EXHIBIT 10.27
March 27, 2003
Roger B. Farley
6976 Fieldstone Drive
Burr Ridge, Illinois 60521
Dear Roger:
This letter confirms the agreement between you and United States Can Company
("U.S. Can"), its parent U.S. Can Corporation and their respective subsidiaries
(collectively, "the Companies") regarding your severance arrangement following
your resignation and retirement from the position of Senior Vice President -
Human Resources with U.S. Can effective April 1, 2003. Your last day worked will
be April 1, 2003 ("LDW"). On or before April 1, 2003, you will resign your
employment and all positions and offices held with each of the Companies by
tendering a signed resignation letter as set forth in Exhibit A. Notwithstanding
the date of your resignation letter, the Companies waive any requirement that
you provide 30 days prior written notice of a resignation, as provided in
Section 4(e) of the Employment Agreement (as defined below).
In consideration of your acceptance of this Letter Agreement and subject to your
meeting in full your obligations under it and the Employee Agreement between you
and U.S. Can, dated February 3, 2000 ("Employee Agreement"), as amended by the
Employment Agreement, dated October 4, 2000 ("Employment Agreement"), copies of
which are attached hereto as Exhibits B.1 and B.2, you will receive the
following severance pay and benefits:
1. Base Salary Continuance, Transition Assistance, Vacation Pay
As a result of your resignation and retirement from U.S. Can and the Companies,
you shall not be entitled to any further compensation, payments or remuneration,
except as provided in this Letter Agreement. You have agreed to be available to
answer any questions we may have that involved your role/responsibilities with
U.S. Can and assist in a smooth transition of your duties and responsibilities
to others within U.S. Can beginning on April 2, 2003 and continuing through
October 1, 2004 (the "Salary Continuation Period"). U.S. Can will give due
consideration to your other personal and professional commitments so as to
minimize any material disruption or interference with them. Upon delivery of a
fully executed copy of this Letter Agreement to U.S. Can and the expiration of
any statutory revocation period, you will receive annual base salary continuance
at your final base rate ($245,000 per annum), payable in bi-weekly increments,
for the Salary Continuation Period. The final payment will be dated as of the
first regularly scheduled payroll date after October 1, 2004 and will be for the
period of September 20, 2004 through October 1, 2004. You will be paid a lump
sum amount on account of all of your accrued but unused vacation days through
your LDW, which total 13 days. You will not accrue or be entitled to payment for
any vacation after your LDW. The base salary continuance and pay on account of
unused vacation will be subject to customary withholding and other employment
taxes and any other voluntary, authorized or required deductions.
2. Health Insurance
From April 1, 2003 through December 31, 2003, you will be eligible to continue
to participate in U.S. Can's health, dental and vision insurance, pursuant to
the terms of the applicable plan(s) for active employees and consistent with the
terms and provisions of the plans or as they may be amended or modified,
provided you continue to pay any employee portion of premium contributions for
the coverage you elected as required by the terms of the plans. Naturally, this
coverage will be discontinued if you obtain a new position with a company where
these benefits are covered as a part of their insurance coverages. Beginning
January 1, 2004 or, if earlier, the date your coverage is discontinued either
pursuant to the preceding sentence or otherwise, you will be eligible for such
COBRA benefits as are authorized and required by law.
3. 2003 Bonus
Your bonus for 2003, prorated based on your service through your LDW will be
paid on or about March 15, 2004, based on 2003 audited results for the Company
under the 2003 Management Incentive Plan. Bonus payments are
Roger B. Farley
March 27, 2003
Page 2
subject to customary withholding and other employment taxes and any other
voluntary, authorized or required deductions.
