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Exhibit 10.53
[Libby Inc. Letterhead]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Wayne Zitkus
6209 Turnwood Drive
Jamesville, NY 13078
Dear Wayne,
Libbey Inc. (the "Corporation") considers it essential to the
best interests of its shareholders to foster the continuous employment of key
management personnel. In connection with this, the Corporation's Board of
Directors (the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Corporation may
exist and that the uncertainty and questions that it may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued
attention and dedication of members of the Corporation's management, including
yourself, to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in its employ, the
Corporation hereby agrees that after this letter agreement (this "Agreement")
has been fully executed, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control (as
defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 2001; provided,
however, that commencing on January 1, 2002 and on each January 1 thereafter,
the term of this Agreement shall automatically be extended for one additional
year unless, not later than September 30 of the preceding year, the Corporation
shall have given notice that it does not wish to extend this Agreement;
provided, further, that if a Change in Control (as defined in Section 2), occurs
during the original or any extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than thirty-six (36)
months beyond the month in which such Change in Control occurred.
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2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there has been a Change in Control. For purposes of this Agreement, a
Change in Control shall be deemed to occur if:
(a) any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of
securities of the Corporation representing twenty percent (20%) or more
of the combined voting power of the Corporation's then outstanding
securities. For purposes of this Agreement, (A) the term "Person" is
used as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided,
however, that the term shall not include the Corporation, any trustee
or other fiduciary holding securities under an employee benefit plan of
the Corporation, and any corporation owned, directly or indirectly, by
the shareholders of the Corporation, in substantially the same
proportions as their ownership of stock of the Corporation, and (B) the
term "Beneficial Owner" shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act;
(b) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in Sections 2(a), (c) or (d)) whose election by
the Board or nomination for election by the Corporation's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (hereinafter referred to as "Continuing Directors"), cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation
(or other entity), other than a merger or consolidation which would
result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 66 2/3% of the combined voting power of the
voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation;
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the
sale or
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disposition by the Corporation of all or substantially all of the
Corporation's assets; or
(e) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's then outstanding securities (a "10% Owner") and (A) the
identity of the Chief Executive Officer of the Corporation is changed
during the period beginning sixty (60) days before the attainment of
the ten percent (10%) beneficial ownership and ending two (2) years
thereafter, or (B) individuals constituting at least one-third (1/3) of
the members of the Board at the beginning of such period shall cease
for any reason to serve on the Board during the period beginning sixty
(60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter; provided, however, that
this subsection (e) shall not apply to any Person who is a 10% Owner as
of the date hereof so long as such Person does not increase such
beneficial ownership by five percent (5%) or more over the percentage
so owned by such Person as of the date hereof.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. During the term of this Agreement, if any of the
events described in Section 2 constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(ii) upon
the subsequent termination of your employment, provided that such termination
occurs during the term of this Agreement and within the two (2) year period
immediately following the date of such Change in Control, unless such
termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c)
by you other than for Good Reason (as defined in Section 3(iv)). In the event
that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the
event your employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, you shall not be entitled to any
benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
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, your
employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment
for
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"Cause" shall mean termination (a) upon your willful and continued failure to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3(vi)) 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, (b) upon your willful and
continued failure to substantially follow and comply with the specific and
lawful directives of the Board, as reasonably determined by the Board (other
than any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after your issuance of a
Notice of Termination 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, (c) upon your willful commission of an act
of fraud or dishonesty resulting in material economic or financial injury to the
Corporation, or (d) upon your willful engagement in illegal conduct or gross
misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), 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. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d) hereof 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, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 3(iii) and specifying the particulars thereof in reasonable 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 any of the following circumstances unless, in the case of Sections
3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of
Termination (as defined in Section 3(vii)) specified in the Notice of
Termination given in respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Corporation that you held immediately prior to
the Change in Control, a significant adverse alteration in the nature
or status of your responsibilities or the conditions of your employment
from those in effect
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immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other
action by the Corporation that results in a material diminution in your
position, authority, duties or responsibilities;
(b) the Corporation's reduction of your annual base
salary as in effect on the date hereof or as the same may be increased
from time to time;
(c) the relocation of the Corporation's offices at
which you are principally employed immediately prior to the date of the
Change in Control (your "Principal Location") to a location more than
thirty (30) miles from such location, or the Corporation's requiring
you, without your written consent, to be based anywhere other than your
Principal Location, or the headquarters of the Corporation in Toledo,
Ohio or a manufacturing facility of the Corporation, except for
required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations;
(d) the Corporation's failure 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 Corporation within seven (7) days of the date such
compensation is due;
(e) the Corporation's failure to continue in effect
any material compensation or benefit plan or practice in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the Corporation's
failure to continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of
the Change in Control;
(f) the Corporation's failure to continue to provide
you with benefits substantially similar in the aggregate to those
enjoyed by you under any of the Corporation's life insurance, medical,
health and accident, disability, pension, retirement, or other benefit
plans or practices in which you and your eligible family members were
participating at the time of the Change in Control, the taking of any
action by the Corporation which would directly or indirectly materially
reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Corporation in
accordance with the
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Corporation's normal vacation policy in effect at the time of the
Change in Control;
(g) the Corporation's failure to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 6 hereof;
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(vi) hereof (and, if applicable, the
requirements of Section 3(iii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(i) the continuation or repetition, after written
notice of objection from you, of harassing or denigrating treatment of
you inconsistent with your position with the Corporation.
