Exhibit 10.27
EMPLOYMENT AND CHANGE-IN-CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT, made as of December 11, 2000, (the "Effective
Time"), by and between RUSSELL-STANLEY HOLDINGS, INC., a Delaware corporation
(the "Company"), RONALD M. LITCHKOWSKI (the "Executive") and, for the purpose of
acting as a guarantor of the Company, RUSSELL-STANLEY CORPORATION, a Delaware
corporation (the "Corporation").
WHEREAS, the Executive is currently employed by the Company, and the
Company recognizes the Executive's unique skills and abilities in serving the
Company's business in such capacity;
WHEREAS, the Company may undergo a restructuring pursuant to any one
of the following transactions: (i) a full or partial refinancing, repurchase or
other restructuring of the Company's long-term indebtedness; (ii) a sale of all
or a significant portion of the Company's assets; (iii) a merger, acquisition or
other similar transaction by the Company and/or (iv) an equity investment in or
other recapitalization by the Company (any such event, a "Restructuring"),
during which time the Company wishes to assure that the Executive continues to
be dedicated to his or her duties and responsibilities, and the Company is
willing to provide the Executive with certain compensation in order to assure
such continued dedication; and the Executive is willing to forego other
employment opportunities which he might otherwise pursue in exchange for such
compensation.
WHEREAS, the Company has determined that it is essential and in the
best interest of the Company and its stockholders to retain the services of the
Executive as Chief Financial Officer of the Company, and to provide the
Executive with compensation and other benefits on the terms and conditions set
forth in this Agreement, and to ensure his continued dedication and efforts in
such event without undue concern for his personal financial and employment
security in the event of a Change in Control; and
WHEREAS, the Executive is willing to accept such employment and
perform services for the Company on the terms and conditions hereinafter set
forth.
NOW THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. EFFECTIVENESS; RETENTION BONUS
1.1 This Agreement shall become effective at the Effective Time.
1.2 The Company shall pay to the Executive a lump sum cash payment
in an amount equal to $62,500 within ten (10) days after the successful
completion (as determined by the Board of Directors of the Company (the
"Board")) of the Restructuring (the "Completion Date"), so long as the Executive
remains employed with the Company through the Completion Date. Thereafter, the
Company shall pay to the Executive a lump sum cash payment in an amount equal to
$62,500 within ten (10) days after the earliest to occur of (i) the date that
Executive's employment is terminated by the Company without Cause (as
hereinafter defined) or as a result of Executive's death or Disability, at any
time during the six consecutive months immediately following Completion Date
(such six-month period, the "Retention Period"), (ii) a Change in Control that
occurs during the Retention Period, so long as the Executive is still employed
by the Company immediately prior to the Change in Control, and (iii) the end of
the Retention Period, so long as the Executive is still employed on such date.
2. TERM OF AGREEMENT. This agreement shall commence as of the
Effective Time, and shall continue in effect until the second anniversary of the
Effective Time; PROVIDED, HOWEVER, that commencing on the second anniversary of
the Effective Time, and on each anniversary of the Effective Time thereafter,
the term of this Agreement shall automatically be extended for one (1) year
unless the Company or the Executive shall have given written notice to the other
at least sixty days prior thereto that the term of this Agreement shall not be
so extended (including, without limitation, at least sixty days prior to the
second anniversary of the Effective Time); and PROVIDED, FURTHER, however, that
notwithstanding any such notice by the Company not to extend, the term of this
Agreement shall not expire prior to the expiration of twenty-four (24) months
after any Change in Control (the "Protected Period") which occurs while this
Agreement is in effect. Any such notice not to extend by the company shall be
deemed a termination without Cause.
3. EMPLOYMENT.
3.1 The Company agrees to employ Executive, and Executive agrees to
serve during the term hereof, as Chief Financial Officer of the Company.
Executive shall report to the Chief Executive Officer of the Company (the "CEO).
3.2 Executive agrees to devote his full working time and efforts, to
the best of his ability, experience and talent, to the performance of services,
duties and responsibilities in connection with the position named above.
