Exhibit 10(xvii)
January 1, 2000
Name
Title
The Mead Corporation
Courthouse Plaza N.E.
Dayton, Ohio 45463
Dear Name:
The Mead Corporation (the "Corporation") recognizes that your contribution to
the growth and success of the Corporation has been substantial and desires to
assure the Corporation of your continued employment. In this connection the
Board of Directors of the Corporation (the "Board") recognizes that, as is the
case with many publicly held corporations, the possibility of a change in
control may exist and that such possibility, 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 Corporation 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 Corporation'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 Corporation.
In order to induce you to remain in the employ of the Corporation, the
Corporation agrees that you shall receive the severance benefits set forth in
Section 4 hereof in the event your employment with the Corporation is terminated
subsequent to a "Change in Control of the Corporation" (as defined in Section 2
hereof) under the circumstances described below.
1. Term of Agreement. This Agreement will commence on the date hereof and
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shall continue in effect until December 31, 2000; provided, however, that
commencing on January 1, 2001 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than November 1 of the preceding year, the Corporation shall have given
notice that it does not wish to extend this Agreement; provided, further, if a
Change in Control of the Corporation shall have occurred during the original or
extended term of this Agreement, this Agreement shall continue in effect for a
period of twenty-four (24) months beyond the month in which such Change in
Control of the Corporation occurred.
2. Change in Control of the Corporation.
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(a) No benefits shall be payable hereunder unless there shall have
been a Change in Control of the Corporation, as set forth below. For purposes of
this Agreement, a "Change in Control of the Corporation" shall be deemed to have
occurred if an event set forth in any one of the following paragraphs shall have
occurred:
(i) date of expiration of a Tender Offer (other than an offer
by the Corporation), if the offeror acquires Shares pursuant to such Tender
Offer;
(ii) the date of approval by the shareholders of the
Corporation of a definitive agreement: (x) for the merger or consolidation of
the Corporation or any direct or indirect subsidiary of the Corporation into or
with another corporation, other than (1) a merger or consolidation which would
result in the voting securities of the Corporation outstanding immediately prior
thereto continuing to represent ((i) in the case of a merger or consolidation of
the Corporation, either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof, or (ii) in the
case of a merger or consolidation of any direct or indirect subsidiary of the
Corporation,
either by remaining outstanding if the Corporation continues as a parent of the
merged or consolidated subsidiary or by being converted into voting securities
of the surviving entity or any parent thereof) at least 51% of the combined
voting power of the voting securities of the Corporation or such surviving or
parent entity outstanding immediately after such merger or consolidation, or (2)
a merger or consolidation effected to implement a recapitalization of the
Corporation (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Corporation (not
including in the securities Beneficially Owned by such Person any securities
acquired directly from the Corporation or its Affiliates) representing 20% or
more of the combined voting power of the Corporation's then outstanding
securities, or (y) for the sale or disposition of all or substantially all of
the assets of the Corporation, other than a sale or disposition by the
Corporation of all or substantially all of the Corporation's assets to an
entity, at least 51% of the combined voting power of the voting securities of
which are owned (directly or indirectly) by shareholders of the Corporation in
substantially the same proportions as their ownership of the Corporation
immediately prior to such sale or disposition;
(iii) (x) any Person is or becomes the Beneficial Owner of 20%
or more of the voting power of the then outstanding securities of the
Corporation (not including in the securities beneficially owned by such Person
any securities acquired directly from the Corporation or its affiliates),
excluding any Person who becomes such a Beneficial Owner in connection with a
transaction described in clause (x) (1) of paragraph (ii) above or (y) the date
of authorization, by both a majority of the voting power of the Corporation and
a majority of the portion of such voting power excluding the voting power of
interested Shares, of a control share acquisition (as such term in defined in
Chapter 1701 of the Ohio Revised Code); and
(iv) a change in the composition of the Board of Directors
such that individuals who were members of the Board of Directors on the date two
years prior to such change (and any new directors (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Corporation) who were elected, or were
nominated for election, by the Corporation's shareholders with the affirmative
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such two year period or whose election or
nomination for election was previously so approved) no longer constitute a
majority of the Board of Directors.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Corporation immediately prior to such transaction or series
of transactions continue to have substantially the same proportionate ownership
in an entity which owns all or substantially all of the assets of the
Corporation immediately following such transaction or series of transactions.
