EXHIBIT 10.7
November 25, 1996
(Name)
(Address)
(City)
Dear (Name2):
Union Camp Corporation (the "Company") considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Company may exist
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company's
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from the possibility of
a change in control of the Company.
In order to induce you to remain in the employ of the Company, the Company
agrees that you shall receive the severance benefits set forth in this letter
agreement (the "Agreement") in the event your employment with the Company is
terminated under the
circumstances described below subsequent to a "change in control of the
Company".
1. Term of Agreement. This Agreement shall commence on November 25, 1996,
and shall continue in effect until the date specified in a written
notice of termination of this Agreement given no less than two (2) years
prior to such date; provided that if a change in control of the Company
occurs prior to the date of termination of this Agreement, but
subsequent to such written notice of termination, this Agreement shall
continue in effect for two (2) years after the date such change in
control occurs, notwithstanding that notice of termination of this
Agreement has previously been given. The foregoing notwithstanding, this
Agreement is subject to earlier termination as provided in Subsection
3(ii).
2. Change in Control. No benefits shall be payable hereunder unless there
shall have been a change in control of the Company, as set forth below.
For purposes of this Agreement, a "change in control of the Company"
shall be deemed to have occurred upon the occurrence of one of the
following events:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, any employee benefit plan
sponsored by the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes (other than
pursuant to a transaction which is deemed to be a "Non-Qualifying
Transaction" under Subsection 2(iii)) the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board (the
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"Company Voting Securities");
(ii) individuals who, on October 29, 1996, constitute the Board (the "
Incumbent Directors") cease for any reason to constitute at least
a majority of the Board, provided that any person becoming a
director subsequent to October 29, 1996, whose election or
nomination for election was approved by a vote of at least
two-thirds of the Incumbent Directors then on the Board (either
by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director,
without written objection to such nomination) shall be an
Incumbent Director; provided, however, that no individual
initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect
to directors (including without limitation in order to settle any
such contest) or any other actual or threatened solicitation of
proxies by or on behalf of any person other than the Board shall
be an Incumbent Director;
(iii) the consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the
Company or any of its subsidiaries that requires the approval of
the Company's stockholders, whether for such transaction or the
issuance of securities in the transaction (a "Business
Combination"), unless immediately following such Business
Combination: (A) more than 50% of the total voting power of (x)
the corporation resulting from such Business Combination (the
"Surviving Corporation"), or (y) if applicable, the ultimate
parent corporation that directly or indirectly has beneficial
ownership of 100% of the voting securities eligible to elect
directors of the Surviving Corporation (the "Parent
Corporation"), is represented by Company Voting Securities that
were outstanding immediately prior to such Business Combination
(or, if applicable, shares into which such
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Company Voting Securities were converted pursuant to such
Business Combination), (B) no person (other than any employee
benefit plan sponsored or maintained by the Surviving Corporation
or the Parent Corporation) is or becomes the beneficial owner,
directly or indirectly, of 25% or more of the total voting power
of the outstanding voting securities eligible to elect directors
of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or,
if there is no Parent Corporation, the Surviving Corporation)
following the consummation of the Business Combination were
Incumbent Directors at the time of the Board's approval of the
execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the
criteria specified in (A), (B) and (C) above shall be deemed to
be a "Non-Qualifying Transaction"); or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of
the Company's assets.
Anything in this Agreement to the contrary notwithstanding, a change in control
of the Company shall be deemed not to have occurred with respect to you if you
participate as an investor in the acquiring entity (which shall include the
Parent Corporation, when applicable) in any such change in control transaction
unless such acquiring entity is a publicly-traded corporation and your interest
in such acquiring entity immediately prior to the acquisition constitutes less
than one percent (1%) of both (1) the combined voting power of such entity's
outstanding securities and (2) the aggregate fair market value of such entity's
outstanding equity securities. For this purpose your interest in
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any equity securities shall include any such interest of which you are a
"beneficial owner" as defined in Rule 13d-3 under the Exchange Act.