Executive shall perform such duties and exercise such powers, commensurate with
his position, as the CEO shall from time to time assign to him on such terms and
conditions and subject to such restrictions as the CEO may reasonably from time
to time impose.
3.3 Nothing in this Agreement shall preclude Executive from (a)
engaging in charitable and community affairs so long as, in the reasonable
determination of the Board, such activities do not interfere with his duties and
responsibilities hereunder, (b) managing any
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passive investment made by him in publicly traded equity securities or other
property (provided that no such investment may exceed 5% of the equity of any
entity, without the prior approval of the Board, which approval shall not be
unreasonably withheld) or (c) serving, subject to the prior approval of the
Board, which approval shall not be unreasonably withheld, as a member of boards
of directors or as a trustee of any other corporation, association or entity.
4. COMPENSATION.
4.1 SALARY. Effective as of February 1, 2001, the Company shall pay
Executive a base salary ("Base Salary") at an annual rate of $200,000. The Base
Salary shall be payable in accordance with the ordinary payroll practices of the
Company. The Base Salary may be increased in the discretion of the Board and, as
so increased, shall not be decreased and shall constitute "Base Salary"
hereunder.
4.2 PERFORMANCE BONUS. In addition to his Base Salary, Executive
shall receive an annual bonus (the "Performance Bonus"), equal to up to 50% of
the Executive's Base Salary (the "Target Performance Bonus"), payable pursuant
to the Company's annual incentive plan in respect of the Company's 2001 fiscal
year, in the event and to the extent that the Company achieves certain
performance targets (the "Performance Targets") established by the Board. The
Executive's Target Performance Bonus amounts and the Performance Targets are set
forth on Exhibit A attached hereto. The Board shall determine whether and to
what extent the Performance Targets have been achieved, and the amount of the
Performance Bonus, if any, to be paid to the Executive, and the Performance
Bonus shall be paid, not later than March 15 of the calendar year following the
fiscal year in respect of which the Performance Bonus is to be paid.
4.3 SUPER PERFORMANCE BONUS. In addition to his Base Salary and
Performance Bonus, Executive shall receive an additional bonus (the "Super
Performance Bonus"), equal to a portion of a bonus pool, which pool shall be
established based on the achievement by the Company of certain performance
targets established by the Board in respect of the Company's 2001 fiscal year
(the "Super Performance Targets", which targets are set forth generally on
Exhibit B attached hereto), so long as the Executive is employed by the Company
as of December 31, 2001. The Board shall determine whether and to what extent
the Super Performance Targets have been achieved, the amount of the bonus pool,
and the amount of the Super Performance Bonus, if any, to be paid to the
Executive (which determination shall be based in part upon the chief executive
officer of the Company's recommendation of the appropriate allocation of the
bonus pool); PROVIDED, HOWEVER, in the event of a Change in Control, the Super
Performance Bonus shall in no event be less than the Target Performance Bonus.
The Super Performance Bonus shall be paid not later than March 15 of the
calendar year following the fiscal year in respect of which the Super
Performance Bonus is to be paid.
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4.4 EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES. The Company
shall provide Executive during the term of his employment hereunder with
coverage under all employee pension, welfare and fringe benefit programs, plans
and practices (including, without limitation, the Company's vacation plan and
the Company's Vehicle Program) in accordance with the terms thereof, which the
Company makes available to its senior executives. In addition to the foregoing,
Executive shall be provided with the fringe benefits set forth on Appendix I
attached hereto.
4.5 EXPENSES. Executive is authorized to incur reasonable expenses
in carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel and similar items related to such duties
and responsibilities. The Company will reimburse Executive for all such expenses
upon presentation by Executive from time to time of appropriately itemized and
approved (consistent with the Company's past practice) accounts of such
expenditures.
5. DEFINITIONS.
5.1 CAUSE. For purposes of this Agreement, "Cause" shall mean (i)
the willful and continued failure by Executive substantially to perform
Executive's duties with the Company (other than any such failure resulting from
Executive's incapacity due to physical or mental illness) after a demand for
substantial performance is delivered to Executive by the Board, (ii) the willful
and continuous engaging by Executive in gross misconduct after a demand to cease
such misconduct is delivered to Executive by the Board, (iii) Executive's
commission of a felony or a misdemeanor involving moral turpitude or (iv) a
breach by the Executive of the material terms of the Management Stockholder's
Agreement concerning any non-compete, non-solicitation or confidentiality,
following notice of such breach (which notice shall be written) or (v) any
violation by the Executive of any material written Company policy after written
notice of such breach.