Your right to terminate your employment pursuant to this Section 3(iv) 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.
(v) VOLUNTARY TERMINATION. You shall be entitled to
voluntarily terminate your employment for any reason or no reason at any time
after a Change in Control.
(vi) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "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.
(vii) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (a) if your employment is terminated due to your death, the date of your
death; (b) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such thirty (30) day period),
and (c) if your employment is terminated pursuant to Section 3(iii), Section
3(iv) or Section 3(v) or for any other reason (other
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than death or Disability), 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).
Notwithstanding anything to the contrary contained in this Section 3(vii), if
within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, 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.
4. COMPENSATION UPON TERMINATION. Following a Change in
Control during the term of this Agreement, you shall be entitled to the benefits
described below upon termination of your employment, provided that such
termination occurs during the term of this Agreement and within the two (2) year
period immediately following the date of such Change in Control. The benefits to
which you are entitled, subject to the terms and conditions of this Agreement,
are:
(i) 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, when due, 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 plan or practice of the
Corporation at the time such payments are due, and the Corporation shall have no
further obligations to you under this Agreement.
(ii) If your employment by the Corporation shall be
terminated by you for Good Reason or by the Corporation other than for Cause or
Disability, then you shall be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base
salary, when due, through the Date of Termination at the rate in effect
at the time Notice of Termination is given, at the time specified in
Section 4(iii), plus all other amounts to which you are entitled under
any compensation plan or practice of the Corporation at the time such
payments are due;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Corporation shall
pay as severance pay to you, at the time specified in Section 4(iii), a
lump-sum severance payment
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(together with the payments provided in Section 4(ii)(c) below, the
"Severance Payments") equal to the sum of the following:
(A) two (2) times your annual base salary as
in effect as of the Date of Termination or immediately prior
to the Change in Control, whichever is greater; and
(B) two (2) times the greater of (x) your
targeted annual bonus as in effect as of the Date of
Termination or immediately prior to the Change in Control,
whichever is greater, or (y) your annual bonus for the year
immediately preceding the Date of Termination;
(c) notwithstanding any provisions of the
Corporation's stock option plans, incentive plans, or other similar
plans, the restricted period with respect to any restricted stock
granted to you thereunder shall lapse and such shares shall be
distributed to you at the time specified in Section 4(iii);
(d) for a period of one (1) year following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with financial planning services of substantially the same
type and scope as those which the Corporation was providing to you
immediately prior to the Date of Termination, or, if more favorable to
you, the date of the Change in Control;
(e) for a period of two (2) years following the Date
of Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by you in your sole discretion;
(f) for a twenty-four (24) month period after such
termination, the Corporation shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between
you and the Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter; provided, however, that if you become re-employed with
another employer and are eligible to receive medical and dental health
benefits under another employer's plans, the Corporation's obligations
under this Section 4(ii)(f) 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. In the event you
are ineligible under the terms of such benefit
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plans or programs to continue to be so covered, the Corporation shall
provide you with substantially equivalent coverage through other
sources or will provide you with a lump-sum payment in such amount
that, after all taxes on that amount, shall be equal to the cost to you
of providing yourself such benefit coverage. At the termination of the
benefits coverage under the second preceding sentence, you, your spouse
and your dependents shall be entitled to continuation coverage pursuant
to section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the
extent required by such laws, as if you had terminated employment with
the Corporation on the date such benefits coverage terminates. The
lump-sum shall be determined on a present value basis using the
interest rate provided in section 1274(b)(2)(B) of the Code on the Date
of Termination.