3. Termination Following Change in Control.
(i) General. If any of the events described in Section 2 constituting
a change in control of the Company shall have occurred, you shall
be entitled to the benefits provided in Subsection 4(iii) upon
the subsequent termination of your employment during the term of
this Agreement unless such termination is (a) because of your
death, (b) by the Company for Cause, or (c) by you other than for
Good Reason. Except as set forth below, in the event your
employment with the Company is terminated for any reason and
subsequently a change in control of the Company shall have
occurred, you shall not be entitled to any benefits hereunder.
Notwithstanding anything in this Agreement to the contrary, if
(i) your employment terminates prior to a change in control of
the Company under circumstances that would have entitled you to
the benefits under Subsection 4 (iii) if they had occurred
following a change in control of the Company; (ii) you reasonably
demonstrate that such termination of employment (or Good Reason
event leading to your termination) was at the request or
suggestion of a third party who had indicated an intention or
taken steps reasonably calculated to effect a change in control
of the Company; and (iii) a change in control of the Company
involving such third party (or a party competing with such third
party to effectuate a change in control) does occur, then for
purposes of this Agreement the date immediately prior to the date
of your termination of employment shall be deemed to be the date
of a change in control of the Company. If a termination of your
employment occurs pursuant to the circumstances described in the
immediately preceding sentence, then for purposes of determining
the timing of
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payments and benefits to you under Section 4, the date of the
actual change in control of the Company shall be treated as your
Date of Termination under Section 3(vi).
(ii) Disability. Notwithstanding anything in this Agreement to the
contrary, if, as a result of your incapacity due to physical or
mental condition or illness, you shall have been absent from the
full-time performance of your duties with the Company for six (6)
consecutive months and such period of absence commenced prior to
a change in control of the Company, the Company may give you at
least thirty (30) days prior written notice of termination of
this Agreement and if you shall not have returned to the
full-time performance of your duties by the date of termination
specified in such notice, this Agreement shall terminate on such
date and no benefit shall be payable hereunder.
(iii) Cause. Termination by the Company of your employment for "Cause"
shall mean termination (a) upon the willful and continued failure
by you to substantially perform your duties with the Company
(other than any such failure resulting from your incapacity due
to physical or mental condition or illness or any such actual or
anticipated failure after the issuance of a Notice of Termination
by you for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes
that you have not substantially performed your duties, or (b) the
willful engaging by you in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise. For
purposes of this Subsection, no act, or failure to act, on your
part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith and without reasonable belief that
your action or omission was in the best interest of the Company.
Notwithstanding the foregoing,
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you shall not be deemed to have been terminated for Cause unless
and until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the
Board you were guilty of conduct set forth above in this
Subsection and specifying the particulars thereof in detail.
(iv) Good Reason. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without your express written consent, the occurrence
after a change in control of the Company (except as provided in
Subsection 3(i) with respect to certain events occurring prior to
a change in control) of any of the following circumstances
unless, in the case of paragraphs (a), (e), (f) or (g), such
circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination given in
respect thereof:
(a) the assignment to you of any duties inconsistent with the
position in the Company that you held immediately prior to
the change in control of the Company (other than in the
nature of a promotion), or a diminution in your duties,
responsibilities, employment status or authority as
compared to your duties, responsibilities, employment
status or authority in effect immediately prior to such
change in control;
(b) a reduction by the Company in your annual base salary as
in effect on the date hereof or as the same may be
increased from time to time except for across-the-board
salary reductions
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similarly affecting all management personnel of the
Company and all management personnel of any person in
control of the Company;
(c) the relocation of the Company's offices at which you are
principally employed immediately prior to the date of the
change in control of the Company to a location more than
twenty-five (25) miles from such location, or the
Company's requiring you to be based anywhere other than
the Company's offices at such location except for required
travel on the Company's business to an extent
substantially similar to your business travel obligations
immediately prior to the change in control;