5.2 CHANGE IN CONTROL. (a) For purposes of this Agreement, a "Change
in Control" shall mean the occurrence during the term of this Agreement of the
date that:
(i) Vestar Capital Partners III, L.P. (and/or any investor therein
or any affiliate thereof) (collectively, "Vestar") ceases to be the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, which shall
in any event include having the power to vote (or cause to be voted at Vestar's
direction) pursuant to contract, irrevocable proxy or otherwise)), directly or
indirectly, of a majority in the aggregate of the total voting power of the
Company, whether as a result of the issuance of securities of the Company, any
merger, consolidation, liquidation or dissolution of the Company, any direct or
indirect transfer of securities by the Company or otherwise, or
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(ii) any "person", other than a "group" of securityholders of the
Company acting in concert (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act), is or becomes the beneficial owner (as defined in clause
(i)(A) above, except that such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, in the aggregate, of a greater percentage of the total
voting power of the Company than that held, directly or indirectly, in the
aggregate, by Vestar; and
(iii) Vestar ceases to have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of the
Board.
(b) For purposes of clause (a), Vestar shall be deemed to
beneficially own voting power of a corporation held by any other corporation
(the "parent corporation") so long as Vestar beneficially owns (as so defined),
directly or indirectly, in the aggregate, a majority of the voting power of the
parent corporation. Also for purposes hereof, Vestar shall be deemed to have
voting power over each share of common stock of the Company owned by any
employee thereof.
(c) For purposes of this Subsection 5.2, "Exchange Act" shall mean
the Securities and Exchange Act of 1934, as amended.
5.3 DISABILITY. For purposes of this Agreement, "Disability" shall
mean a physical or mental infirmity, which impairs the Executive's ability to
substantially perform his duties with the Company that continues for a period of
at least one hundred eighty (180) consecutive days.
5.4 GOOD REASON. For purposes of this Agreement, "Good Reason" shall
mean (i) a reduction in Executive's Base Salary or annual bonus opportunity,
(ii) a substantial diminution of Executive's duties and responsibilities (iii)
an adverse change in Executive's reporting obligations or (iv) a relocation of
Executive's primary workplace that is greater than ten (10) miles from
Executive's primary workplace as of the date hereof.
5.5 LTIP TARGET AWARD. For purposes of this Agreement, "LTIP Target
Award" shall mean a bonus payable to the Executive upon the Company's
achievement of certain performance targets in respect of the Company's fiscal
years 2001 and 2002, in an amount equal to $250,000.
6. TERMINATION OF EMPLOYMENT.
6.1 FOLLOWING A CHANGE IN CONTROL. If, during the term of this
Agreement, the Executive's employment with the Company shall be terminated
during the Protected Period, then the Executive shall be entitled to the
following compensation and benefits:
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(a) If the Executive's employment with the Company shall be
terminated by the Company for Cause, the Company shall pay to the Executive the
following:
(i) Base Salary earned or accrued by the Executive through the
Termination Date but not paid as of the Termination Date;
(ii) reimbursement for reasonable and necessary expenses incurred by
the Executive on behalf of the Company during the period ending on the
Termination Date; and
(iii) vacation pay earned or accrued by the Executive through the
Termination Date (the amounts in clauses (i), (ii), and (iii),
collectively, the "Accrued Compensation").