Terms used in this Section 2 have the following meanings:
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the 1934 Act.
"Beneficial Owner" shall have the meaning defined in Rule 13d-3 under the
1934 Act.
"Person" shall have the meaning given in Section 3(a)(9) of the 1934 Act,
as modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Corporation or any of its subsidiaries, (ii) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Corporation or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or
indirectly, by the shareholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation.
"Tender Offer" means a tender offer or a request or invitation for tenders
or an exchange offer subject to regulation under Section 14(d) of the 1934 Act
and the rules and regulations thereunder, as the same may be amended, modified
or superseded from time to time.
(b) For purposes of this Agreement, a "Potential Change in Control of
the Corporation" shall be deemed to have occurred if (i) the Corporation enters
into an agreement, the consummation of which would result in the occurrence of a
Change in Control of the Corporation, (ii) any person (including the
Corporation) publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in Control of the
Corporation, (iii) any person is declared to be an "Adverse Person" by the Board
under the Rights Agreement dated November 9, 1996; or (iv) the Board adopts a
resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control of the Corporation has occurred. You agree that, subject to
the terms and conditions of this Agreement, in the event of a Potential Change
in Control of the Corporation, you will remain in the employ of the Corporation
until the earliest of (i) a date which is six (6) months from the occurrence of
such Potential Change in Control of the Corporation, (ii) the termination by you
of your employment by reason of Disability or Retirement (at your normal
retirement date), as defined in Section 3(a), or (iii) the occurrence of a
Change in Control of the Corporation.
3. Termination Following a Change in Control of the Corporation. If any
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of the events described in Section 2 hereof constituting a Change in Control of
the Corporation shall have occurred, subject to the limitations of Section 4(e)
hereof, you shall be entitled to the benefits provided in Section 4(d) hereof
upon the termination of your employment during the term of this Agreement unless
such termination is (i) because of your death, Disability or Retirement, (ii) by
the Corporation for Cause or (iii) by you other than for Good Reason.
(a) Disability; Retirement. If, as a result of your incapacity due to
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physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, the
Corporation may terminate your employment for "Disability." Termination for
Disability, in accordance with, and for the purposes of, this Agreement shall
not necessarily mean that you are "terminated" for purposes of determining your
participation in the Corporation's retirement, insurance and other applicable
programs and plans. Your status as a terminated or inactive employee and your
benefits under the Corporation's applicable programs and plans then in effect
shall be determined in accordance with such programs and plans. Termination by
the Corporation or you of your employment by reason of "Retirement" shall mean
termination on or after your "normal retirement date," as defined in The Mead
Retirement Plan for Salaried and Certain Non-Bargaining Hourly Employees as of
the date hereof, or in accordance with any retirement arrangement established
with your consent with respect to you.
(b) Cause. Termination by the Corporation of your employment for
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"Cause" shall mean termination upon (i) the willful and continued failure by you
to substantially perform your duties with the Corporation (other than any such
failure resulting from termination by you for Good Reason), after a demand for
substantial performance is delivered to you that specifically identifies the
manner in which the Corporation believes that you have not substantially
performed your duties, and you have failed to resume substantial performance of
your duties on a continuous basis within fourteen (14) days of receiving such
demand, (ii) the willful engaging by you in conduct which is demonstrably and
materially injurious to the Corporation, monetarily or otherwise or (iii) your
conviction of a felony or conviction of a misdemeanor which impairs your ability
substantially to perform your duties with the Corporation. 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 Corporation.