4. Miscellaneous Benefits
a) You will be eligible for any benefits which have heretofore vested to you
in accordance with applicable plan documents and/or your elections
pertaining to the Salaried Employees Retirement and Accumulation Plan
("SRAP"), and the non-qualified 401(k) plan and benefit replacement plans
("non-qualified plans"). You are 100% vested in all monies that are in your
SRAP and non-qualified plans accounts. Distributions under the
non-qualified plans are taxable events and the value of the distributions
would be taxable as ordinary income at your marginal tax rate. U.S. Can is
obligated to withhold taxes upon distribution.
b) U.S. Can will pay the reasonable legal fees you incur in the negotiation,
review and completion of this Letter Agreement up to a maximum amount of
$5,000, upon submission of a usual and customary final invoice, together
with supporting documentation. Any invoice is subject to audit and
approval.
c) Unless otherwise addressed in this Letter Agreement, Company benefits that
will cease on your LDW include but are not limited to business travel
insurance, disability and life insurance, perquisites (such as executive
physicals and any club or membership dues), car allowance and participation
in the SRAP, the non-qualified plans, or any other equity, deferred
compensation, welfare, benefit or bonus plan.
d) You or your Permitted Transferees (as defined in the Stockholders Agreement
dated October 4, 2000) will continue to hold any shares of basic U.S. Can
Corporation restricted common stock ("basic restricted stock") and
performance based U.S. Can Corporation restricted stock ("performance based
restricted stock") that vested on or before April 1, 2003, subject to the
terms and conditions of the governing Stockholders Agreement. Any unvested
shares of basic or performance based restricted stock will be treated in
accordance with the terms and conditions of the governing Stockholders
Agreement. You hereby agree, however, that as of your LDW, for all purposes
of the Stockholders Agreement, you and your Permitted Transferees shall
each be deemed to be an "Other Stockholder" rather than a "Management
Stockholder" and that from time to time thereafter, at the request of U.S.
Can Corporation and without further consideration, you shall execute and
deliver further instruments and take such other actions, as U.S. Can
Corporation may reasonably require, to more effectively evidence such
designation.
e) The current term life insurance policy, with death benefits equal to
$500,000, for which the premium has been paid through December 1, 2003 will
be transferred to you if such transfer is permitted by such policy.
5. Employee Agreement, Employment Agreement, Non-Competition/Non-
Solicitation Obligations, Confidentiality Obligations, Return of
Company Property and Post-Employment Assistance
You are a party to that certain Employee Agreement with the Company, dated
February 3, 2000, as amended by the Employment Agreement, dated October 4, 2000,
(respectively, the "Employee Agreement" and the "Employment Agreement"), copies
of which are attached hereto as Exhibits B.1 and B.2. The Employee Agreement
contains, among other things, restrictive covenants and certain confidentiality
provisions that survive your LDW and/or its termination. You specifically agree
that the post-employment non-competition and non-solicitation of
clients/customers covenants from the Employee Agreement will remain in effect
until October 1, 2004. In addition, from July 1, 2002 through June 30, 2004, you
agree to be bound by the following non-solicitation of employees clause:
You will not directly or indirectly on behalf of any other
individual or entity solicit, induce or entice any individual
who was an employee of any of the Companies as of your LDW
("Covered Employees") to terminate his or her employment
relationship with any of the Companies. Notwithstanding the
prior sentence, you are not prohibited from hiring any Covered
Employee so long as you did not initiate contact with such
Covered Employee for purposes of such hiring and
Roger B. Farley
March 27, 2003
Page 3
did not, directly or indirectly, solicit, induce or entice
such Covered Employee to terminate his or her employment
relationship with any of the Companies.
You acknowledge that the Companies have a protectible interest in you not
directly or indirectly competing with them in the metal and rigid plastic
segment of the packaging industry. However, if you present to U.S. Can the names
of potential employers, U.S. Can will not unreasonably withhold giving you
approval to work for any such potential employer.
Your obligations under the confidentiality provisions of the Employee Agreement
do not expire merely by the passage of time, but rather remain in effect
according to their substantive terms. You agree to return to U.S. Can any
property (keys, credit cards, passes, confidential documents or materials, all
work-in-process, etc.) belonging to the Companies, and to return all writings,
files, records, correspondence, notebooks, notes and other document and things
(including any copies thereof) containing confidential or proprietary
information or trade secrets of the Companies. The Employee Agreement, as
amended, will remain in effect following your LDW and terminate in accordance
with its terms. Except to the extent that the Employment Agreement amends the
Employee Agreement, this Letter Agreement supersedes, terminates and discharges
agreements, commitments or understandings between you and U.S. Can or any of the
Released Parties with respect to the subject matter hereof, contained in the
Employment Agreement, dated October 4, 2000, among you, the Company and U.S. Can
Corporation.