(b) If the Executive's employment with the Company shall be
terminated by the Executive without Good Reason (including as a result of the
Executive's death or Disability), and either (I) Dan Miller has ceased to be
Chief Executive Officer of the Company, or (ii) Dan Miller, in his capacity as
Chief Executive Officer of the Company, consents in writing to such termination
without Good Reason, which consent shall not be unreasonably withheld, the
Company shall pay and provide the Executive (or his or her personal
representative or estate, as applicable) the following:
(i) all Accrued Compensation;
(ii) a severance amount equal to 15 months (the "Severance Period")
of Base Salary at the rate in effect immediately prior to the Termination Date;
(iii) an amount equal to the maximum target amount of the
Executive's Performance Bonus, pro rated from the first day of the applicable
fiscal year in respect of which the Performance Bonus is payable, through the
Termination Date; and
(iv) an amount equal to the maximum LTIP Target Award, pro rated
from the first day of the applicable fiscal year in respect of which the LTIP
Target Award is payable, through the Termination Date;
(v) during the Severance Period, the Company shall at its expense
continue on behalf of the Executive and his dependents and beneficiaries (to the
same extent provided to the dependents and beneficiaries prior to the
Executive's termination) the life insurance, disability, medical, dental, and
hospitalization benefits provided to the Executive by the Company at any time
within ninety (90) days preceding a Change in Control or at any time thereafter,
or, to the extent more favorable, to other similarly situated executives who
continue in the employ of the Company during the Severance Period. The Company's
obligation hereunder with respect to the foregoing benefits shall be limited to
the extent that the Executive obtains any such benefits
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pursuant to a subsequent employer's benefit plans, in which case the Company may
reduce the coverage of any benefits it is required to provide the Executive
hereunder as long as the aggregate coverages and benefits of the combined
benefit plans are no less favorable to the Executive than the coverages and
benefits required to be provided hereunder. This Subsection 6.1(b)(v) shall not
be interpreted so as to limit any benefits to which the Executive or his
dependents may be entitled under any of the Company's employee benefit plans,
programs or practices following the Executive's termination of employment,
including without limitation, retiree medical and life insurance benefits;
(vi) during the Severance Period, the Company shall, at its expense,
continue to provide Executive with the fringe benefits provided to the Executive
by the Company (including without limitation those fringe benefits set forth on
Appendix I attached hereto) at any time within ninety (90) days preceding a
Change in Control or at any time thereafter, or, to the extent more favorable,
to other similarly situated executives who continue in the employ of the Company
during the Severance Period; PROVIDED, HOWEVER, that in any event the Executive
shall be entitled to (A) retain his or her laptop computer that is, immediately
prior to the Change in Control, being provided to Executive, subject to the
Executive's removal from the computer of all data that constitutes Confidential
Information (as defined in Section 18), with the supervision of an appropriate
employee of the Company; (B) retain any automobile that the Company is,
immediately prior to the Change in Control, providing to the Executive, and (C)
an amount equal to $6,250, payable in a lump sum within thirty (30) days after
the Executive's Termination Date, in respect of the expenses incurred by the
Executive during the Severance Period in connection with the automobile provided
in clause (B) above. In addition to the foregoing, the Company shall pay the
Executive an amount equal to any income or other related taxes paid by the
Executive in respect of his receipt of the benefits provided for in clause (B)
and (C), above; and
(vii) at any time during the twelve (12) months following the
Executive's Termination Date, at the Executive's request, the Executive shall
receive outplacement assistance pursuant to the Company's Executive Outplacement
Program, which assistance shall be provided by the outplacement service provider
designated by the Company pursuant to such Program, as such program is in effect
as of the date hereof.
Notwithstanding anything in this Section 6.1(b) to the contrary, in the event
that Dan Miller, in his capacity as Chief Executive Officer of the Company,
does not consent in writing to such termination without Good Reason,
Executive shall only be entitled to the compensation and benefits under
Section 6.1(a) of this Agreement.
