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EXHIBIT 10.7
(G-P LETTERHEAD)
CONFIDENTIAL
February 28, 1994
Mr. James C. Van Meter
10 Cherokee Road, N.W.
Atlanta, Georgia 30305
Dear Jim:
This will confirm our agreement regarding your resignation from Georgia-Pacific
Corporation.
I have accepted your resignations as a member of the boards of directors of
Georgia-Pacific Corporation, its subsidiaries and nonprofit affiliates
effective today, and as Vice Chairman of Georgia-Pacific Corporation effective
March 11, 1994. As we discussed, however, you will remain on the payroll as a
regular salaried employee at your current base salary until May 13, 1994, when
your resignation from Georgia-Pacific employment will be effective. During
your remaining time with us, you will not be required to perform any services
for Georgia-Pacific in any connection, other than to complete the sale of the
Roofing Division and matters relating to the Mail-Well divestiture, and to
advise us on other matters for which you have had responsibility or are within
your knowledge or as requested by me.
As a result of your resignation from Georgia-Pacific employment, you will be
entitled to receive the following benefits:
1) Your resignation has been determined to be for "Good Reason," as
that phrase is defined under the 1988 and 1990 Long-Term Incentive
Plans (the "LTIPs"). Consequently, all restricted stock awarded
under the LTIPs on or before May 13, 1994, will vest immediately
on that date, and you will be entitled to an immediate
distribution of that stock. Pursuant to the terms of the LTIPs,
the requisite tax gross-up will be paid directly to the
appropriate taxing authorities.
2) You will be eligible to receive termination benefits under the
terms and provisions of your Executive Retirement Agreement,
commencing at age 62. Normally, your benefits under that agreement
would be eleven-fifteenths (approximately 73%) of the normal
retirement benefit you will have accrued through May 13, 1994.
However, we have agreed to amend your Executive
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February 28, 1994
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Retirement Agreement (as described on page 3 below) to increase
your termination benefit to 100% of your then accrued normal
retirement benefit. As you are aware, your "average monthly cash
salary" for these purposes will be calculated as of May 13, 1994,
and will take into account the amount of your base salary
(including deferrals in the Savings Plan) and incentive bonuses for
your last 48 months of employment. The benefit formula includes an
offset for company-funded retirement benefits under the
tax-qualified retirement plans for salaried employees.
3) You may obtain distribution of your vested account balance under
the Georgia-Pacific Corporation Savings and Capital Growth Plan
("Savings Plan") and your Personal Account under the
Georgia-Pacific Corporation Salaried Employees Retirement Plan
("SERP") in the following forms: (i) under both the Savings Plan
and the SERP, you are eligible for a lump sum distribution of your
account balance at any time; or (ii) as an alternative to a lump
sum payment under either plan, you will be eligible to elect an
immediate or deferred monthly annuity commencing at a time of your
choosing (but no later than age 70-1/2). You may also elect to
leave your funds in the plans and withdraw them at some future time
of your choosing (but no later than your attainment of age 70-1/2).
4) Normally your coverage under the Executive Life Program would come
to an end on May 13, 1994, and you would have a right to convert
this coverage to a personal policy (your insurance would be
extended during the conversion election period). However, we have
agreed to treat you as having an additional four years of service
with Georgia-Pacific, thus permitting you to have the option to
choose a company-paid death benefit, annuity, or lump sum payment
as more fully described on pages 3 and 4 below.
5) Your present (active employee) medical/dental/vision coverage will
terminate on May 31, 1994. Under COBRA, however, you will be
entitled to continue this coverage for a maximum of eighteen (18)
months on a self-paid basis. You will receive detailed information
regarding the cost of, and the procedures for electing, this
coverage continuation under separate cover.
However, since you are eligible for retirement, you will be
entitled to coverage under Georgia-Pacific's retiree medical
program in lieu of the 18-month self-paid extension of your
coverage under COBRA. As you may be aware, the retiree medical
plan requires participant contributions. It is expected that the
participant contribution rate which will be in effect on your
retirement date will require you to contribute approximately 50% of
the premium costs until you attain age 65 and approximately 64% of
the premium costs thereafter. Of course, the company cannot
guarantee that the contribution rates which retirees have to pay
will not increase in the future.