(c) Good Reason. You shall be entitled to terminate your employment
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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 Corporation of any one or more of the following:
(i) the assignment to you of duties which are substantially
inconsistent with your present duties, responsibilities and status as the Title
of the Corporation or a substantial reduction or alteration in the nature or
status of your responsibilities from those in effect as of the date hereof;
(ii) a reduction by the Corporation in your base salary as in
effect on the date hereof or as the same shall be increased from time to time
("Base Salary");
(iii) the Corporation's requiring you to be based at a location
in excess of twenty-five (25) miles from the location where you are currently
based;
(iv) the failure by the Corporation to continue in effect any of
the Corporation's employee benefit plans, policies, practices or arrangements,
including, but not limited to, those plans, policies and arrangements maintained
solely for the benefit of key management personnel, in which you participate, or
the failure by the Corporation to continue your participation therein on
substantially the same basis, both in terms of the amount of benefits provided
and the level of your participation relative to other participants, as existed
as of the date hereof; provided, however, that such plans, policies or
arrangements are not replaced by one or more alternative or substitute plans,
policies, or arrangements providing substantially equivalent benefits in the
aggregate;
(v) the failure of the Corporation to obtain a satisfactory
agreement from any successor to the Corporation to assume and agree to perform
this Agreement, as contemplated in Section 5 hereof; and
(vi) any purported termination by the Corporation of your
employment that is not effected pursuant to a Notice of Termination satisfying
the requirements of Subsection (d) below, and for purposes of this Agreement, no
such purported termination shall be effective.
Your right to terminate your employment pursuant to this Subsection (c) shall
not be affected by your incapacity due to physical or mental illness. Your
continued employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason hereunder.
(d) Notice of Termination. Any termination by the Corporation for
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Cause or by you for Good Reason shall be communicated by Notice of Termination
to the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(e) Date of Termination. "Date of Termination" shall mean the date
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specified in the Notice of Termination where required or in any other case upon
ceasing to perform services to the Corporation; provided that if within thirty
(30) days after any Notice of Termination one party notifies the other party
that a dispute exists concerning the termination, the Date of Termination shall
be the date finally determined to be the Date of Termination, either by mutual
written agreement of the parties or by a binding and final arbitration award.
4. Compensation Upon Termination or During Disability. Except as provided
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in Section 4(e) hereof, following a Change in Control of the Corporation, as
defined in Section 2 hereof, upon termination of your employment or during a
period of disability, you shall be entitled to the following benefits:
(a) During any period that you fail to perform your full-time duties
with the Corporation as a result of incapacity due to physical or mental
illness, you shall continue to receive your Base Salary at the rate in effect at
the commencement of any such period, until your employment is terminated
pursuant to Section 3(a) hereof. Thereafter, your benefits shall be determined
in accordance with the Corporation's retirement, insurance and other applicable
programs and plans then in effect.
(b) If your employment shall be terminated by the Corporation for
Cause or by you other than for Good Reason, the Corporation shall pay you your
full Base Salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given or on the Date of Termination if no Notice
of Termination is required hereunder, plus all other amounts to which you are
entitled under any compensation plan of the Corporation at the time such
payments are due, and the Corporation shall have no further obligations to you
under this Agreement.
(c) If your employment terminates by reason of your Retirement, or by
reason of your death, your benefits shall be determined in accordance with the
Corporation's retirement, survivor's benefits, insurance and other applicable
programs and plans, then in effect.
(d) If your employment by the Corporation shall be terminated (i) by
the Corporation other than for Cause, Retirement or Disability or (ii) by you
for Good Reason, you shall be entitled to the benefits (the "Severance
Payments") provided below, in lieu of the benefits provided by the Corporation's
general severance program:
(i) the Corporation shall pay you your full Base Salary through
the Date of Termination at the rate in effect at the time Notice of Termination
is given, or the Date of Termination where no Notice of Termination is required
hereunder;
(ii) the Corporation will pay as severance benefits to you, not
later than the fifth day following the Date of Termination, a lump sum severance
payment equal to two times the sum of your (A) annual Base Salary in effect
immediately prior to the occurrence of the circumstances giving rise to such
termination, and (B) the greater of (1) your most recent annual award under the
Corporation's long-term and short-term incentive plans as in effect from time to
time or (2) the target payout under such plan in respect of the year in which
such termination occurs;
(iii) in lieu of shares of common stock of the Corporation
("Option Shares") issuable upon exercise of outstanding options ("Options"), if
any, granted to you under the Corporation's stock option plans, together with
any additional, substitute or successor option program or plan as may be in
effect from time to time (which Options shall be cancelled upon the making of
the payment referred to below), you shall receive an amount in cash equal to the
product of (A) the higher of the closing price of Option Shares reported on the
New York Stock Exchange on the Date of Termination or the highest per share
price for Option Shares actually paid in connection with any Change in Control
of the Corporation, over the per share exercise price of each Option held by
you, times (B) the number of Option Shares covered by each such Option (the
"Product Amount"); provided, however, that, if payment of the Product Amount in
cash would cause a transaction of the Corporation intended by the Corporation to
qualify for "pooling-of-interests" accounting not to qualify for such
accounting, payment of the Product Amount shall be made in shares of the stock
of the company which is the resulting or surviving
company in such transaction which are at the time of closing of such transaction
of equal value to the Product Amount.