(c) If the Executive's employment with the Company shall be
terminated by the Company without Cause (which shall include the Company's
nonrenewal of this Agreement) or by the Executive for Good Reason, the Company
shall provide the Executive the following:
(i) all Accrued Compensation;
(ii) a severance amount equal to 15 months of Base Salary at the
rate in effect immediately prior to the Termination Date;
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(iii) an amount equal to the sum of (x) the maximum target amount of
the Executive's Performance Bonus plus (y) the Executive's LTIP Target Award;
(iv) during the Severance Period, the Company shall at its expense
continue on behalf of the Executive and his dependents and beneficiaries (to the
same extent provided to the dependents and beneficiaries prior to the
Executive's termination) the life insurance, disability, medical, dental, and
hospitalization benefits provided to the Executive by the Company at any time
within ninety (90) days preceding a Change in Control or at any time thereafter,
or, to the extent more favorable, to other similarly situated executives who
continue in the employ of the Company during the Severance Period. The Company's
obligation hereunder with respect to the foregoing benefits shall be limited to
the extent that the Executive obtains any such benefits pursuant to a subsequent
employer's benefit plans, in which case the Company may reduce the coverage of
any benefits it is required to provide the Executive hereunder as long as the
aggregate coverages and benefits of the combined benefit plans are no less
favorable to the Executive than the coverages and benefits required to be
provided hereunder. This Subsection 6.1(c)(iv) shall not be interpreted so as to
limit any benefits to which the Executive or his dependents may be entitled
under any of the Company's employee benefit plans, programs or practices
following the Executive's termination of employment, including without
limitation, retiree medical and life insurance benefits.
(v) during the Severance Period, the Company shall, at its expense,
continue to provide Executive with the fringe benefits (including without
limitation those fringe benefits set forth on Appendix I attached hereto)
provided to the Executive by the Company at any time within ninety (90) days
preceding a Change in Control or at any time thereafter, or, to the extent more
favorable, to other similarly situated executives who continue in the employ of
the Company during the Severance Period; PROVIDED, HOWEVER, that in any event
the Executive shall be entitled to (A) retain his or her laptop computer that
is, immediately prior to the Change in Control, being provided to Executive,
subject to the Executive's removal from the computer of all data that
constitutes Confidential Information (as defined in Section 18), with the
supervision of an appropriate employee of the Company; (B) retain any automobile
that the Company is, immediately prior to the Change in Control, providing to
the Executive, and (C) an amount equal to $6,250, payable in a lump sum within
thirty (30) days after the Executive's Termination Date, in respect of the
expenses incurred by the Executive during the Severance Period in connection
with the automobile provided in clause (B) above. In addition to the foregoing,
the Company shall pay the Executive an amount equal to any income or other
related taxes paid by the Executive in respect of his receipt of the benefits
provided for in clause (B) and (C), above.
(vi) at any time during the twelve (12) months following the
Executive's Termination Date, at the Executive's request, the Executive shall
receive outplacement assistance pursuant to the Company's Executive Outplacement
Program, which assistance shall be provided by the outplacement service provider
designated by the Company pursuant to such Program, as such program is in effect
as of the date hereof.
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6.2 PRIOR TO A CHANGE IN CONTROL OR AFTER THE PROTECTED PERIOD. If,
during the term of this Agreement, but prior to a Change in Control or after the
Protected Period, the Executive's employment with the Company is terminated,
then the Executive shall be entitled to certain compensation and benefits, as
follows:
(a) If the Executive's employment with the Company shall be
terminated by the Company for Cause, or by the Executive without Good Reason,
the Company shall pay the Executive the same amount of compensation, and provide
the same benefits, as payable and provided pursuant to Section 6.1(a) of this
Agreement.
(b) If the Executive's employment with the Company shall be
terminated by the Company without Cause or by the Executive for Good Reason, the
Company shall pay the Executive the same amount of compensation, and provide the
same benefits, as payable and provided pursuant to Section 6.1(b) of this
Agreement, in addition to any other payments or benefits which may be provided
pursuant to any Company plan, program, or policy; PROVIDED, HOWEVER, that with
respect to the provision of welfare and fringe benefits, the Company shall
provide welfare and fringe benefits to the same extent as provided to the
Executive pursuant to Section 6.1(c)(iv), (v) and (vi) of this Agreement.
6.3 Except as otherwise provided in this Agreement, all payments
required to be paid by the Company to the Executive pursuant to Section 6.1 or
6.2 shall be paid in equal installments in accordance with the Company's normal
payroll practices or, at the Company's option, in a lump sum within thirty (30)
days after the Executive's Termination Date.
6.4 The Executive shall not be required to mitigate the amount of
any payments provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment
except as provided in Section 6.1(c)(iv).
