EXHIBIT 10.5
FORM OF EMPLOYMENT AND CONSULTING AGREEMENT
This EMPLOYMENT AND CONSULTING AGREEMENT (this "Agreement") is made and
entered into as of this 22nd day of November, 1997, by and among U.S.
Timberlands Services Company, L.L.C., a Delaware limited liability company (the
"Company"), U.S. Timberlands Company, L.P., a Delaware limited partnership
("UST"), New Services (as defined below), a Delaware limited liability company,
and Xxxx X. Xxxxxxxx ("Xxxxxxxx").
W I T N E S S E T H
-------------------
WHEREAS, a new limited partnership, UST, has been formed and a new limited
liability company, to be re-named "U.S. Timberlands Service Company, L.L.C."
("New Services"), has been formed to serve as the general partner of UST and as
the managing member of certain affiliated limited liability companies (together
with any subsidiary entities, the "UST Group") and upon the initial public
offering of the units representing limited partner interests in UST (the "IPO"),
New Services will assume the obligations of the Company hereunder as more fully
described in Section 12.2; and
WHEREAS, Xxxxxxxx brings over 25 years of responsible management experience
in the timberlands and forest products business, and has developed valuable
knowledge and contacts useful to the UST Group; and,
WHEREAS, Xxxxxxxx has played an important role in making and operating
acquisitions on behalf of the UST Group including implementing new procedures
and strategies for operations and marketing, and providing proprietary
information for the purpose of developing the UST Group business; and,
WHEREAS, the Company desires to employ Xxxxxxxx as its President and Chief
Executive Officer and, upon the occurrence of certain events, to engage Xxxxxxxx
as a consultant after Xxxxxxxx' termination of employment, and Xxxxxxxx desires
to accept such employment and such contingent consulting agreement, on the terms
and conditions set forth in this Agreement;
WHEREAS, to induce Xxxxxxxx to accept such employment, UST desires to
guarantee the performance by the Company of its obligations hereunder,
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
Section 1. Employment.
The Company hereby employs Xxxxxxxx, and Xxxxxxxx hereby accepts employment
with the Company, on the terms and conditions set forth in this Agreement.
Section 2. Term.
Subject to the provisions of Section 6, Xxxxxxxx' employment by the Company
under this Agreement shall be for a term (the "Employment Term") commencing on
the date hereof and expiring on the earlier of December 31, 2002 or the date
Xxxxxxxx ceases to be an officer as provided in Section 3.1.
Section 3. Xxxxxxxx' Duties.
3.1 Duties. Xxxxxxxx shall hold the position of the Company's President and
Chief Executive Officer. Subject to the control of the board of directors or
other governing body of the Company (the "Board"), and any limitations set forth
in the operating agreement of the Company attached hereto as Exhibit A, as
amended from time to time in accordance with the terms thereof (the "Company
Agreement"), and in the agreements of limited partnership of the partnerships
and the operating agreements of the limited liability companies within the UST
Group, Xxxxxxxx shall, in general, supervise and control all the day-to-day
business and affairs of the Company and the UST Group. Should Xxxxxxxx desire at
any time to nominate the Chief Operating Officer of the Company to assume the
office of President, and should the Board approve such nomination, upon such
promotion of the Chief Operating Officer, Xxxxxxxx shall cease to be an officer
or employee of the Company and shall assume the position and duties of a Vice
Chairman of the Board, a non-officer position.
3.2 Performance of Duties. Xxxxxxxx shall perform Xxxxxxxx' duties and
responsibilities as President and Chief Executive Officer during the Company's
normal business hours and at all other times reasonably necessary to comply with
the terms and conditions of this Agreement. Xxxxxxxx shall devote the time and
attention required to the performance of Xxxxxxxx' duties and responsibilities
as President and Chief Executive Officer for and on behalf of the Company on the
terms set forth in this Section 3.2. In addition, Xxxxxxxx may from time to
time serve as a consultant to and/or as a member of the board of directors of
other entities, provided that the Board in good faith determines that such
activities do not unreasonably interfere with the business of the Company and
the UST Group and the performance of Xxxxxxxx' duties hereunder. The parties
acknowledge that Xxxxxxxx currently serves as a board member or advisory member
of various civic and charitable organizations and may continue to participate in
these activities; provided, however, that such continued participation shall in
no event be deemed a violation the limitations of the first two sentences of
this Section 3.2 unless and until Xxxxxxxx shall have been notified in writing
thereof and afforded a reasonable opportunity to cure the violation.