(d) the failure by the Company to pay to you any portion of
your current compensation or to pay to you any portion of
an installment of deferred compensation under any deferred
compensation program of the Company within seven (7) days
of the date such compensation is due;
(e) the failure by the Company to continue to provide
substantially the same compensation plans in which you
participated immediately prior to the change in control of
the Company, including without limitation as of the date
hereof, a savings and investment plan, a stock option and
stock award plan, a restricted stock performance plan and
an annual incentive compensation plan, unless an equitable
arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to each such
plan, or the failure by the Company to continue your
participation therein (or in any such substitute or
alternative plan) on a basis not materially less
favorable, both in terms of the
8
amount of benefits provided and the level of your
participation relative to other participants, than that
which existed at the time of the change in control of the
Company;
(f) the failure by the Company to continue to provide you with
benefits and coverage substantially similar to those
provided to you under any of the Company's pension, life
insurance, medical, accident, or disability plans in which
you were participating at the time of the change in
control of the Company, the taking of any action by the
Company which would directly or indirectly materially
reduce any of such benefits or the failure by the Company
to provide you with the number of paid vacation days to
which you are entitled on the basis of years of service
with the Company in accordance with the Company's vacation
policy for salaried employees in effect at the time of the
change in control of the Company; or
(g) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying
the requirements of Subsection (3)(v) (and, if applicable,
the requirements of Subsection (3)(iii)), which purported
termination shall not be effective for purposes of this
Agreement.
Your right to terminate your employment pursuant to this
Subsection 3(iv) shall not be affected by your incapacity due to
physical or mental condition or illness. Your continued
employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstance constituting Good Reason
hereunder.
(v) Notice of Termination. Any purported termination of your
employment by the Company or by you after a change in control of
the Company
9
shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 6. "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 your employment under the
provision so indicated.
(vi) Date of Termination, Etc. "Date of Termination" shall mean if
your employment is terminated pursuant to Subsections (3)(iii) or
(3)(iv) hereof or for any other reason, the date specified in the
Notice of Termination (which, in the case of a termination for
Cause shall not be less than thirty (30) days from the date such
Notice of Termination is given, and in the case of a termination
for Good Reason shall not be less than fifteen (15) nor more than
sixty (60) days from the date such Notice of Termination is given
(provided, that no advance notice is required in the case of a
termination of employment for Good Reason as a result of events
occurring prior to a change in control of the Company));
provided, however, that if prior to the Date of Termination (as
determined without regard to this provision), the party receiving
such Notice of Termination notifies the other party that a
dispute exists concerning the termination under the terms of this
Agreement, then the Date of Termination shall be the date on
which the dispute is finally resolved (provided, that,
notwithstanding when the dispute is finally resolved, your Date
of Termination shall be deemed to occur for purposes of Section 4
during the term of this Agreement), either by mutual written
agreement of the parties, by a binding arbitration award, or by a
final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which
the time for appeal therefrom has expired and no appeal has been
perfected); and
10
provided, further, that the Date of Termination shall be extended
by a notice of dispute only if such notice is given in good faith
and the party giving such notice pursues the resolution of such
dispute with reasonable diligence. Any such notice of dispute
must be in writing and delivered or mailed to the other party,
and such notice shall set forth the specific reasons for the
dispute. You shall have the right to appeal to the Board or its
delegate in writing any notice of dispute given by the Company
within sixty (60) days of your receipt thereof. Within sixty (60)
days thereafter, you shall be given a written decision of your
appeal from the Board or its delegate, which decision shall
clearly set forth the specific reasons for the decision,
including specific references to pertinent provisions of this
Agreement. If you dispute the decision, such dispute shall be
resolved by arbitration as provided in Section 10 hereof.
Notwithstanding the pendency of any such dispute, the Company
will continue to pay you your full compensation in effect
immediately prior to when the Notice of Termination giving rise
to the dispute was given (including, but not limited to, base
salary) and continue you as a participant in all compensation,
benefit and insurance plans in or by which you were participating
or were covered immediately prior to when the Notice of
Termination giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Subsection.
