CONFIDENTIAL EXHIBIT 10.2
MEMORANDUM
TO: Robert P. Newcomer
FROM: William Yanavitch II
DATE: March 25, 2003
This offer (the "Severance Offer") is being made to you concerning your
separation from employment with the Glatfelter Company (the "Company"). This
Severance Offer is intended as a confidential statement and supersedes all prior
understandings and agreements whether written or oral. In recognition of your
contributions to the Company and to aid you in your transition to new
employment, you are being offered the following:
1. You will continue to be employed as President and Chief Operating Officer
through June 30, 2003, at which time your employment will end unless your
position terminates earlier under paragraph 3 or is extended under paragraph
4. During the term of your employment you agree to perform the duties
assigned to you faithfully, diligently and to the best of your ability, and
to cooperate fully with the officers and directors of the Company. It is
recognized, however, that you may devote a significant portion of time during
your work days to search for a new position, including taking time off for
research purposes, consultations with outplacement professionals, and
interviews. Notwithstanding the other terms of this paragraph 1, the Company
reserves the right to place you on a paid leave of absence until June 30,
2003. Throughout your employment, the Company will provide you with an office
and facilities commensurate with your position.
2. Except as specified herein, you will continue to receive your base salary, at
the annual rate of $391,128, and benefits provided senior executives or other
employees at your grade level, or otherwise provided to you in the past,
through June 30, 2003, and payment of 2002 Management Incentive,
Profit-Sharing and Long-Term Incentive awards that are payable in 2003. The
Company will pay you the amounts that are due to you under the Company's
Management Incentive Plan ("MIP") and the Company profit sharing plan
("Profit Sharing Plan") as soon as administratively practicable after each
such payment becomes due for the year 2002. The amounts payable under this
paragraph 2, and all other amounts payable under this Severance Offer, shall
be subject to legally required withholdings and deductions.
3. The Company will have the right to terminate your employment for Cause, as
further set forth herein. "Cause" means, for purposes of this Severance
Offer, conduct materially injurious to the Company, following notice thereof
and reasonable opportunity to cure. In the event of such a termination for
Cause, the Company shall have no further obligation under this Memorandum,
except the obligation to pay you an amount equal to the portion of your
compensation as defined in paragraph 2 as may be accrued and unpaid on the
date of termination.
4. The Company will have the right to request that you provide significant
services through June 30, 2003. However, if the Company assigns you such
significant responsibilities that you cannot reasonably devote at least 20
hours per week to your search for a new position (as further set forth in
paragraph 1) throughout the period ending June 30, 2003, the Company will pay
you an additional $32,594 on or about July 1, 2003. After June 30, 2003, you
may perform services for the Company as a consultant, as you and the Company
may further agree.
5. If you die or become totally disabled during your employment hereunder, you
will be treated as any other executive employee of the Company under the same
circumstances, except to the extent set forth in this Severance Offer or
Exhibit A hereto.
6. So long as you do not voluntarily terminate your employment before July 1,
2003, you will receive the following payments and benefits, subject to the
conditions set forth herein:
(a) The Company will pay you $488,910 as severance pay. It is expected that
such amount will be paid in a single sum on July 1, 2003. However, the
Company reserves the right to pay you such amount in installments of at
least $32,594, not less frequently than monthly, beginning July 1, 2003.
If the Company elects to pay you other than in a single sum, the Company
will notify you of that decision before July 1, 2003 and will review that
decision at least quarterly until the entire amount has been paid to you,
and may pay you any remaining amount due at any time.
(b) You will continue to vest in and be paid prior MIP and Profit Sharing
Plan awards (such as your performance share awards) through June 30,
2003, except as further provided herein. Previously deferred MIP
compensation plus accrued interest will be paid to you on or about July
1, 2003. In lieu of any further award under the MIP or Profit Sharing
Plan on account of your service for the period January 1-June 30, 2003,
the Company will pay you an additional amount of $115,000. As further
severance pay, the Company will also pay you $230,000 in lieu of any
further award under the MIP or Profit Sharing Plan on account of your
termination of employment. Such additional payments will be made on or
about July 1, 2003 and will be eligible compensation under the Company's
401(k) savings plan.