3.3 Principal Place of Employment. Xxxxxxxx' principal place of employment
and consulting shall be at Bandon, Oregon. The Company shall provide Xxxxxxxx,
at such location, for so long as the Company needs an office at such location,
with a private office, secretarial services and such other facilities and
support services as are appropriate to the position of President and Chief
Executive Officer or a Vice Chairman of the Board, as the case may be, and
necessary or appropriate in the performance of Xxxxxxxx' duties as the President
and Chief Executive Officer or a Vice Chairman; provided, that the Company shall
be under no obligation to maintain an office at Bandon, Oregon for any period
subsequent to December 31, 1998; further provided, the Company shall, in lieu of
maintaining such an office, reimburse Xxxxxxxx for his clerical, professional
and other
2
expenses reasonably incurred in prosecution of the Company's business, as other
expenses are reimbursed at Section 4.4 below.
Section 4. Compensation and Other Benefits.
Xxxxxxxx shall be entitled to receive from the Company the following
compensation and benefits for the services to be rendered by Xxxxxxxx hereunder:
4.1 Salary and Bonuses.
(a) During the Employment Term, the Company shall pay Xxxxxxxx an annual
base salary of $450,000, payable in equal installments during the year in
accordance with the Company's customary practices for senior executives ("Base
Salary"). The amount of Xxxxxxxx' Base Salary may be increased from time to
time by the Board, and, once increased, such higher amount shall become the Base
Salary for all purposes of this Agreement and may not thereafter be reduced. The
Company shall also pay to Xxxxxxxx, to the extent earned, an annual cash bonus,
not to exceed 100% of Base Salary, which shall be based on the performance of
Xxxxxxxx and the UST Group's business as determined annually by the Compensation
Committee of the Board in its discretion. The Company shall have the right to
deduct and withhold from Xxxxxxxx' compensation all taxes and charges that are
currently or that hereafter may be required by law to be so deducted and
withheld.
The Company shall establish a program whereby Xxxxxxxx may, at his option,
defer receipt of any or all of the Base Salary and bonuses otherwise payable to
him under this Agreement. Any amounts so deferred shall be placed in a "rabbi"
trust, with a bank or other financial institution reasonably satisfactory to
Xxxxxxxx, as trustee, providing the maximum security to Xxxxxxxx without causing
the constructive receipt of income for federal income tax purposes and
distributed, together with interest or other earnings thereon, according to a
payment schedule to be designated by Xxxxxxxx.
(b) Notwithstanding the foregoing however, if Xxxxxxxx ceases to be an
officer as provided in Section 3.1, Xxxxxxxx shall thereafter, except as
provided below for consultant services, be entitled only to receive such meeting
fees and other benefits, if any, as the Company provides to the members of the
Board who are not also employees of the Company; provided that Xxxxxxxx shall
continue to retain his current ownership of (a) all subordinated units
representing limited partner interests in UST issued to him at the closing of
the IPO, (b) his 10% member interest in New Services, subject to the provisions
of the Company Agreement, and (c) the Unit Options awarded to him under the U.S.
Timberlands Company 1997 Long-Term Incentive Plan (the "LTIP"), subject to the
terms of the LTIP. Xxxxxxxx agrees to make himself available to the Company to
provide, upon reasonable request, consulting services of the nature Xxxxxxxx is
qualified to perform by reason of Xxxxxxxx' background, knowledge and
experience. As consideration for being available to provide such consulting
services, Xxxxxxxx shall be entitled to receive an annual retainer of $25,000,
payable in equal quarterly installments of $6,250 on each January 2, April 1,
July 1 and October 1. Upon the presentation of invoices, in a form reasonably
satisfactory to the Company, from Xxxxxxxx for such consulting services, the
Company shall also pay Xxxxxxxx at the rate of $200 per hour for
the consulting services rendered, up to a maximum of $1,600 for any one day, and
shall reimburse Xxxxxxxx for all reasonable expenses incurred by Xxxxxxxx in
performing such consulting services.
3
The consulting agreement described herein shall terminate at the effective date
of the Xxxxxxxx' removal, resignation or retirement from the Board or upon his
Death or becoming Disabled (the "Consulting Term"). During the term of such
consultancy, Xxxxxxxx agrees to present to the Board for consideration proposed
acquisitions that meet the Board's criteria prior to presenting such proposed
acquisitions to any other person. The Board will have a 30-day period in which
to exercise its right of first refusal and an additional 120 days thereafter
either to consummate the acquisition or enter into a binding agreement with
respect thereto.