Amounts paid under this Subsection are in addition to all other
amounts due under this Agreement, and shall not be offset against
or reduce any other amounts due under this Agreement. No amount
payable hereunder shall be reduced by any compensation earned by
you as the result of employment by another employer. This
Subsection 3(vi) shall not apply to any termination of your
employment prior to a change in control of the Company as
described in Subsection 3(i).
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4. Compensation Upon Termination or During Disability. Following a change
in control of the Company, you shall be entitled to the following
benefits during a period of disability, or upon termination of your
employment, as the case may be, provided that such period commences or
termination occurs during the term of this Agreement:
(i) During any period that you fail to perform your full-time duties
with the Company as a result of incapacity due to physical or
mental condition or illness, you shall receive all compensation
payable to you under the Company's disability plan or program or
other similar plan during such period. In the event your
employment is terminated by reason of your death, your benefits
shall be determined under the Company's retirement, insurance and
other compensation plans then in effect in accordance with the
terms of such plans.
(ii) Except as otherwise provided in Subsection 3(vi), if applicable,
if your employment shall be terminated by the Company for Cause
or by you other than for Good Reason, the Company shall pay you
your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus all
other amounts to which you are entitled under any compensation or
benefit plan of the Company at the time such payments are due,
and the Company shall have no further obligations to you under
this Agreement.
(iii) If your employment by the Company is terminated by the Company
other than for Cause or if you terminate your employment for Good
Reason, you shall be entitled to the benefits provided below:
(a) the Company shall pay to you (i) your full base salary
through the Date of Termination at the rate in effect at
the time Notice of Termination is given and the value of
your accrued and "banked"
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vacation as of the Date of Termination, no later than the
fifth day following the Date of Termination, (ii) any
outstanding amounts due and owing to you as of the Date of
Termination under the Union Camp Corporation Policy Group
Executive Annual Incentive Plan and the Union Camp
Corporation Restricted Stock Performance Plan (or any
successor, substitute or additional incentive plans), no
later than the fifth day following the Date of Termination
(or, if later, such date by which such amounts may
reasonably be calculated), plus all other amounts to which
you are entitled under any compensation or benefit plan or
policy of the Company, at the time such payments are due,
and (iii) if such termination of employment occurs during
the remainder of the calendar year in which the change in
control of the Company occurs, no later than the fifth day
following the Date of Termination, a pro rata annual
target incentive under the Union Camp Corporation Policy
Group Executive Annual Incentive Plan and a pro rata
annual target award (payable in cash) under the Union Camp
Corporation Restricted Stock Performance Plan (or any
successor plans thereto), to the extent you are a
participant in such plans (and such pro rata payment is
not made thereunder). Such pro rata payments shall be
equal to the product(s) of (i) the quotient resulting from
dividing the number of days you were employed during such
year through the Date of Termination by three hundred and
sixty-five (365) and (ii) your annual target incentive
under the Union Camp Corporation Policy Group Executive
Annual Incentive Plan and your annual target award under
the Union Camp Corporation Restricted Stock Performance
Plan (or any successor plans thereto) for such year;
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(b) in lieu of any further salary and bonus payments to you
for periods subsequent to the Date of Termination and in
lieu of other severance benefits, the Company shall pay as
severance pay to you, at the time specified in Subsection
4(v), a lump sum severance payment equal to (i) 300% of
the greater of (A) your annual rate of base salary in
effect immediately prior to the Date of Termination and
(B) your annual rate of base salary in effect immediately
prior to the change in control of the Company, plus (ii)
300% of the greater of (x) the amount of your annual
target incentive in effect immediately prior to the date
on which the change in control occurs and (y) your annual
target incentive with respect to the year in which the
Date of Termination occurs; provided, that for purposes of
this Subsection 4(iii)(b) your annual target incentive is,