(c) With respect to the Company's Key Employee Long-Term Incentive Plan (the
"LTIP"):
(1) In lieu of any further award under the LTIP, the Company will pay you
an additional amount of $66,000, on or about July 1, 2003.
(2) After your separation from employment on June 30, 2003, you will be
eligible under this agreement to exercise the stock options
previously granted to you under the LTIP as of that date and which
are vested as of that date, at any time until the earlier of July 1,
2008 (five (5) years from the termination date) and the stated
expiration of the date of such stock options. You may elect to
exercise your stock options through a "cashless exercise", and may do
so within this period by notifying the Company, in writing, regarding
your cashless exercise of such option(s). When you notify the Company
of a cashless exercise, the Company will pay you, in a single sum as
soon as administratively practicable, an amount of cash equal to the
difference between the exercise price of the stock option(s) and the
closing price of Company common stock on the date you notify the
Company regarding your cashless exercise of the option(s) multiplied
by the number of shares with respect to which options are then
exercised. In the event of your death before July 1, 2008, a cashless
exercise of such stock option(s) may be made by the legal
representative of your estate for a period of one year from the date
of death (or stated expiration date of the option, if shorter). If,
after June 30, 2003, the Company reprices or otherwise modifies the
terms of options granted to participants in the LTIP prior to that
date, and such repricing or change applies to all or substantially
all such options, or cancels such options and issues new options in
their place, the repricing, change or reissuance of options will
apply equally to you unless such repricing or change is less
favorable to you than the terms of the options as granted to you.
(3) The Company will pay you $423,000 in respect of all vested shares of
restricted stock held by you. Such payment shall be made on or about
July 1, 2003, and your rights to and under such shares shall be
cancelled as of such date.
(d) Throughout your employment and until the date you become eligible for
health benefits under Medicare, the Company will continue health and
dental benefits under health and dental plans providing coverage,
benefits, and out-of-pocket costs not less favorable than now in effect,
as further set forth in Exhibit C hereto, which is made part of this
Severance Offer, and the Company will pay the cost for those benefits.
Exhibit C shall incorporate by reference the 2003 Summary Plan
Description for the health plan described in Exhibit C, whether or not
such Summary Plan Description has been made final and adopted by the
Company on the date of this offer.
(e) You will be an active participant in the Company's life insurance plan
through June 30, 2003. On or about July 1, 2003, the Company will pay you
$36,000 in lieu of further payments by the Company for life insurance
coverage following your termination of employment (and any taxes on such
payment).
(f) You will continue to be covered under the Company's long-term disability
(LTD) benefit program through June 30, 2003. On or about July 1, 2003,
the Company will pay you $131,000 in lieu of further payments by the
Company for long-term disability coverage following your termination of
employment (and any taxes on such payment). If you become disabled prior
to July 1, 2003, any severance pay you receive under paragraph 6(a) will
be reduced, dollar for dollar, by any short or long-term disability
benefit payable with respect to the same period of time.
(g) Your active participation in the Company's 401(k) Savings Plan (the
"401(k) Plan") will end as of your June 30, 2003 termination date. You
will not be permitted to defer amounts from your severance pay to the
401(k) Plan except as the 401(k) Plan may provide or as set forth herein.
You will have the same options as any other terminated employee to
request and receive distribution of your 401(k) Plan account (which can
be rolled over to an individual retirement account or another employer's
qualified plan that accepts rollovers), or to keep your 401(k) Plan
account invested for distribution at a later date.
(h) The Company will arrange and pay for professional outplacement with one
or more outplacement firms to be selected by the Company and you.
(i) The Company will pay the cost of financial planning in an amount up to
$15,000, plus legal services reasonably incurred in the negotiation and
review of this Severance Offer, and the cost of estate planning. The
Company will pay any costs incurred by you to enforce the performance of
this Severance Offer.
(j) The Company will provide relocation assistance, in an amount not to
exceed $15,000, to facilitate your move to another location outside the
greater York area where your new employer picks up the principal
expenses. This assistance will cover incidental expenses and items that
may or may not be covered under the new employer's relocation policy. The
Company will provide a relocation allowance similar in most respects to
the Company's policy for current exempt employees, in the event the costs
of our relocation are not provided for under the terms of your new
employment. Eligibility for this relocation assistance is available until
the end of the Severance Period. Specific relocation issues should be
addressed to the attention of William Yanavitch.