4.2 Long Term Incentive Plan. During the Employment Term and Consulting
Term, Xxxxxxxx shall be entitled to participate in the LTIP on the terms and
conditions set forth therein. Concurrently with the IPO, Xxxxxxxx will be
granted Unit Options (as defined in the LTIP) pursuant to the LTIP in an amount
equal to 12.5% of the number of Unit Options initially available to be granted
under the LTIP and substantially in the form of the grant agreement attached
hereto as Attachment A.
4.3 Participation in Benefit Plans. During the Employment Term, Xxxxxxxx
shall be eligible to participate in all employee benefit plans and arrangements
now in effect or which may hereafter be established that are generally
applicable to other senior executives of the Company, including, without
limitation, all life, group insurance, and medical and dental care plans and all
disability, retirement, 401(k) and other employee benefit plans of the Company,
as long as any such plan or arrangement remains generally applicable to other
senior executives of the Company. Xxxxxxxx shall also be entitled to the same
vacation benefits as are generally available to senior executives of the
Company, provided in any case that Xxxxxxxx shall have a minimum of four weeks'
vacation per year.
4.4 Reimbursement of Expenses. The Company shall reimburse Xxxxxxxx for
reasonable expenses incurred by Xxxxxxxx in the performance of Xxxxxxxx' duties
hereunder (including as set forth in the second proviso to Section 3.3) in
accordance with the policy of the Company for reimbursement of expenses as
adopted by the Board from time to time and generally applicable to all senior
executives of the Company. Xxxxxxxx shall furnish the Company with the
supporting documentation required under the Company's policy in connection with
the reimbursement of such expenses.
Section 5. Membership on the Board.
Xxxxxxxx shall be entitled to membership on the Board in accordance with
the terms of the Company Agreement as in effect on the date the Company
Agreement is first executed.
Section 6. Termination.
6.1 Termination by the Company Without Cause. The Company may terminate
Xxxxxxxx' employment as President and Chief Executive Officer other than for
Cause or Xxxxxxxx becoming Disabled (as such terms are defined below) at any
time during the Employment Term if the Board determines, in its sole discretion,
that the continued employment of Xxxxxxxx is not in the continued
interests of the Company. In the event the Company terminates Xxxxxxxx'
employment pursuant to this Section 6.1, then Xxxxxxxx shall be paid on
termination, (i) any unpaid Base Salary earned
4
hereunder prior to the termination date, (ii) all unused vacation time accrued
by Xxxxxxxx as of the termination date in accordance with the Company's vacation
policy for senior executives, (iii) all unpaid amounts of compensation in which
Xxxxxxxx is vested as of the termination date under any and all incentive
compensation plans or programs of the Company, (iv) any expenses in respect of
which Xxxxxxxx has requested, and is entitled to, reimbursement in accordance
with Section 4.4, (v) a prorated bonus for the year of such termination
calculated based on the bonus being equal to 100% of Base Salary, and (vi) an
amount equal to the amount of Base Salary that Xxxxxxxx would receive if
Xxxxxxxx' employment had continued without change through the remainder of the
Term or for 12 months, whichever is less, (items (i) through (iv) above being
the "Earned Amounts").
6.2 Termination by the Company for Cause. The Company may terminate this
Agreement at any time, in the discretion of the Board, in the event of (i) any
conviction of Xxxxxxxx for a felony, (ii) any material breach by Xxxxxxxx of a
material written agreement between Xxxxxxxx and the Company or the UST Group,
including this Agreement, (iii) any breach caused by Xxxxxxxx of the Company
Agreement, the limited partnership agreement of any member of the UST Group, or
the charter or bylaws of any corporation within the UST Group, provided that
Xxxxxxxx had prior written notice of such agreement or other document and any
amendment thereto (including a copy of the full text thereof) and provided
further that such breach has a material adverse effect on the Company, (iv) any
willful conduct by Xxxxxxxx materially injurious to the Company or the UST Group
or their respective businesses, (v) any willful failure by Xxxxxxxx to comply
with any material policies, procedures, or directives of the Board, provided
that, Xxxxxxxx shall first be given notice from the Board of such failure and
such failure shall not have been cured within 10 days after such notice or, if
such failure is not capable of being cured within 10 days, Xxxxxxxx shall not
have commenced and be diligently pursuing in good faith efforts to cure such
default, or (vi) any fraud, misappropriation of funds, embezzlement, or other
similar acts of misconduct by Xxxxxxxx with respect to the Company or the UST
Group. In the event the Company terminates Xxxxxxxx' employment pursuant to
this Section 6.2 for Cause, then Xxxxxxxx shall be paid on termination the
Earned Amounts. For purposes of this Agreement, no act or failure to act on
Xxxxxxxx' part shall be deemed "willful" unless done, or omitted to be done, in
bad faith or without the reasonable belief that the act or failure to act was in
the best interests of the Company or the UST Group. Any act or failure to act
on the basis of authority given by resolution duly adopted by the Board or on
the basis of advice given by legal counsel for the Company shall be conclusively
presumed to have been done, or omitted to be done, in good faith and in the best
interests of the Company or the UST Group. No termination of Xxxxxxxx'
employment shall be for Cause unless such termination shall have been authorized
in advance by a resolution adopted by the Board and delivered to Xxxxxxxx,
following a meeting of the Board at which Xxxxxxxx (together with his counsel)
shall have been afforded a reasonable opportunity to refute the purported
grounds for termination for Cause.