as of the date hereof, determined pursuant to your
participation in the Union Camp Corporation Policy Group
Executive Annual Incentive Plan, and does not include any
target award under the Union Camp Corporation Restricted
Stock Performance Plan;
(c) the Company shall pay to you all legal fees and expenses
incurred by you in connection with the interpretation or
enforcement of this Agreement (including all such fees and
expenses, if any, incurred in contesting or disputing any
termination hereunder or in seeking to obtain or enforce
any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"),
to any payment or benefit provided hereunder);
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(d) for a thirty-six (36) month period after such termination,
the Company shall arrange to provide you with life,
disability, accident and health insurance benefits
equivalent to those which you were receiving immediately
prior to the Notice of Termination (provided, that, any
reduction of benefits which constituted a basis for your
termination of employment for Good Reason pursuant to
Subsection 3(iv) shall not be taken into account for
purposes of determining your continued benefits under this
Subsection 4(iii)(d)). Notwithstanding the foregoing, the
Company shall not provide a benefit otherwise receivable
by you pursuant to this paragraph (d) during any period in
which an equivalent benefit is actually provided to you
during the thirty-six (36) month period following your
termination, and you must report to the Company any such
benefit actually received by you; and
(e) notwithstanding any election you may have made under any
of the applicable plans, and any provisions to the
contrary in any such plans, the Company shall pay to you,
at the time specified in Subsection 4(v), a lump sum
amount, in cash, equal to the sum of (i) all amounts
credited to your book account described in Article V,
Section 3 of the Union Camp Corporation Supplemental
Retirement Plan (the "ERISA Excess Plan"), (ii) the
actuarial equivalent of the supplemental pension benefit
(determined as a straight life annuity commencing at the
greater of age sixty-two (62) or your age at the Date of
Termination) that you have accrued under Article IV,
Section 1 of the ERISA Excess Plan as of the Date of
Termination (for this purpose, "actuarial equivalent"
shall be determined using the same
15
assumptions utilized under the Company's Retirement Plan
for Salaried Employees immediately prior to the change in
control), and (iii) the amount due to you pursuant to the
Company's Supplemental Retirement Income Plan for
Executive Officers (the "SERP") determined as if you had
been credited under the SERP with three (3) additional
years of age and service (but not beyond age sixty-five
(65) and twenty (20) years of service) and determined
pursuant to the lump sum payment provisions under Section
2 of such Plan. This lump sum payment shall be in full
settlement of all benefits accrued by you under the ERISA
Excess Plan and the SERP, provided, however, to the extent
such lump sum payment would duplicate any benefits paid to
you under the terms of such plans it shall be reduced to
the extent necessary to prevent the duplicative payment of
benefits.
Notwithstanding anything in this Agreement to the contrary, if
you are over age sixty-two (62) as of your Date of Termination,
(i) the 300% multiplier set forth in paragraph (b) above to
determine your severance benefit shall be reduced by 8.33% for
each full month that your age is in excess of sixty-two (62) as
of your Date of Termination and (ii) your continued benefits
pursuant to paragraph (d) above shall cease at age sixty-five
(65).
(iv) Notwithstanding anything in this Agreement to the contrary, in
the event it shall be determined that any payment, award, benefit
or distribution (or any acceleration of any payment, award,
benefit or distribution) by the Company (or any of its affiliated
entities) or any entity which effectuates a change in control of
the Company (or any of its affiliated entities) to or for your
benefit (whether pursuant to the terms of this Agreement or
otherwise, but excluding any Gross-Up Payments (as
16
defined below)) (the "Payments"), would be subject to the excise
tax imposed by section 4999 of the Code (the "Excise Tax"), then
the Company shall pay to you an additional payment (a "Gross-Up
Payment") in an amount such that after payment by you of all
taxes (including any Excise Tax) imposed upon the Gross-Up
Payment, you retain an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments. For purposes of
determining the amount of the Gross-Up Payment, you shall be
deemed to (i) pay federal income taxes at the highest marginal
rates of federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and (ii) pay applicable state
and local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be
made, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes.