(k) You are currently eligible for participation in the Final Average
Compensation Pension under Article V of the Company's Supplemental
Executive Retirement Plan (the "FAC Pension"), to supplement your vested
pension under the Company's Retirement Plan for Salaried Employees. The
FAC Pension otherwise payable to you will be adjusted to take into
account further service and elements of compensation previously addressed
with you. The calculation and amount of the adjusted FAC Pension is set
forth in Exhibit A. It is payable to you commencing July 1, 2003, and is
payable in the form of an unreduced joint and 75% survivor annuity with
your wife as the surviving beneficiary unless otherwise arranged by you
and the Company.
(l) The Company will pay the cost of an annual executive physical until you
reach age 62.
(m) The Company will provide you with a mutually agreed upon letter of
reference if requested and such other personal references as appropriate.
All such requests for references must be directed to William Yanavitch,
Vice President of Human Resources.
(n) The Company will issue a mutually agreed upon statement announcing your
retirement. You and the Company will not issue any statement which
publicly or privately disparages the conduct or reputation of the other.
(o) The Company will provide an office for your use, and appropriate
administrative support, through June 30, 2005. The Company at its expense
will also provide you with a laptop computer, a facsimile machine, and a
cellular phone for your use through June 30, 2005.
(p) The Company will provide, on a nontaxable basis, executive development at
one or more nationally recognized programs agreed upon by you. The cost
of such programs shall not exceed $20,000.
(q) The Company will pay or reimburse the cost of membership dues for the
Lafayette Club through June 30, 2005.
(r) The Company, at its expense and when doing so is not a significant
additional burden on the Company, will provide you and your family with
transportation to Wisconsin on the Company's airplane through June 30,
2005, and at its convenience after that date.
(s) You will be entitled to six weeks of paid vacation until June 30, 2003,
and will be paid at your regular rate of pay for any vacation that is
unused as of that date.
7. In exchange for all amounts, benefits and other property paid to you or for
your benefit under the Severance Offer:
(a) You hereby agree that the Change in Control Employment Agreement dated as
of December 31, 2000 by and between the Company and yourself (the "Change
in Control Agreement") is terminated as of your last day of employment,
provided, however, that the terms section 6(d)(iv) thereof (relating to
the funding of the Company's Supplemental Executive Retirement Plan) of
such agreement, and any other provision of the Change in Control
Employment Agreement relating to the vesting and funding of any benefit
following a Change in Control (as defined therein), shall remain
effective with respect to you through the end of the Severance Period.
Any amount payable to you or for your benefit under this Severance Offer
which would remain unpaid on the date of any "Change in Control," as such
term is defined in the Change in Control Agreement, but for the operation
of this sentence, shall be accelerated and paid in full, without any
adjustment, on or before the date of the Change in Control. Until your
last day of employment, the Change in Control Agreement shall remain in
effect, but shall not supersede the terms of Section 6(k) of this
Severance Offer, it being intended that you will receive the amount of
the enhanced pension payable to you under Section 6(k) and Exhibit A
whether or not a Change in Control occurs.
(b) You will execute the General Release Agreement attached as Exhibit B. By
doing so, you will be releasing the Company from any and all claims that
you possibly could assert, including without limitation, any and all
claims based on your employment or the termination of your employment
(including without limitation, any and all claims under the federal Age
Discrimination in Employment Act, Title VII of the Civil Rights Act, the
Americans with Disabilities Act and state and local discrimination laws),
except for claims based on the enforcement or validity of this agreement
being offered to you, for unemployment compensation and for any accrued
benefits under an employee benefit plan maintained by the Company under
the Employee Retirement Income Security Act.
(c) You hereby resign as an officer of the Company effective your last day of
employment.
(d) You represent and warrant that you will comply with all of the terms of
the agreement concerning inventions and confidential information and you
will preserve the confidential nature of all trade secrets and other
proprietary information of the Company. You also represent and warrant
that by your last day of employment, you will deliver to the Company, all
Company keys, equipment, books, journals, records, computers, customer
lists, publications, files, computer disks, memoranda and documents of
any kind or description and other materials acquired during the course of
your employment and not make use of or disclose to anyone, without the
prior written consent of the Company, any information or documents
concerning or related to the Company, whether confidential or not, that
you have acquired to date, except as provided for under paragraph 6(o) of
this Severance Offer.