(g) (1) anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution to you or for your benefit (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement
or otherwise (the "Payment") would be subject to the excise tax imposed
by section 4999 of the Code (the "Excise Tax"), then you shall be
entitled to receive from the Corporation an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of the
Payment and the Gross-Up Payment retained by you after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 4(ii)(g), and taking into
account any lost or reduced tax deductions on account of the Gross-Up
Payment, shall be equal to the Payment;
(2) all determinations required to be made under this
Section 4(ii)(g), including whether and when the Gross-Up Payment is
required and the amount of such Gross-Up Payment, and the assumptions
to be utilized in arriving at such determinations shall be made by the
Accountants (as defined below) which shall provide you and the
Corporation with detailed supporting calculations with respect to such
Gross-Up Payment within fifteen (15) business days of the receipt of
notice from you or the Corporation that you have received or will
receive a Payment. For the purposes of this Section 4(ii)(g), the
"Accountants" shall mean the Corporation's independent certified public
accountants serving immediately prior to the Change in Control. In the
event that the Accountants are also serving as accountant or auditor
for the individual,
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entity or group effecting the Change in Control, you shall appoint
another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accountants hereunder). All fees and expenses of the
Accountants shall be borne solely by the Corporation. For the purposes
of determining whether any of the Payments will be subject to the
Excise Tax and the amount of such Excise Tax, such Payments will be
treated as "parachute payments" within the meaning of section 280G of
the Code, and all "parachute payments" in excess of the "base amount"
(as defined under section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the
opinion of the Accountants such Payments (in whole or in part) either
do not constitute "parachute payments" or represent reasonable
compensation for services actually rendered (within the meaning of
section 280G(b)(4) of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise Tax. For
purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable 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 the deduction of such state or local taxes if paid in
such year (determined without regard to limitations on deductions based
upon the amount of your adjusted gross income), and to have otherwise
allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in your adjusted gross income. To the extent
practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Corporation at the time you are entitled to receive the
Payment and in no event will any Gross-Up Payment be paid later than
five days after the receipt by you of the Accountant's determination.
Any determination by the Accountants shall be binding upon the
Corporation and you. As a result of uncertainty in the application of
section 4999 of the Code at the time of the initial determination by
the Accountants hereunder, it is possible that the Gross-Up Payment
made will have been an amount less than the Corporation should have
paid pursuant to this Section 4(ii)(g) (the "Underpayment"). In the
event that the Corporation exhausts its remedies pursuant to Section
4(ii)(g)(3) and you are required to make a payment of any Excise Tax,
the Underpayment shall be promptly paid by the Corporation to or for
your benefit; and
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(3) you shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the Gross-Up Payment. Such
notification shall be given as soon as practicable after you are
informed in writing of such claim and shall apprise the Corporation of
the nature of such claim and the date on which such claim is requested
to be paid. You shall not pay such claim prior to the expiration of the
30-day period following the date on which you give such notice to the
Corporation (or such shorter period ending on the date that any payment
of taxes, interest and/or penalties with respect to such claim is due).