You agree that, for the period beginning on April 2, 2003, and continuing for a
reasonable period thereafter (including, at a minimum, all times during which
you are receiving salary continuation), you will assist the Companies in the
defense or prosecution of any claim that may be made by or against any of them,
to the extent that such claim(s) may relate to services performed by you for the
Companies. You agree to promptly inform the Companies if you become aware of any
such claim or threatened claim. The Companies will give due consideration to
your other personal or professional commitments with regard to this duty of
cooperation and to reimburse you for all of your reasonable out-of-pocket
expenses associated with such assistance, in accordance with U.S. Can's
then-current business expense reimbursement policies. The Companies agrees to
provide legal counsel to you in connection with such assistance (to the extent
legally permitted). You also agree to promptly inform the Companies if you are
asked to assist in any investigation of any of them (or their actions) that may
relate to services performed by you for any of them, regardless of whether a
lawsuit has then been filed against any of them with respect to such
investigation.
6. This Letter Agreement
You agree not to disclose, divulge, publicize or publish the existence or terms
of this Letter Agreement, and any Exhibits, except to your counsel, immediate
family or financial advisor, or as required by law or as required to enforce the
terms of this Letter Agreement. The Companies also agrees not to disclose,
divulge, publicize or publish the existence of the terms of this agreement to
anyone except its lawyers, accountants and those persons within the Companies or
their respective boards of directors whose knowledge is necessary for the
approval and implementation of this Letter Agreement or as required by law or as
required to enforce the terms of this Letter Agreement.
7. Non-Disparagement/References
You agree that you will refrain from making any discrediting or disparaging
comments regarding the Companies or any of the Released Parties referred to in
this Letter Agreement. The Companies agrees that it will refrain from making any
discrediting or disparaging comments regarding you provided that it may give
truthful responses to employment reference inquiries upon receipt of a written
release from you. In response to unsolicited requests for employment references
or in the absence of a written release from you, the Company will provide a
neutral reference identifying your dates of employment and positions held and
that you separated from the Company. You agree to direct all employment
references to Thomas J. Olander, Vice President, Human Resources or John
Workman, Chief Executive Officer.
Roger B. Farley
March 27, 2003
Page 4
8. Effect of Breach
In the event of a material breach or threatened material breach of the Employee
Agreement, as amended, the Employment Agreement, or the provisions of this
Letter Agreement, the Company shall be entitled to suspend any payment(s)
hereunder immediately and without notice, pending receipt of adequate assurances
that no breach has or will occur, or final resolution of any breach. This shall
be in addition to, and not in place of, any other remedies that may be available
to the Company for such breach or threatened breach.
9. Releases
a) By you:
In consideration for the promises herein, you, for yourself, your agents, legal
or personal representatives, assigns, heirs, distributees, administrators and
executors (the "Releasing Parties"), hereby release and forever discharge U.S.
Can, its present or past parents, subsidiaries, divisions, affiliates, or
related companies, and their respective successors or assigns, present or past
officers, trustees, directors, employees, representatives and agents of each of
them (the "Released Parties"), from any and all claims, demands, actions,
liabilities and other claims for relief and remuneration whatsoever, whether
known or unknown, arising or which could have arisen, up to and including the
date of your execution of this Letter Agreement, including, without limitation,
those arising out of or relating to your employment or change in employment
status and termination of prior agreements, including any claims arising under
Title VII of the Civil Rights Act of 1964 (as amended by the Civil Rights Act of
1991), the Americans With Disabilities Act, the Age Discrimination in Employment
Act of 1967, the Illinois Human Rights Act, the Illinois Wage Payment and
Collection Act, the Employee Retirement Income Security Act ("ERISA"), or any
other federal, state, county, or local statute, law, ordinance, regulation, code
or executive order, any tort or contract claims, whether express or implied, and
any of the claims, matters and issues which could have been asserted by the
Releasing Parties against the Released Parties in any legal, administrative, or
other proceeding. Notwithstanding any provision in this release to the contrary,
you are not releasing any of your rights that you may have (a) under any company
benefit plan, (b) to indemnity under the Company's charter, bylaws or other
agreements, (c) under any directors and officers insurance and (d) under this
Letter Agreement.
b) By U.S. Can:
U.S. Can, on behalf of itself, and its former and present parents, subsidiaries,
affiliates, successors, assigns and their respective present or former directors
and officers, hereby release you, your heirs, and representatives from any and
all claims, demands, actions and liabilities whatsoever arising from or out of
your employment through the date of this Release, EXCEPT wanton and willful
misfeasance, gross misconduct, fraud or criminal conduct in the discharge of
your employment duties or acts outside the scope of your employment.