(e) You represent and warrant that you will comply with all terms in the
Company Corporate Disclosure and Securities Trading Policy, as delivered
to you. In addition to any existing obligation under your Employee's
Agreement, the Corporate Disclosure and Securities Trading Policy or
under the common law, you represent and warrant for all time that all
confidential information of the Company and/or any related entities
(whether written, graphic, oral, committed to memory or otherwise) in
your possession, including without limitation, information relating to
the operations or marketing plans of the Company and/or any related
entities, shall remain strictly confidential and secret so long as that
information has not been published in a form generally available to the
public.
(f) You will not discuss the Company's business, prospects, methods of
operation or other similar topics, to the extent such topics are
confidential or proprietary, with anyone other than the officers and
board of directors of the Company. You also will not engage in any
activities or make any statements that may disparage or reflect
negatively on the Company, its officers, directors or shareholders.
(g) You will keep the terms and conditions of the Severance Offer
confidential, except that you may reveal the terms and conditions of this
Severance Offer to your spouse, attorney and financial advisor or such
other party approved by the Company, so long as they first agree not to
disclose them to anyone else. The Company will make reasonable efforts to
keep the terms and conditions
of this Severance Offer confidential and to limit disclosure on a
need-to-know basis. The parties, however, understand that, by way of
example and not limitation, the Company may need to disclose the terms
and conditions of this Severance Offer to the Company's independent
auditors, the board of directors and as required by applicable law.
(h) Both during and after your employment with the Company, you will
cooperate with any reasonable request of the Company to participate in
the preparation for, response to, prosecution of and/or defense of any
pending, actual or threatened litigation involving the Company. If the
Company requests such participation after your employment ends, it will
reimburse you for all reasonable out-of-pocket expenses you incur as a
result of such cooperation.
(i) If the Company determines that you have breached your obligations set
forth in this Memorandum, the Company shall give you written notice
thereof and 14 days' opportunity to cure. If you fail to cure such
breach, the Company may bring an action to recoup any amounts paid or
payable after June 30, 2003, which shall be repaid by you following a
determination by a court having jurisdiction of the matter (and
exhaustion of any appeals therefrom) that you in fact breached your
obligations hereunder. (As required by regulations issued by the EEOC,
the foregoing sentence does not apply with respect to a claim under the
Federal Age Discrimination in Employment Act). In addition, if you breach
your obligations set forth in subparagraphs 7(d), (e), (f), (g) or (h)
above, the Company also shall be entitled to seek temporary and permanent
injunctive relief to restrain any further breach of those obligations
following notice and opportunity to cure.
(j) You agree that your agreement with respect to the Severance Offer shall
be deemed to be made in the Commonwealth of Pennsylvania and it shall be
interpreted, construed and governed by the laws of Pennsylvania, without
giving effect to the principles of conflicts of law under Pennsylvania
law. You also agree to submit to the jurisdiction of the state and
federal courts located in Pennsylvania in the event there is any claim
that you have breached this agreement.
Please consider this offer for up to 21 days from today. You may accept this
Severance Offer by returning a signed and notarized copy of the General Release
Agreement attached as Exhibit B by no later than 5:00 p.m. on April 14, 2003 to
William Yanavitch. If you return it before April 14, 2003, you will be
voluntarily waiving your right to consider it for the entire 21-day period. In
addition, you will have 7 days after you return a signed copy of the General
Release Agreement to revoke it by submitting a signed revocation notice to
William Yanavitch if you choose to do so. Upon the expiration of that 7 day
period, the General Release Agreement will become effective. If you do not
return a signed and notarized copy of the General Release Agreement to William
Yanavitch by 5:00 p.m. on April 14, 2003, or if you revoke the General Release
Agreement within the 7 day revocation period, you will not receive the
separation payments and enhanced benefits described in this Agreement.
You should consult with your personal attorney whether to sign the required
General Release Agreement. On behalf of the Company, I thank you for your past
service and I wish you well in your future endeavors.