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Exhibit 10.38
[LIBBEY LOGO]
May 27, 1998
John F. Meier
Chairman
Chief Executive Officer
Mr. Rob Bules
5321 Eagle Ridge Lane
Sylvania, OH 43560
Dear Rob,
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, 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 Corporation's normal vacation policy in effect at
the time of the Change in
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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 than death or Disability), the
date specified in the Notice of Termination (which, in the
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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 (together with the payments provided in
Section 4(ii)(c) below, the "Severance
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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 plans or programs to
continue to be so covered, the Corporation shall provide
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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, entity or group effecting the Change in Control,
you shall appoint another
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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
(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
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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 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-
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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 aggregate,
materially less favorable to you than those in effect on the date
hereof; provided, further, that if the aggregate annual premiums for
such
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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 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).
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(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 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.
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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 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,
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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
(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
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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 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,
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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 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
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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/ Robert A. Bules Jr.
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[Executive]