6.3 Termination Upon Death or Disability of Xxxxxxxx. This Agreement shall
terminate upon the death of Xxxxxxxx, or upon Xxxxxxxx becoming Disabled (as
defined below). In the event of a termination of this Agreement pursuant to this
Section 6.3, Xxxxxxxx (or Xxxxxxxx' estate, if applicable) shall be paid on
termination the Earned Amounts. For purposes of this Agreement, "Disabled" shall
mean that Xxxxxxxx shall have qualified for and be receiving benefits under the
Company's long-term disability insurance plan or, if there is no such plan, that
Xxxxxxxx shall have qualified for and be receiving disability benefits under the
federal Social Security Act.
5
6.4 Voluntary Resignation for Good Reason. Xxxxxxxx may resign Xxxxxxxx'
employment as President and Chief Executive Officer of the Company at any time
and, if such resignation is for "Good Reason", Xxxxxxxx shall be entitled to the
same payments and benefits that Xxxxxxxx would receive under Section 6.1 if
Xxxxxxxx' employment were being terminated by the Company other than for Cause
or Xxxxxxxx becoming Disabled. "Good Reason" shall mean any one or more of the
following: (i) failure of UST to complete its IPO on or before March 31, 1998;
(ii) failure of the Company to appoint or re-appoint Xxxxxxxx to the office of
President and Chief Executive Officer (excluding in the circumstances described
in Section 3.1); (iii) failure of the Company's members to elect or re-elect
Xxxxxxxx to the Board; (iv) failure of the Company, by act, omission, amendment
to the instruments governing its organization and operation or otherwise, to
vest in Xxxxxxxx the position, duties and responsibilities contemplated by this
Agreement; (v) failure by the Company to pay when due any portion of the
compensation payable to Xxxxxxxx hereunder; (vi) any material breach by the
Company of any material provision of this Agreement; (vii) on or following a
Change of Control (as such term is defined in the Company's LTIP, as the same
may be amended from time to time), either Xxxxxxxx is assigned any duties or
responsibilities materially inconsistent with, or diminished from, Xxxxxxxx'
duties and responsibilities with the Company and the UST Group immediately prior
to the Change of Control, or, Xxxxxxxx' status, duties, responsibilities, titles
or offices with the Company and the UST Group are materially diminished from
those in effect immediately prior to the Change of Control, as determined in the
good faith opinion of Xxxxxxxx; or (viii) Xxxxxxxx, on the basis of a
certificate of a medical doctor mutually acceptable to the Company and Xxxxxxxx,
becomes unable to properly discharge his duties and responsibilities as
President and Chief Executive Officer of the Company due to the substantial
deterioration of his physical or mental health and gives the Company 30 days
prior written notice of his resignation; provided, however, Good Reason shall
exist with respect to a matter described in (ii) through (vii) above that is
capable of being corrected by the Company only if such matter is not corrected
by the Company within a 30-day period following its receipt of written notice of
such matter from Xxxxxxxx, and in no event shall a termination by Xxxxxxxx
occurring more than 60 days following any such written notice or the event
described in (i) above be for Good Reason.
Section 7. Covenant Not to Compete; Confidentiality.
7.1 Noncompetition. Unless granted written permission by the Board and
subject to any further restrictions contained in the agreements of limited
partnership within the UST Group, while employed by the Company or a member of
the Board and for a period of 12 months after the termination of such employment
or membership on the Board, Xxxxxxxx covenants that Xxxxxxxx shall not (i) own
(as a proprietor, partner, or stockholder of greater than one percent of
outstanding equity securities, interests or otherwise) an interest in, or (ii)
participate (as an officer, director, or in any other capacity) in the
management, operation, or control of, or (iii) perform services as or act in the
capacity of any employee, independent contractor, consultant, or agent of any
enterprise which engages in one or more of the following activities in a state
in which the Company or the UST Group is then conducting business and in which
the Company or the UST Group commenced conducting business prior to the
commencement of such activities therein by Xxxxxxxx:
(a) acquisition, exchange, operation or sale of timber-producing real
property or rights to harvest timber, a principal purpose of which is
producing logs or other forest products;
6
(b) harvesting of timber other than harvesting which is incidental to
the ownership or operation of real property not owned or operated for a
principal purpose of producing logs or other forest products;
(c) sale, exchange or purchase of logs other than sales, exchanges or
purchases which are incidental to the ownership or operation of real
property not owned or operated for a principal purpose of producing logs or
other forest products;
(d) manufacture, marketing or sale of manufactured, engineered, or
substitute wood products to the extent such products compete with products
produced by the Company or any member of the UST Group; or
(e) any and all other activities relating to the United States forest
products industry to the extent such activities compete with activities of
the Company or any member of the UST Group.
The non-competition restrictions set forth in this Section 7.1 shall not apply
in the event of a termination of this Agreement pursuant to Section 6.1 or 6.4,
nor, in the event of Xxxxxxxx' termination due to Xxxxxxxx becoming Disabled in
accordance with Section 6.3, shall they apply following Xxxxxxxx ceasing to be
Disabled unless the Company offers to re-employ Xxxxxxxx on terms and
conditions at least as favorable as those set forth in this Agreement.
7.2 Confidentiality. Xxxxxxxx acknowledges that in the course of Xxxxxxxx'
employment by the Company, including as a member of the Board following
employment, if applicable, Xxxxxxxx will be furnished and have access to certain
information concerning the business, financial condition, operations, assets and
liabilities of the Company and the UST Group that is confidential or proprietary
in nature. All such information (irrespective of the form of communication) is
hereinafter collectively referred to as the "Information." Until the later to
occur of (i) the date of termination of Xxxxxxxx' employment hereunder or (ii)
the date of Xxxxxxxx' resignation or removal from the Board, and for a period of
12 months thereafter, Xxxxxxxx agrees to keep the Information confidential and
agrees that Xxxxxxxx will use the Information solely for the purpose of
performing Xxxxxxxx' duties hereunder or as a member of the Board or as
otherwise authorized by the Company. This Agreement shall be inoperative as to
such portions of the Information which (a) are or become generally available to
the public other than as a result of a disclosure by Xxxxxxxx in violation of
this Agreement, (b) become available to Xxxxxxxx on a non-confidential basis
from a source other than the Company or the UST Group that is not bound by an
obligation of confidentiality to such entity or entities, or (c) are required to
be disclosed by an order or decree of a court or other tribunal of competent
jurisdiction, provided the Company is given prompt notice of, and the
opportunity to contest disclosure under, such order or decree. Upon termination
of this Agreement, Xxxxxxxx will return the Information furnished by the Company
or the UST Group and any documents that contain, reflect, or are based upon, in
whole or in part, the Information.
7.3 Equitable Relief. Xxxxxxxx acknowledges and agrees that it would be
difficult to measure damage to the Company or the UST Group from any breach by
Xxxxxxxx of Section 7.1 or 7.2 and that monetary damages would be an inadequate
remedy for any such breach. Accordingly, Xxxxxxxx agrees that if Xxxxxxxx shall
breach Section 7.1 or 7.2, the Company shall be entitled, in
7
addition to all other remedies it may have at law or in equity, to an injunction
or other appropriate orders or equitable relief to restrain any such breach,
without showing or proving any actual damage sustained by the Company or the UST
Group. Xxxxxxxx further agrees to waive any requirement for the securing or
posting of any bond in connection with such remedies.
7.4 Xxxxxxxx' Acknowledgment. Xxxxxxxx hereby expressly acknowledges and
agrees that (i) the restrictions and obligations set forth in and imposed by
this Section 7 will not prevent Xxxxxxxx from obtaining gainful employment in
Xxxxxxxx' field of expertise or cause Xxxxxxxx undue hardship, and (ii) in view
and consideration of the substantial benefits Xxxxxxxx will receive from the
Company pursuant to this Agreement and the Company Agreement, the restrictions
and obligations imposed on Xxxxxxxx under this Section 7 are reasonable and
necessary to protect the legitimate business interests of the Company and its
members and the UST Group.