10. Non-admission of Liability
Nothing in this Letter Agreement, nor any actions taken by any parties in
connection herewith, shall constitute, be construed as, or be deemed to be, an
admission of fault, liability or wrongdoing of any kind whatsoever on the part
of U.S. Can or the Released Parties.
11. Effect of Death
In the event of your death, the unfulfilled payments described in section 1 will
be made to Employee's designated beneficiary, if one has been designated. (A
form for this purpose is attached hereto as Exhibit C.) Otherwise, the payments
described in section 1 will be paid to your estate. All other benefits,
compensation, payments or remuneration shall cease, except that the Company will
provide such COBRA benefits as authorized or required by law.
12. Arbitration and Enforcement Costs
Any dispute or claim under this Letter Agreement shall be settled by
arbitration in Chicago, Illinois by an
Roger B. Farley
March 27, 2003
Page 5
arbitrator, who shall be appointed pursuant to the rules of the American
Arbitration Association ("AAA"). The arbitration shall be conducted in
accordance with the AAA rules governing employment disputes and shall include
any employment disputes or claims arising under Title VII of the Civil Rights
Act of 1964 (as amended by the Civil Rights Act of 1991), the Americans With
Disabilities Act, the Age Discrimination in Employment Act of 1967, the Illinois
Human Rights Act, the Illinois Wage Payment and Collection Act, the Employee
Retirement Income Security Act ("ERISA"), or any other federal, state, county,
or local statute, law, ordinance, regulation, code or executive order, or any
tort or contract claims, with respect to the subject matter hereof. Any award
issued as a result of such arbitration shall be final and binding on the
parties, and judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof; provided, however, that any award
issued as a result of arbitration shall be reviewable de novo by a court of
competent jurisdiction for errors of law. Should you be the prevailing party in
such arbitration or appeal therefrom the Company will reimburse you for the
reasonable attorneys' fees, costs and expenses incurred by you in connection
with such arbitration or appeal therefrom.
In addition, if it becomes reasonably necessary for you to retain legal counsel
or incur other costs and expenses in connection with either enforcing any
rights(s) under this Letter Agreement or defending against any allegations of
breach of this Letter Agreement by any of the Companies:
- You shall be entitled to recover from the Companies reasonable attorneys'
fees, cost and expenses incurred by you in connection with such enforcement or
defense.
- Payment required under this paragraph 12 shall be made by the Companies
to you (or directly to your attorney) promptly following submission to the
Companies of appropriate documentation evidencing the incurrence of such
attorney's fees, costs and expenses.
- You shall be entitled to select your legal counsel; provided, however,
that such right of selection shall not affect the requirement that any costs and
expenses reimbursable under this paragraph 12 be reasonable.
- Your rights to payments under this paragraph 12 shall not be affected by
the final outcome of any dispute with any of the Companies; provided, however,
that to the extent that the arbitrators shall determine that under the
circumstances recovery by you of all or a part of any such fees and costs and
expenses would be unjust, you shall not be entitled to any such recovery; and to
the extent that such amounts have been recovered by you previously, you shall
promptly repay such amounts to the Companies.
Roger B. Farley
March 27, 2003
Page 6
13. Knowing and Voluntary Agreement; Statutory Consideration Period
YOU REPRESENT AND WARRANT THAT YOU HAVE BEEN ADVISED, IN WRITING, TO CONSULT
WITH COUNSEL OR AN ATTORNEY IN CONNECTION WITH THIS LETTER AGREEMENT. THE
PARTIES REPRESENT AND WARRANT THAT, PRIOR TO EXECUTING THIS LETTER AGREEMENT,
THEY HAVE READ IT IN ITS ENTIRETY AND FULLY UNDERSTAND ITS MEANING AND EFFECT
AND THAT THEY HAVE ENTERED INTO IT KNOWINGLY AND VOLUNTARILY.