(iv) for a twenty-four (24) month period after the Date of
Termination, the Corporation will arrange to provide you at the Corporation's
expense with benefits under the Corporation's life insurance, medical and dental
plans, or benefits substantially similar to the benefits you were receiving
immediately prior to the Notice of Termination under such plans and to provide
you, at your expense, with benefits under the Corporation's accident and
disability plans, if the respective insurance carrier agrees to do so; but
benefits otherwise receivable by you pursuant to this Paragraph (iv) shall be
reduced to the extent comparable benefits are actually received by you during
the twenty-four (24) month period following your termination, and any such
benefits actually received by you shall be reported to the Corporation; and
(v) for a twelve (12) month period after the Date of
Termination, the Corporation will provide you with outplacement counseling with
an independent professional at the Corporation's expense.
(e) Notwithstanding the provisions of Subsection (d) hereof, if, in
the opinion of tax counsel selected by the Corporation's independent auditors,
(i) any payments or benefits which would otherwise be received
by you, whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Corporation, any person whose actions result
in a change in control of the Corporation or any person affiliated with the
Corporation or such person, constitute "parachute payments" (such payments,
including the Severance Payments, being hereinafter called "Total Payments")
within the meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986,
as amended (the "Code"), and
(ii) the aggregate present value of the Total Payments would
exceed 2.99 times your "base amount," as defined in Section 280G(b)(3) of the
Code, then, in lieu of the Severance Payments, the Corporation shall pay to you
under this Subsection, no later than the fifth day following the Date of
Termination, a lump sum amount such that the aggregate present value of the
Total Payments is equal to 2.99 times your base amount.
For purposes of the preceding paragraph, your base amount and the value of the
Total Payments shall be determined by the Corporation's independent auditors in
accordance with the principles of Section 280G of the Code and based upon the
advice of the tax counsel referred to herein.
(f) The payments provided for in Subsections (d) and (e) above shall
be made not later than the fifth 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 Corporation shall pay to you on such day
an estimate as determined in good faith by the Corporation of the minimum amount
of such payments 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 but in no event later than the thirtieth
day after the Date of Termination. Notwithstanding the immediately preceding
sentence, in the event that payment of the amount described in Section 4(d)(iii)
is required by the proviso in such Section to be made in shares of stock, the
calculation of the number of such shares and the payment of such shares may be
delayed by the Corporation beyond the thirty-day payment deadline, if such delay
is determined in good faith by the Corporation to be necessary and payment is
made as soon as the number of such shares 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 Corporation to you
payable on the fifth day after demand by the Corporation (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code).
(g) The Corporation shall also pay to you all legal fees and expenses
incurred by you as a result of such termination of employment (including all
such fees and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit provided by
this Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to any payment or
benefit provided hereunder).
(h) 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 provided for in this Section 4 be reduced by any
compensation earned by you as the result of employment by another employer after
the Date of Termination, or otherwise.
5. Successors; Binding Agreement.
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(a) The Corporation 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 Corporation or of any
division or subsidiary thereof employing you to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession had taken
place. Failure of the Corporation to obtain such assumption and agreement prior
to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle you to compensation from the Corporation in the same amount
and on the same terms as you would be entitled hereunder if you terminated your
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder if you had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement, to your devisee, legatee or other designee or,
if there is not such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
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communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement.
7. Miscellaneous. No provision of this Agreement may be modified, waived
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or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be specifically designated by
the Board. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Ohio.
8. Validity. The invalidity or unenforceability of any provision of this
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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
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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
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connection with this Agreement shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that you shall be entitled to seek specific
performance of your
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
11. Effective Date. This Agreement shall become effective as of the date
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set forth above.
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Corporation the enclosed copy of this letter which will
then constitute our agreement on this subject.
Sincerely,
THE MEAD CORPORATION
By _______________________________
Name
Title
Agreed to this _____ day
of _______, ____.
By ___________________________
Name
Title