6) You have agreed to use your remaining earned vacation for 1994
beginning March 14, 1994. After your vacation, you will be
extended a paid leave of
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February 28, 1994
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absence at your current base salary until May 13. In
consideration for this arrangement, you have agreed to waive your
accrued vacation to the extent of the leave of absence period.
7) Since you are eligible for retirement, we will continue to match
your charitable gifts under the terms and conditions specified
in the salaried employees matching gift program.
8) Since you are eligible for retirement, we will give you a pro rata
share (based on your final resignation date of May 13) of any
payment which you would have received under the Management
Incentive Plan (MIP) for 1994 had you been an active employee
through December 31, 1994. We have agreed that your rating for
the individual portion of any such bonus will be 7. This payment,
less appropriate tax withholding, will be made to you at the time
MIP payments for 1994 are made to regular participants, probably
sometime in February 1995.
You will continue to participate in the same benefit plans and fringe-benefit
programs as if you remained an executive officer of the company through May 13,
1994.
In addition to the above and any other normal benefits for which you are
eligible, we have also agreed to give you the following special benefits in
exchange for your release of Georgia-Pacific from any claims relating to your
employment or your separation from employment and your agreement to the other
terms set out below:
1) Effective May 13, 1994, your Executive Retirement Agreement will
be amended as follows: (i) the provision governing termination
benefits under the agreement will be modified to provide that your
benefits will be 100% of your accrued normal retirement benefit at
the effective date of your resignation (but still payable at age
62); and (ii) the scope of the non-competition clause in the
agreement will be narrowed to cover only director, officer,
employee, agent, or consultant positions with Weyerhaeuser,
International Paper, Louisiana-Pacific, Champion, Union Camp,
Boise Cascade and Stone Container (and, of course, any successor,
subsidiary or affiliate of these corporations).
2) Effective May 13, 1994, you will be credited with an additional
four years of service under the Executive Life Program, and
accordingly we will make the following actuarially equivalent
options available to you:
-- A company-paid death benefit ($1,000,000) to be paid to your
designated beneficiary as soon as practicable following
the time of your death,
-- A lump sum payment of $ 178,490, to be paid as soon as
practicable following May 13, 1994, or
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February 28, 1994
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-- A single life, joint and 50% survivor or joint
and 100% survivor annuity from company funds (if you elect this
option, your monthly payments based on a June 1, 1994,
commencement date will be $1,418.01, $1,324.23, or $1,242.92,
respectively).
No matter which option you select, at the time the death
benefit, lump sum or each annuity payment (as the case may be) is
paid, a separate additional payment will be made directly to the
appropriate taxing authorities at the rate specified in the applicable
Executive Life Program as in effect at that time. You will be
informed under separate cover of the procedures for making your
decision.
4) We will reimburse your reasonable out-of-pocket expenses
for personal income tax advice and tax return preparation services for
the 1993 tax year, up to a maximum for the year (including any
reimbursements previously made) of $15,000. In addition, we will pay
you a lump sum of $15,000 for income tax advice, tax preparation and
legal services for the 1994 tax year. These payments will be subject
to appropriate tax withholding and will be made as soon as practicable
following your reimbursement request or, in the case of the lump sum,
shortly after May 13, 1994.
5) The company will enter into a consulting agreement with you
on the terms and conditions set forth in the attached agreement.
6) Georgia-Pacific and all affiliated companies hereby release
you from all claims, losses, or expenses which any of them have or
have had or may later claim to have had, against you for any loss,
damages or expense arising out of your service as an officer,
director, and employee of the company, so long as you acted in a
manner which you reasonably believed to be in or not opposed to the
best interests of Georgia-Pacific (or affiliated company, if
applicable) and had, with regard to any criminal matter, no reasonable
cause to believe your conduct was unlawful; provided, however, that
this release does not cover any claims arising under this agreement.
Nothing in this agreement is to be construed as an admission by you of
liability or wrongdoing of any sort.
Any questions concerning any of the normal benefits or special payments
described above should be directed to Rebecca M. Crockford in the Employee
Benefits Department at 404/652-5847. Of course, all benefits will be subject
to applicable taxes as well as to the terms and conditions of the applicable
benefit plan, policy or arrangement except as expressly modified herein.