YOU REPRESENT AND WARRANT THAT YOU HAVE BEEN GIVEN TWENTY-ONE (21) DAYS WITHIN
WHICH TO CONSIDER THIS LETTER AGREEMENT AND THAT YOU HAVE BEEN GIVEN SEVEN (7)
DAYS AFTER EXECUTING OR SIGNING IT IN WHICH TO REVOKE IT. YOUR REVOCATION MUST
BE IN WRITING, AND MUST BE RECEIVED BY THOMAS J. OLANDER WITHIN THE 7-DAY
REVOCATION PERIOD. (A FORM YOU MAY USE FOR SUCH PURPOSE IS ATTACHED HERETO AS
EXHIBIT D.) THIS LETTER AGREEMENT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE
UNTIL THE REVOCATION PERIOD HAS EXPIRED.
14. Call Of Stock
Upon this agreement being executed by you, Company waives any call rights it
has, arising out of your separation, as to Company stock held by you.
15. Successors
Each of the Companies, as applicable, will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of such company, as applicable, to
expressly assume and agree to perform this Letter Agreement in the same manner
and to the same extent that such company would be required to perform it if no
such succession had taken place.
This Letter Agreement, consisting of six pages, plus your resignation letter
(one page), a copy of the Employee Agreement (seven pages), a copy of the
Employment Agreement (seventeen pages), your designation of beneficiary form
(one page) and a form of revocation (one page), constitutes the entire agreement
between you and U.S. Can or any of the Released Parties. This Letter Agreement
supersedes, terminates and discharges all prior oral and written agreements,
commitments or understandings between you and U.S. Can or any of the Released
Parties with respect to the subject matter hereof, including but not limited to
that certain Employment Agreement, dated October 4, 2000, among you, the Company
and U.S. Can Corporation. This Letter Agreement shall be binding upon us, our
successors, assigns, heirs and legal representatives, and inure to our benefit
and the benefit of U.S. Can's successors and assigns.
Sincerely,
UNITED STATES CAN COMPANY
By: /s/ Thomas J. Olander
-----------------------------------------------
Thomas J. Olander
Vice President
Organization, Staffing, Compensation & Benefits
ACCEPTED AND AGREED TO:
/s/ Roger B. Farley
- ------------------------------
Roger B. Farley
Date: March 27, 2003
March 27, 2003
U.S. Can Corporation
700 E. Butterfield Road
Suite 250
Lombard, IL 60148
Ladies and Gentlemen:
I hereby voluntarily resign effective April 1, 2003 all of my offices,
directorships, memberships and other positions with U.S. Can Corporation and its
subsidiaries and affiliates, including but not limited to Senior Vice President
- - Human Resources of U.S. Can Corporation and United States Can Company.
Sincerely,
/s/ Roger B. Farley
-------------------------------------
Roger B. Farley
March 27, 2003
DESIGNATION OF BENEFICIARY
Pursuant to section 11 of the Letter Agreement, dated March __, 2003
between me and the United States Can Company, I hereby designate the following
as my designated beneficiary:
(a) prior to May 17, 2003, my daughters, Kelly T. Johnston and Kyle Farley
Schockley, in equal parts; and
(b) on and after May 17, 2003, my intended wife, Marilyn Joe Hurst.
/s/ Roger B. Farley
-----------------------------
Roger B. Farley
Dated: March 27, 2003
March 27, 2003
Revocation of Agreement
By signing below, I, Roger B. Farley, hereby revoke my agreement. I UNDERSTAND
THAT MY REVOCATION WILL BE EFFECTIVE ONLY IF I SIGN BELOW WITHIN SEVEN (7) DAYS
OF THE DATE ON WHICH I AGREED TO THE TERMS OF THIS LETTER FROM THOMAS J.
OLANDER, DATED MARCH 27, 2003 AND MY REVOCATION IS RECEIVED BY THOMAS J. OLANDER
WITHIN THE SEVEN (7) DAY REVOCATION PERIOD.
- ---------------------------------
Roger B. Farley
Date:
Acknowledgement of Receipt of Revocation
By signing below, I, Thomas J. Olander, acknowledge receipt of Roger B. Farley's
revocation of my letter to him, dated March ___, 2003.
UNITED STATES CAN COMPANY
By:
-----------------------------
Thomas J. Olander
Vice President
Human Resources
Date: