynolds
from pursuing any other rights and remedies at law or in equity
which Reynolds may have.
6. Term of Agreement. The term of this Agreement
shall become effective upon the execution hereof by Reynolds and
shall continue unless terminated by written agreement between
Executive and Reynolds. No benefits shall be payable hereunder
unless there has been a Change ofin Control before termination of
Executive's employment.
7. Suits, Actions, Proceedings and Expenses.
(a) Executive's compensation during any disagreement,
dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute"), arising out of or relating to this
Agreement or the interpretation of this Agreement shall be as
follows. If there is a Termination followed by a Dispute as to
whether Executive is entitled to the payments and other benefits
provided under this Agreement, then, during the period of that
Dispute:
(i) Reynolds shall pay Executive fifty
percent (50%) of the amounts specified in Sections
3(a), 3(b) and 3(c) that are in Dispute;
(ii) Reynolds shall provide Executive with
the other benefits provided in Sections 3(d), 3(e),
3(f) and 3(g) of this Agreement; and
(iii) Reynolds shall pay Executive one
hundred percent (100%) of the amounts specified in
Sections 3(a), 3(b) and 3(c) that are not in Dispute;
provided however, if the Dispute is resolved against Executive,
Executive shall promptly refund to Reynolds all payments
Executive receives under Section 7(a)(i) of this Agreement, plus
interest at the rate provided in Section 1274(d)(b)(2)(B) of the
Code, compounded quarterly. If the Dispute is resolved in
Executive's favor, promptly after resolution of the Dispute,
Reynolds shall pay to Executive the sum that was withheld during
the period of the Dispute plus interest at the rate provided in
Section 1274(d)(b)(2)(B) of the Code, compounded quarterly.
(b) Reynolds shall pay to Executive all legal fees and
expenses incurred by Executive in connection with any Dispute
arising out of or relating to
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15
this Agreement or the interpretation thereof (including,
without limitation, all such fees and expenses, if any, (A)
arising out of, or challenging the validity or enforceability
of, this Agreement or any provision hereof, (B) incurred in
contesting or disputing any termination of Executive's
employment, (C) seeking to obtain or enforce any right or
benefit provided by this Agreement, or (D) in connection
with any tax audit or proceeding to the extent attributable to
the application of Section 4999 of the Code to any payment or
benefit provided hereunder).
(c) If a Dispute arises out of or relates to this
Agreement or the interpretation of this Agreement, Executive
shall be entitled to an adjudication of the Dispute in the courts
of the United States of America located in the City of Richmond,
Virginia, and/or of the courts of the Commonwealth of Virginia in
the City of Richmond, Virginia or, at Executive's option, in
Chesterfield, Goochland, Hanover or Henrico Counties, and
Reynolds irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of such courts for any Dispute.
Reynolds further agrees not to commence any action, suit or
proceeding relating thereto except in such courts. Reynolds and
Executive hereby irrevocably and unconditionally waive any
objection to the laying of venue of any action, suit or
proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the United States of America
located in the City of Richmond, Virginia, and in the courts of
the Commonwealth of Virginia, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such
court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
(d) Alternatively, Executive, at Executive's option,
may seek an award in arbitration, in which event, Reynolds shall
appoint as the sole and exclusive arbiter of such Dispute a
committee of three members of the Board immediately before the
Change in Control, who are not directors of Reynolds or its
affiliates at the time of such Dispute. The decision of such
committee and the award of any monetary judgment or other relief
by such committee shall be final and binding upon Executive and
Reynolds and shall not be subject to appeal. Judgment may be
entered upon the decision and award of such committee by
Executive or Reynolds in any court of competent jurisdiction.
Reynolds shall pay the persons selected pursuant to this Section
7(c) a reasonable fee for their services, and shall reimburse
such persons for their expenses in this capacity. In addition,
Reynolds shall, to the maximum extent permitted by law, indemnify
and hold harmless such persons of and from any and all claims,
damages or expenses of any nature whatsoever relating to or
arising from their activities in this capacity. If Reynolds is
unable to appoint the committee referred to above after good
faith efforts to do so, or if such committee cannot reach
agreement, any remaining Dispute shall be settled, at Executive's
option, either by adjudication on the terms set forth above, or
by arbitration in the City of
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16
Richmond in accordance with the commercial arbitration
rules then in effect of the American Arbitration
Association, before a panel of three arbitrators, two
of whom shall be selected by Reynolds and Executive,
respectively, and the third of whom shall be selected by the
other two arbitrators. Any award entered by the arbitrators
shall be final, binding and nonappealable and judgment may be
entered thereon by any party in accordance with applicable law in
any court of competent jurisdiction.
8. Successors; Binding Agreement.
(a) This Agreement shall inure to the benefit of and
be binding upon Reynolds and its successors and assigns.
Reynolds shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Reynolds to
expressly assume and agree to perform this Agreement. Failure of
Reynolds to obtain such assumption and agreement prior to a
Change in Control shall be a breach of this Agreement and shall
entitle Executive to terminate Executive's employment pursuant to
Section 2(b)(vii).
(b) This Agreement shall inure to the benefit of and
be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amount
would still be payable hereunder if Executive had continued to
live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to
Executive's devisee, legatee or other designee or, if there is no
such designee, Executive's estate.
9. Miscellaneous.
(a) Assignment. No right, benefit or interest
hereunder shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or
charge, except by will or the laws of descent and distribution,
and any attempt thereat shall be void; and no right, benefit or
interest hereunder shall, prior to receipt of payment, be in any
manner liable for or subject to the recipient's debts, contracts,
liabilities, engagements or torts; provided however, that
Executive may assign any right, benefit or interest hereunder if
such assignment is permitted under the terms of any plan or
policy of insurance or annuity contract governing such right,
benefit or interest.
(b) Construction of Agreement. This Agreement is not,
and nothing herein shall be deemed to create, a commitment of
continued employment of Executive by Reynolds or by any of its
subsidiaries.
(c) Statutory References. Any reference in this
Agreement to a specific statutory provision shall include that
provision and any comparable
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17
provision or provisions of future legislation amending, modifying,
supplementing or superseding the referenced provision.
(d) Amendment. This Agreement may not be amended,
modified or terminated except by written agreement of both
parties. Anything in this Agreement to the contrary
notwithstanding, at any time before a Change in Control occurs,
Executive shall, at Reynolds' written request enter into an
amendment to this Agreement to change the percentage referred to
in Section 2(c)(i) to a percentage that is not more than 25%, so
long as such change is consistent with a contemporaneous change
of a similar nature in the Rights Agreement.
(e) Waiver. No provision of this Agreement may be
waived except by a writing signed by the party to be bound
thereby. Executive may at any time or from time to time waive any
or all of the rights and benefits provided for herein which have
not been received by Executive at the time of such waiver. In
addition, prior to the last day of the calendar year in which
Executive's Termination occurs, Executive may waive any or all
rights and benefits provided for herein which have been received
by Executive; provided that Executive repays to Reynolds (or, if
the benefit was received from an employee benefit plan, to such
plan) the amount of the benefit received (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code). Any
waiver of benefits pursuant to this section shall be irrevocable.
(f) Severability. If any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for
any reason, the remaining provisions of this Agreement shall
remain in full force and effect to the fullest extent permitted
by law.
(g) Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be considered an
original and all of which together shall constitute one
agreement.
(h) Number and Gender. All words used in this
Agreement shall be construed to be of such number or gender as
the circumstances require.
(i) Taxes. Any payment or delivery required under
this Agreement shall be subject to all requirements of the law
with regard to withholding of taxes, filing, making of reports
and the like, and Reynolds shall use its best efforts to satisfy
promptly all such requirements.
(j) Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of
Delaware.
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18
(k) Entire Agreement. This Agreement sets forth the
entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all other prior
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject
matter contained herein, including, without limitation, any prior
severance agreement, is hereby terminated and canceled; provided
however, except as specifically provided in Section 3(f)
regarding Reynolds' Termination Allowance Policy, any of
Executive's rights hereunder shall be in addition to any rights
Executive may otherwise have under benefit plans or agreements of
Reynolds to which Executive is a party or in which Executive is a
participant, including, but not limited to, any Reynolds'
sponsored employee benefit plans, long term share performance or
other long term incentive plans and stock option plans.
Provisions of this Agreement shall not in any way abrogate
Executive's rights under such other plans or agreements.
(l) Notice. All notices required or permitted to be
given under this Agreement shall be given in writing or other
permanently recorded form to the parties at the addresses set
forth below, or to such other address(es) as may be provided by
notice given in accordance with this Section 9(l):
If to Reynolds, to:
Reynolds Metals Company
Attention: Corporate Secretary
6601 West Broad Street
Richmond, Virginia 23230
Facsimile Number: 804-281-3740
If to Executive, to the address set forth below
Executive's signature line, or if no address appears at the
signature line, at the last known home address of Executive in
Reynolds' records.
A notice shall be deemed to have been duly given
(1) if delivered by hand or courier, on the date of
delivery;
(2) if sent by United States mail, 7 days after
posting;
(3) if sent by facsimile, on production of a
transmission report by the machine from which the facsimile
was sent which indicates that the facsimile was sent in its
entirety to the facsimile number of its recipient.
Facsimile notices shall be confirmed by sending the
original document by hand, courier or United States mail.
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Each of the parties has therefore caused this Agreement to
be duly executed as of the _____ day of ____________, 1999.
REYNOLDS METALS COMPANY
By____________________________
Title: Chairman of the Board and
Chief Executive Officer
EXECUTIVE
______________________________
Address:______________________
______________________________
______________________________
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