As you are aware, this special benefit package is substantially greater than
those benefits to which you are normally entitled. In consideration for these
additional benefits and so that there will be no misunderstanding as to your
entitlement to any additional money or benefits, you have agreed to release the
company, all related companies, and their officers, directors, and employees,
from all actions, claims and liabilities of any kind arising out of either your
employment with Georgia-Pacific or your separation from employment, except as
expressly provided below. This release includes (but is not limited to) any
rights or claims you may have
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February 28, 1994
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under the Age Discrimination in Employment Act, which prohibits age
discrimination in employment; Title VII of the Civil Rights Act of 1964, which
prohibits discrimination in employment based on race, color, national origin,
religion or sex; the Equal Pay Act, which prohibits paying men and women
unequal pay for equal work; or any other federal, state or local laws or
regulations prohibiting employment discrimination. This release also includes
a release of any claims for wrongful discharge arising from your employment or
your separation from employment and includes both claims that you know about
and those you may not know about. However, this release does not affect your
rights under this separation agreement, any claim for indemnification under the
"Indemnification of Directors and Officers" article of the Georgia-Pacific
Corporation Bylaws, or any rights you have accrued under the Georgia-Pacific
Salaried Employees Retirement Plan, the Savings and Capital Growth Plan, your
Executive Retirement Agreement or the LTIPs, or your rights under insurance or
other welfare benefit plans (other than any severance plans or arrangements).
Nor does this release waive or release any rights or claims that you may have
under the Age Discrimination in Employment Act which arise after the date you
sign this agreement. Of course, I know you understand that nothing in this
letter is to be construed as an admission of liability or wrongdoing of any
sort by Georgia-Pacific.
As another condition to the special benefits package described above, you have
promised never to file a lawsuit asserting any claims which are included in the
release set out in the preceding paragraph. If you break that promise, you
agree to pay for all costs incurred by the company, any related company, or the
officers, directors or employees of any of them, including reasonable
attorneys' fees in defending against your claim. Moreover, if you file any
such lawsuit or other claim, you agree that Georgia-Pacific has the right, in
its sole discretion, to cease the payment of any further benefits which might
be payable under the special benefits package outlined above and you further
agree to tender back all special payments and reimbursements previously paid
under this Agreement. Georgia-Pacific promises never to file a lawsuit
asserting any claims which are included in its release set forth in clause (6)
on the preceding page; if we do so we will pay for all costs incurred by you
including reasonable attorney's fees in defending against our claim.
You are hereby given at least three weeks to consider our offer of special
benefits and urged to think over the terms of this agreement carefully before
accepting it and to discuss it with your family, an attorney of your choice
and/or your financial advisor before making a decision. Once you agree to
the terms set out in this letter (as evidenced by your signature below) you
will have seven days in which to revoke your decision, and you must do so by
delivering me a written notice of such revocation. Thus, this agreement will
not become effective or enforceable until seven days from the date of your
signature (assuming, of course, that you do not revoke it).
If you would like to discuss this matter further, let me know. By signing
below, you are indicating that you have discussed the terms of this agreement
with whomever you wished, that you have had as much time as you wished in which
to consider it, that you fully understand it, including its final and binding
effect, and that you fully and voluntarily agree to the terms and conditions
set forth herein. By signing below, you are also indicating that the terms and
provisions set forth in this letter constitute the entire agreement between you
and Georgia-Pacific
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February 28, 1994
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and supersede all previous communications, negotiations, proposals,
representations, conditions, or other agreements, whether written or oral,
between you or your counsel and Georgia-Pacific with respect to the subject
matter of this letter.
We and you agree to keep the terms of this agreement confidential and not to
disclose its terms and conditions to any third party except as required by
court order, and except that you may disclose it to your spouse, tax and legal
advisors (who shall be bound by the same obligation of confidentiality), and
except that we may disclose it in any regulatory filing and to any
Georgia-Pacific employee or advisor needing to know its terms in connection
with his duties.
We intend, and understand you also intend, to refer in the future to your
service as an officer and director of Georgia-Pacific on a basis which reflects
the high regard and appreciation that we have for your services and that you
have for the professional opportunities Georgia-Pacific has afforded you.
Please accept our very best wishes for success in your future endeavors.
Sincerely,
GEORGIA-PACIFIC CORPORATION
/s/ A. D. Correll
SO AGREED:
/s/ James C. Van Meter
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James C. Van Meter
February 28, 1994
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