If the Corporation notifies you in writing prior to the expiration of
such period that it desires to contest such claim, you shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by
an attorney reasonably selected by the Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claims;
provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify you for
and hold you harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related
costs and expenses. Without limiting the foregoing provisions of this
Section 4(ii)(g), the Corporation shall control all proceedings taken
in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you
agree to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one
or more appellate courts, as the Corporation shall determine; provided,
however, that if
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the Corporation directs you to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to you, on an
interest-free basis, and shall indemnify you for and hold you harmless
from, on an after-tax basis, any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such
advance (including as a result of any forgiveness by the Corporation of
such advance); provided, further, that any extension of the statute of
limitations relating to the payment of taxes for the taxable year of
you with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and you shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority;
(h) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Corporation or in any other capacity on behalf of or at the request of
the Corporation, the Corporation shall promptly on written request,
indemnify (and advance expenses to) you to the fullest extent permitted
by applicable law, including but not limited to making such findings
and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the
discretion to take so as to effectuate such indemnification or
advancement. Such agreement by the Corporation shall not be deemed to
impair any other obligation of the Corporation respecting your
indemnification otherwise arising out of this or any other agreement or
promise of the Corporation or under any statute;
(i) the Corporation shall furnish you for six (6)
years following the Date of Termination (without reference to whether
the term of this Agreement continues in effect) with directors' and
officers' liability insurance insuring you against insurable events
which occur or have occurred while you were a director or officer of
the Corporation, such insurance to have policy limits aggregating not
less than the amount in effect immediately prior to the Change in
Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such
terms, conditions and exceptions shall not be, in the
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aggregate, materially less favorable to you than those in effect on the
date hereof; provided, further, that if the aggregate annual premiums
for such insurance at any time during such period exceed one hundred
and fifty percent (150%) of the per annum rate of premium currently
paid by the Corporation for such insurance, then the Corporation shall
provide the maximum coverage that will then be available at an annual
premium equal to one hundred and fifty percent (150%) of such rate; and
(j) you shall be fully vested in your accrued
benefits under any qualified or nonqualified pension, profit sharing,
deferred compensation or supplemental plans maintained by the
Corporation for your benefit, and the Corporation shall provide you
with additional fully vested benefits under such plans in an amount
equal to the benefits which you would have accrued had you continued
your employment with the Corporation for two (2) additional years
following your Date of Termination; provided, however, that to the
extent that the acceleration of vesting or enhanced accrual of such
benefits would violate any applicable law or require the Corporation to
accelerate the vesting of the accrued benefits of all participants in
such plan or plans or to provide additional benefit accruals to such
participants, the Corporation shall pay you a lump-sum payment at the
time specified in Section 4(iii) in an amount equal to the value of
such benefits; provided, further, that to the extent that the present
value of all benefits payable to you under this Section 4(ii)(j) is
less than $250,000, the Corporation shall pay you a lump-sum payment at
the time specified in Section 4(iii) in an amount equal to the
difference between $250,000 and the amount of such benefits which are
otherwise payable to you under this Section 4(ii)(j); provided,
further, that if you are eligible to receive grandfathered benefits
under the Corporation's pension plan, the provisions of this Section
4(ii)(j) shall apply to such grandfathered benefits, without reduction
for age, in addition to any other benefits to which you are entitled
under this Section 4(ii)(j).
(iii) The payments provided for in Sections 4(ii)(a), (b),
(c), (d) and (j) 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. 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
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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).
(iv) 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, except as provided in Section 4(ii)(f), 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 or
self-employment, by retirement benefits, by offset against any amount claimed to
be owed by you to the Corporation, or otherwise.
5. ACCELERATION OF VESTING OF OPTIONS. Notwithstanding
anything contained herein, in the event of a Change in Control during the term
of this Agreement, all outstanding options ("Options"), if any, granted to you
under any of the Corporation's stock option plans, incentive plans or other
similar plans (or options substituted therefor covering the stock of a successor
corporation) shall, effective immediately prior to such Change in Control,
become fully vested and exercisable as to all shares of stock covered thereby.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation shall 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 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 terminate your employment and
receive compensation from the Corporation 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, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(ii) This Agreement 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. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless
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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 no such
designee, to your estate.
7. NOTICE. For the purpose 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 notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, 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.
8. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS.
(i) CONFIDENTIALITY. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Corporation by any person or entity, or (iii) is lawfully
disclosed to you by a third party. As used in this Agreement, the term
"Confidential Information" means: information disclosed to you or known by you
as a consequence of or through your relationship with the Corporation, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Corporation and its affiliates.
(ii) NON-SOLICITATION. You hereby agree that, for the period
commencing on the Date of Termination and terminating on the second anniversary
thereof, you shall not, either on your own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on
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behalf of any other person, firm or corporation, directly or indirectly solicit
or attempt to solicit away from the Corporation any of its officers or employees
or offer employment to any person who, on or during the six (6) months
immediately preceding the date of such solicitation or offer, is or was an
officer or employee of the Corporation; provided, however, that a general
advertisement to which an employee of the Corporation responds shall in no event
be deemed to result in a breach of this Section 8(ii).