In the event that the Excise Tax is subsequently determined (by a
final determination by a court or an Internal Revenue Service
proceeding which has been finally and conclusively resolved or by
mutual agreement of the parties hereto) to be less than the
amount taken into account hereunder at the time of termination of
your employment, you shall repay to the Company at the time that
the amount of such reduction in Excise Tax is finally determined
the portion of the Gross-Up Payment which would not have been
paid to you had the Gross-Up Payment calculation been based upon
such reduced Excise Tax, plus interest on the amount of such
repayment at the rate provided in section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to exceed
the amount taken into account hereunder at the time of the
termination of your employment (including by reason of any
payment the existence or amount of which could not be determined
at the
17
time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess (plus
interest payable at the rate provided in section 1274(b)(2)(B) of
the Code with respect to such excess) at the time that the amount
of such excess is finally determined. Notwithstanding the
foregoing provisions of this Subsection 4(iv), if it shall be
determined that you are entitled to a Gross-Up Payment, but that
the Payments would not be subject to the Excise Tax if the
Payments were reduced by an amount that is less than 10% of the
portion of the Payments that would be treated as "parachute
payments" under section 280G of the Code, then the amounts
payable to you under this Agreement shall be reduced (but not
below zero) to the maximum amount that could be paid to you
without giving rise to the Excise Tax (the "Safe Harbor Cap"),
and no Gross-Up Payment shall be made to you. The reduction of
the amounts payable hereunder, if applicable, shall be made by
reducing first the payments under Section 4(iii)(b), unless an
alternative method of reduction is elected by you. For purposes
of reducing the Payments to the Safe Harbor Cap, only amounts
payable under this Agreement (and no other Payments) shall be
reduced. If the reduction of the amounts payable hereunder would
not result in a reduction of the Payments to the Safe Harbor Cap,
no amounts payable under this Agreement shall be reduced pursuant
to this provision.
(v) The payments provided for in Subsections 4(iii)(b), 4(iii)(e) and
4(iv) hereof shall be made not later than the thirtieth day
following the Date of Termination; provided, however, that if the
amounts of such payments cannot be finally determined on or
before such day, the Company shall pay to you on such day an
estimate, as determined in good faith by the Company, of the
minimum amount of such payments
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and shall pay the remainder of such payments (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. In the
event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to you, payable on the
fifth day after demand by the Company (together with interest at
the rate provided in section 1274(b)(2)(B) of the Code). All
determinations required to be made under Subsection 4(iv),
including whether and when a Gross-Up Payment is required, the
amount of such Gross-Up Payment, the reduction of the Payments to
the Safe Harbor Cap and the assumptions to be utilized in
arriving at such determinations, shall be made by the public
accounting firm that is retained by the Company as of the date
immediately prior to the change in control of the Company (the
"Accounting Firm") which shall provide for review detailed
supporting calculations both to the Company and you within
fifteen (15) business days following the receipt of notice from
the Company or you that a Notice of Termination has been provided
under this Agreement, or such earlier time as is requested by the
Company (collectively, the "Determination"). In the event that
the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the change in control (or
does not undertake to provide the Determination), the Company
shall appoint another public accounting firm to make the
Determination required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees
and expenses of the Accounting Firm shall be borne solely by the
Company and the Company shall enter into any agreement requested
by the Accounting Firm in connection with the performance of the
services hereunder.
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(vi) Except as provided in Subsection 4(iii)(d), you shall not be
required to mitigate the amount of any payment provided for in
this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the
result of employment by another employer, by retirement benefits,
by offset against any amount claimed to be owed by you to the
Company, or otherwise.
5. Successors; Binding Agreement.
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company
to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession which
constitutes a change in control of the Company shall be a breach
of this Agreement and shall entitle you to compensation and
benefits from the Company in the same amount and on the same
terms to which you would be entitled hereunder if you terminate
your employment for Good Reason following a change in control of
the Company, except that for purposes of implementing the
foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid, or otherwise.