7. NOTICE OF TERMINATION. Any purported termination by the Company
or by the Executive shall be communicated by written notice of termination to
the other. For purposes of this Agreement, a "Notice of Termination" shall mean
a notice, which indicates the specific termination provision in this Agreement,
relied upon. For purposes of this Agreement, no such purported termination shall
be effective without such Notice of Termination.
8. TERMINATION DATE. "Termination Date" shall mean, in the case of
the Executive's death, his date of death and, in all other cases, the date
specified in the Notice of Termination, subject to the following:
(a) If the Executive's employment is terminated by the Company for
Cause or due to Disability, the date specified in the Notice of Termination
shall be at least thirty (30) days from the date the Notice of Termination is
given to the Executive, provided that, in the case of
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Disability, the Executive shall not have returned to the full-time performance
of his duties during such period of at least (30) days; and
(b) If the Executive terminates his employment, the date specified
in the Notice of Termination shall be at least sixty (60) days from the date the
Notice of Termination is given by the Executive to the Company.
9. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and, at the time of any such
succession or assignment, the Company shall require any successor or assign 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 or assignment had taken place. The term "the Company" as used herein
shall include such successors and assigns. The term "successors and assigns" as
used herein shall mean a corporation or other entity acquiring ownership,
directly or indirectly, of all or substantially all the assets and business of
the Company (including this Agreement) whether by operation of law or otherwise.
(b) Neither this Agreement nor any right or interest hereunder shall
be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal personal representative.
10. FEES AND EXPENSES. The Company shall pay the Executive's legal
fees and related expenses (including reasonable attorneys' fees and court costs)
incurred in connection with any good faith contest or dispute, which may arise
with respect to this Agreement; PROVIDED, HOWEVER, that in the event a court of
competent jurisdiction determines that the Executive's claims were frivolous or
were made in bad faith, the Company shall not be required to pay such fees and
expenses.
11. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other, provided that all notices to the Company shall be directed to the
attention of the board with a copy to the secretary of the Company. All notices
and communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be effective only upon receipt.
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12. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company and
for which the Executive may qualify, nor shall anything herein limit or reduce
such rights as the Executive may have under any other agreements with the
Company. Amounts which are vested benefits or which the executive is otherwise
entitled to receive under any plan or program of the Company shall be payable in
accordance with such plan or program.
13. SETTLEMENT OF CLAIMS; SECURITY FOR PAYMENT.
(a) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against the Executive or others.
(b) The Company shall use its best efforts to obtain a letter of
credit securing the severance payments and provision of benefits provided for in
Sections 6.1 and 6.2 of this Agreement. In addition to the foregoing, in the
event the Company enters a bankruptcy proceeding, it shall use its best efforts
to obtain approval from the bankruptcy court of the payment of the severance
obligations provided for in Sections 6.1 and 6.2 of this Agreement.
14. 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 the Executive and the Company. 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 or subsequent time. No agreement 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. No additional compensation provided under any benefit
or compensation plans to the Executive shall be deemed to modify or otherwise
affect the terms of this Agreement or any of the Executive's entitlements
hereunder.
15. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the state of Delaware, without
reference to principles of conflicts of laws.
16. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
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17. NONSOLICITATION; NONCOMPETITION.
(a) The Executive hereby covenants and agrees that, at all times
during the period of his employment and for one year thereafter, the Executive
shall not, without the prior written consent of the Board, (i) solicit or take
any action to willfully and intentionally cause the solicitation of any person
who as of that date is a client, customer, ("Client") of the Company or any of
its subsidiaries to transact any business with a Competitive Enterprise (as
hereinafter defined) or discontinue business, in whole or in part with the
Company; (ii) willfully or intentionally interfere with or damage any
relationship between a Client and the Company or (iii) solicit any person
employed at that time by the Company or any of its subsidiaries to apply for or
accept employment with a Competitive Enterprise or otherwise encourage or entice
such person to leave his position with the Company or any of its subsidiaries.
(b) The Executive hereby covenants and agrees that at all times
during the period of his employment and during the Severance Period, the
Executive shall not, without the prior written consent of the Board, be engaged
in or have financial interest in any business that is a Competitive Enterprise,
or otherwise engage in any activity that is a Competitive Enterprise.
(c) For purposes of this Agreement, the term "Competitive
Enterprise" shall mean any business which is in competition with a business
engaged in by the Company or any of its subsidiaries or affiliates in any state
of the United States or in any foreign country in which any of them are engaged
in business at the time of such termination of employment for as long as they
carry on a business therein. Notwithstanding the preceding sentence, the
Executive shall not be prohibited from owning less than five (5%) percent of any
publicly traded corporation.
(d) Notwithstanding anything set forth in this Section 17 to the
contrary, after a Change in Control, in the event the Executive's employment is
terminated without Cause by the Company or the Executive terminates his
employment for Good Reason, the Executive shall not be subject to the covenants
set forth in this Section 17.
(e) It is the intention of the parties hereto that the restrictions
contained in this Section be enforceable to the fullest extent permitted by
applicable law. Therefore, to the extent any court of competent jurisdiction
shall determine that any portion of the foregoing restrictions is excessive,
such provision shall not be entirely void, but rather shall be limited or
revised only to the extent necessary to make it enforceable. Specifically, if
any court of competent jurisdiction should hold that any portion of the
foregoing description is overly broad as to one or more states of the United
States or one or more foreign jurisdictions, then that state or states or
foreign jurisdiction or jurisdictions shall be eliminated from the territory to
which the restrictions of paragraph (a) of this Section applies and the
restrictions shall remain applicable in all other states of the United States
and foreign jurisdictions.
12
18. CONFIDENTIAL INFORMATION. The Executive agrees to keep secret
and retain in the strictest confidence all confidential matters which relate to
the Company, its subsidiaries and affiliates, including, without limitation,
customer lists, client lists, trade secrets, pricing policies and other business
affairs of the Company, its subsidiaries and affiliates learned by him from the
Company or any such subsidiary or affiliate or otherwise before or after the
date of this Agreement, and not to disclose any such confidential matter to
anyone outside the Company or any of its subsidiaries or affiliates, whether
during or after his period of service with the Company, except (i) as such
disclosure may be required or appropriate in connection with his work as an
employee of the Company or (ii) when required to do so by a court of law, by any
governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order him to divulge, disclose or make
accessible such information. The Executive agrees to give the Company advance
written notice of any disclosure pursuant to clause (ii) of the preceding
sentence and to cooperate with any efforts by the Company to limit the extent of
such disclosure. Upon request by the Company, the Executive agrees to deliver
promptly to the Company upon termination of his services for the Company, or at
any time thereafter as the Company may request, all Company, subsidiary or
affiliate memoranda, notes, records, reports, manuals, drawings, designs,
computer files in any media and other documents (and all copies thereof)
relating to the Company's or any subsidiary's or affiliate's business and all
property of the Company or any subsidiary or affiliate associated therewith,
which he may then possess or have under his direct control, other than personal
notes, diaries, rolodexes and correspondence.
19. REMEDY. Should the Executive engage in or perform, either
directly or indirectly, any of the acts prohibited by Sections 17 or 18 hereof,
it is agreed that the Company shall be entitled to full injunctive relief, to be
issued by any competent court of equity, enjoining and restraining the Executive
and each and every other person, firm, organization, association, or corporation
concerned therein, from the continuance of such violative acts. The foregoing
remedy available to the Company shall not be deemed to limit or prevent the
exercise by the Company of any or all further rights and remedies, which may be
available to the Company hereunder or at law or in equity.
20. GUARANTEE.
(a) The Corporation hereby unconditionally and irrevocably
guarantees (the "Guarantee") to the Executive and his successors, indorsees,
transferees and assigns, the prompt and complete payment and performance by the
Company when due of the applicable payments and provision of benefits set forth
in Sections 1, 4, 6 and 10 (collectively, the "Obligations").