9. FUNDING OF OBLIGATIONS. Within a reasonable time following
the execution and delivery of this Agreement by you and the Corporation, the
Corporation shall partially fund its obligations to provide benefits hereunder
(including, without limitation, its obligations under Section 4(ii)(g)) by
establishing and irrevocably partially funding a trust for your benefit and the
benefit of other executives of the Corporation with whom the Corporation has
entered into agreements similar to this Agreement. The Corporation shall
initially contribute $1000 to such trust. Such trust shall be a grantor trust
described in section 671 of the Code. Upon the occurrence of a Potential Change
in Control (as defined below), the Corporation shall fully fund its obligations
to provide benefits hereunder (including, without limitation, its obligations
under Section 4(ii)(g)) by irrevocably contributing funds to such trust on your
behalf. The amount of such contribution shall equal the then present value of
the Corporation's obligations under Section 4 hereof as determined by the firms
serving as the Corporation's actuaries and accountants immediately prior to the
Change in Control. Such actuaries and accountants shall be paid by the
Corporation. The establishment and funding of such trust shall not affect the
obligation of the Corporation to provide benefits under the terms of this
Agreement. For purposes of this Agreement a "Potential Change in Control" shall
be deemed to occur if:
(a) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(b) 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;
(c) any Person who is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Corporation
representing ten percent (10%) or more of the combined voting power of
the Corporation's then outstanding securities, increases such Person's
beneficial ownership of such securities by five percent (5%) or more of
the Corporation's then outstanding securities over the percentage so
owned by such Person on the date hereof; or
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(d) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
10. 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 such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No 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 Ohio without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Except as
provided in Section 4(ii)(g) hereunder, any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
11. SEVERABILITY. 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.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. SUITS, ACTIONS, PROCEEDINGS, ETC..
(i) JURISDICTION AND VENUE. No suit, action or proceeding with
respect to this Agreement, nor any judgment entered by any court in respect
thereof, may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority, other than in a court of competent jurisdiction
in the State of Ohio, and you and the Corporation hereby irrevocably waive any
right which you or the Corporation, as applicable, may otherwise have had to
bring such a suit, action, proceeding or judgment in any other court, domestic
or foreign, or before any similar domestic or foreign authority. You and the
Corporation hereby submit to the exclusive jurisdictions
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of such courts for the purpose of any such suit, action, proceeding or judgment.
By your execution and delivery of this Agreement, you appoint the Secretary of
the Corporation, at the Corporation's office in Toledo, Ohio, as your agent upon
which process may be served in any such suit, action or proceeding; and by its
execution and delivery of this Agreement, the Corporation appoints the Secretary
of the Corporation, at its office in Toledo, Ohio, as its agent upon which
process may be served in any such suit, action or proceeding. Service of process
upon such applicable agent, together with actual notice of such service given to
you or the Corporation, as applicable, in the manner provided in Section 7
hereof, shall be deemed in every respect effective service of process upon the
applicable party in any suit, action, proceeding or judgment. Nothing herein
shall be deemed to limit the ability of you or the Corporation to serve any such
writs, process or summonses in any other manner permitted by applicable law. You
and the Corporation hereby irrevocably waive any objections which you or the
Corporation, as applicable, may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement
brought in any court of competent jurisdiction in the State of Ohio, and hereby
further irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event that no court of competent
jurisdiction in the State of Ohio will accept such jurisdiction and venue, then
any suit, action or proceeding with respect to this Agreement, or any judgment
entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the continental United States which has jurisdiction
over such suit, proceeding or action and the parties thereto.
(ii) COMPENSATION DURING DISPUTE, ETC.. Your compensation
during any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute") arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows:
If there is a termination by you or the Corporation followed
by a Dispute as to whether you are entitled to the payments and other benefits
provided under this Agreement, then, during the period of that Dispute the
Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall provide you
with the other benefits provided in Section 4(ii) of this Agreement, if, but
only if, you agree in writing that if the Dispute is resolved against you, you
shall promptly refund to the Corporation all payments you receive under Sections
4(ii)(a) and 4(ii)(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was
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withheld during the period of the Dispute plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly.
(iii) LEGAL FEES. The Corporation shall pay to you all legal
fees and expenses incurred by you in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees and expenses, if any, incurred in contesting or
disputing any termination of your employment 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).
14. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Corporation to which you are a party or in which you are a participant,
including, but not limited to, any Corporation sponsored employee benefit plans
and stock options plans . Provisions of this Agreement shall not in any way
abrogate your rights under such other plans and agreements.
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 shall then constitute our agreement on this subject.
Sincerely,
LIBBEY INC.
By: /s/ John F. Meier
---------------------------------
Its:Chairman of the Board and
Chief Executive Officer
Agreed and Accepted,
this 27th day of May, 1998.
/s/ Wayne Zitkus
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[Executive]