(ii) This Agreement is personal to you and shall not be assigned by
you (other than as a result of your death), except that any
rights that shall
20
have accrued prior to your death shall inure to the benefit of
and be enforceable by you and your personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees, to the extent any such
persons succeed to your interests hereunder from time to time. If
you should die while any amount would still be payable to you
hereunder had you continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to such person or persons appointed in
writing by you (provided you have delivered a copy of such
appointment to the Company) or, if no such person is appointed,
to your estate.
6. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the
first page of this Agreement, provided that all notice to the Company
shall be directed to the attention of the Board with a copy to the
Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
Notwithstanding the foregoing, any notice actually received by the other
party shall be deemed to have been duly given.
7. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and a duly authorized officer of the Company.
No waiver by either party hereto at any time of any breach by the other
party hereto of 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. Similarly, no such waiver of
21
compliance with any condition or provision of this Agreement shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the
laws of the State of New Jersey without regard to its conflicts of law
principles. All references to sections of the Exchange Act, the Code or
the ERISA Excess Plan shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall
be paid net of any applicable withholding required under foreign,
federal, state or local law. The obligations of the Company under
Subsection 3(vi) and Sections 4 and 5 shall survive the expiration of
the term of this Agreement, with respect to Subsection 3(vi) and Section
4, to the extent benefits become due and owing under such provisions
and, with respect to Section 5, to the extent the Company continues to
have obligations under this Agreement.
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and
effect.
9. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in
Wayne, New Jersey or such other location to which you and the Company
agree, in accordance with the commercial rules of the American
Arbitration Association then in effect. The Company shall bear all costs
and expenses arising in connection with any arbitration proceeding
pursuant to this Section 10. Judgment may be entered on
22
the arbitrator's award in any court having jurisdiction; provided,
however, that you shall be entitled to seek specific performance of your
right to be paid pursuant to Subsection 3(vi) until the Date of
Termination during the pendency of any dispute or controversy arising
under or in connection with this Agreement.
11. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto with respect to severance benefits payable to you after a
change in control of the Company, and during the term of the Agreement
supersedes the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party
hereto with respect to such subject matter. Without limiting the
generality of the preceding sentence, the parties acknowledge that this
Agreement supersedes that certain agreement dated (Date) between them
which is terminated in all respects, such termination being a condition
to and in consideration of the Company's execution and delivery of this
Agreement to you.
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If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.
Sincerely,
UNION CAMP CORPORATION
By ____________________________________
W. Craig McClelland
Chairman of the Board
and Chief Executive Officer
Agreed to as of the date set forth above.
_______________________________________
(Name3)
24
INDEX OF DEFINED TERMS
----------------------
Defined Term Where Defined
- ------------ -------------
Accounting Firm 'SS' 4(v)
actuarial equivalent 'SS' 4(iii)(e)
Agreement Introduction
banked 'SS' 4(iii)(a)
beneficial owner 'SS' 2(i)
Board Introduction
Business Combination 'SS' 2(iii)
Cause 'SS' 3(iii)
change in control of the Company 'SS' 2
Code 'SS' 4(iii)(c)
Company Introduction, 'SS' 5(i)
Company Voting Securities 'SS' 2(i)
Date of Termination 'SS' 3(vi)
Determination 'SS' 4(v)
ERISA Excess Plan 'SS' 4(iii)(e)
Exchange Act 'SS' 2(i)
Excise Tax 'SS' 4(iv)
Good Reason 'SS' 3(iv)
Gross-Up Payment 'SS' 4(iv)
Incumbent Directors 'SS' 2(ii)
Non-Qualifying Transaction 'SS' 2(iii)
Notice of Termination 'SS' 3(v)
parachute payments 'SS' 4(iv)
Parent Corporation 'SS' 2(iii)
Payments 'SS' 4(iv)
person 'SS' 2(i)
Safe Harbor Cap 'SS' 4(iv)
SERP 'SS' 4(iii)(e)
Surviving Corporation 'SS' 2(iii)
willful 'SS' 3(iii)