(b) The Corporation shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Corporation, and without
notice to or further assent by the Corporation, any demand for payment of any of
the Obligations made by the Executive may be rescinded by the Executive, and any
of the Obligations continued, and the Obligations, or
13
the liability of any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Executive, and
this Agreement and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in
part. When making any demand hereunder against the Corporation, the Executive
may, but shall be under no obligation to, make a similar demand on the Company
or any other guarantor, and any failure by the employee to make any such demand
or to collect any payments from the Company or any such other guarantor or any
release of the Company or such other guarantor shall not relieve the Corporation
of its obligations or liabilities hereunder, and shall not impair or affect the
rights and remedies, express or implied, or as a matter of law, of the Executive
against the Corporation. For the purposes hereof "demand" shall include the
commencement and continuance of any legal proceedings.
(c) The Corporation waives any and all notice of the creation,
renewal, extension or accrual of any of the Obligations and notice of or proof
of reliance by the Executive upon this Guarantee or acceptance of this
Guarantee; the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon this Guarantee; and all dealings between the Borrower
or the Corporation, on the one hand, and the Executive, on the other, shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guarantee. The Corporation waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Company or
the Corporation with respect to the Obligations. This Guarantee shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity, regularity or enforceability any of this
Agreement, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
the Company against the Executive, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of the Company or the Corporation) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Company for the Obligations, or of the Corporation under this
Guarantee, in bankruptcy or in any other instance.
(d) This Guarantee shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon the Corporation
and its successors and assigns thereof, and shall inure to the benefit of the
Executive and his successors, indorsees, transferees and assigns, until all the
Obligations and the obligations of the Corporation under this Guarantee shall
have been satisfied by payment in full.
(e) This Guarantee shall continue to be effective, or be reinstated,
as the case may be, if at any time payment, or any part thereof, of any of the
Obligations is rescinded or must otherwise be restored or returned by the
Executive upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or upon or as a result of the
14
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Company or any substantial part of its property, or otherwise,
all as though such payments had not been made.
21. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof, which shall cease to be of any
further effect.
[Continued on next page.]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized representative and the Executive has executed
this Agreement as of the day and year first above written.
RUSSELL STANLEY HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
EXECUTIVE:
-----------------------------------
Ronald M. Litchkowski
AND, FOR THE LIMITED PURPOSE OF SECTION 20:
RUSSELL-STANLEY CORPORATION
By:
-----------------------------------
Name:
Title:
EXHIBIT A
PERFORMANCE TARGETS AND PERFORMANCE BONUS
If this % of the Annual Performance This % of the Executive's Target
Performance Bonus
Targets are Achieved Shall Be Payable as the Performance Bonus*:
-------------------- ------------------------------------------
85% 0%
90% 33%
95% 67%
100%* * 100%
* In the event that the Annual Performance Targets are achieved as to a
percentage point that is between the foregoing fixed percentage targets, the
Performance Bonus payable shall be calculated based upon a straight-line
interpolation between the foregoing fixed percentage targets.
** (100% = $27.5 million in EBITDA-Container Purchases, as reported in the
Company's financial statements(1), as such statements may be adjusted to reflect
any material adjustments proposed by the Company's auditors, which would affect
the calculation of EBITDA)
- ----------
(1) Includes in calculation of EBITDA management fees, if any, paid to Vestar
or any of its affiliates that were expensed by the Company.
EXHIBIT B
SUPER PERFORMANCE TARGETS AND SUPER PERFORMANCE BONUS PAYOUT
- ---------------------------------------------------------------------------------------
EBITDA-CONTAINER PURCHASE % OF INCREMENTAL $ AMOUNT ADDED CUMULATIVE BONUS
("CP") TARGETS EBITDA-CP ADDED TO TO BONUS POOL POOL AMOUNT
BONUS POOL
- ---------------------------------------------------------------------------------------
$ 27,500 -- $28,000 20% $ 100,000 $ 100,000
- ---------------------------------------------------------------------------------------
28,001 -- 29,000 20% 200,000 300,000
- ---------------------------------------------------------------------------------------
29,001 -- 30,000 30% 300,000 600,000
- ---------------------------------------------------------------------------------------
30,001 -- 31,000 40% 400,000 1,000,000
- ---------------------------------------------------------------------------------------
* Plus 10% of EBITDA-CP above $31 million.
APPENDIX I
FRINGE BENEFITS
Payment of all annual dues and expenses relating to the Executive's membership
in Fiddler's Elbow Country Club