Section 8. Indemnification.
(a) During the Employment Term and thereafter if the Xxxxxxxx is a member
of the Board and for a period of six years thereafter, the Company shall cause
Xxxxxxxx to be covered by and named as an insured under any policy or contract
of insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as an
officer or director of the Company or service in other capacities at the request
of the Company. The coverage provided to Xxxxxxxx pursuant to this Section 8
shall be of a scope and on terms and conditions at least as favorable as the
coverage (if any) provided to any other officer or director of the Company.
(b) To the maximum extent permitted under applicable law, during the
Employment Term and thereafter if the Xxxxxxxx is a member of the Board and for
a period of six years thereafter, the Company shall indemnify Xxxxxxxx against
and hold Xxxxxxxx harmless from any costs, liabilities, losses and exposures to
the fullest extent and on the most favorable terms and conditions that similar
indemnification is offered to any director or officer of the Company.
Section 9. Representations and Warranties.
9.1 By Xxxxxxxx. Xxxxxxxx represents and warrants to the Company that (i)
Xxxxxxxx is under no contractual or other restriction or obligation which would
prevent the performance of Xxxxxxxx' duties hereunder or interfere with the
rights of the Company hereunder and (ii) this Agreement has been duly executed
and delivered by Xxxxxxxx, is the legal, valid and binding obligation of
Xxxxxxxx, and is enforceable against Xxxxxxxx in accordance with its terms,
except that no representation or warranty is made with respect to the provisions
of Section 7.
9.2 By the Company. The Company represents and warrants to Xxxxxxxx that
(i) it has all requisite limited liability company power and authority to
execute, deliver and perform this Agreement, (ii) all necessary proceedings of
the Company have been duly taken to authorize the execution, delivery and
performance of this Agreement, and (iii) this Agreement has been duly
authorized, executed and delivered by the Company, is the legal, valid and
binding obligation of the Company, and is enforceable against the Company in
accordance with its terms.
8
Section 10. Life Insurance.
If requested by the Company, Xxxxxxxx shall submit to such physical
examinations by a physician and otherwise take such actions and execute and
deliver such documents as may be reasonably necessary to enable the Company to
obtain life insurance on the life of Xxxxxxxx for the benefit of the Company,
but in no event shall Xxxxxxxx' failure to qualify for such coverage, as a
result of the outcome of the medical examination or otherwise, be grounds for a
termination of Xxxxxxxx' employment.
Section 11. Notices.
Any notice given pursuant to this Agreement shall be in writing and shall
be deemed given on the earlier of the date (i) the notice is personally
delivered to the party to be notified, (ii) that is three days after the notice
is mailed, postage prepaid, certified with return receipt requested, addressed
as follows, or at such other address as a party may from time to time designate
by notice to the other party, (iii) the notice is delivered at the party's
address via courier service, or (iv) the notice is received by fax or
telecopier:
To the Company: U.S. Timberlands Services Company, L.L.C.
000 Xxxxxxx Xxxxxx - Xxxxx 00-X
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxx
Facsimile No: (000) 000-0000
To Xxxxxxxx: Xxxx X. Xxxxxxxx
Route 2, Box 2244
Xxxxxx, XX 00000
Section 12. General Provisions.
12.1 Remedies on Default. In the event either party breaches this
Agreement, the other party shall be entitled to pursue all remedies available at
law or in equity. Except as otherwise provided herein, in the event this
Agreement is breached by either party, the non-breaching party shall not
terminate this Agreement without notice and a reasonable opportunity to cure
such breach.
12.2 Assignment; Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor of the Company, by merger
or otherwise. The parties understand and hereby acknowledge that upon the
consummation of the IPO and related transactions, the obligations of the Company
under this Agreement shall be assumed by New Services. The Company will require
any successor, other than New Services, which is already a party to this
Agreement, by agreement in form and substance reasonably acceptable to Xxxxxxxx,
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place and following such assumption all references to the
Company herein shall be deemed to mean such successor, including New Services.
Except as provided in the preceding sentence, this Agreement, and the rights and
obligations of the parties hereunder, are personal and neither this Agreement,
nor any right, benefit,
9
or obligation of either party hereto, shall be subject to voluntary or
involuntary assignment, alienation or transfer, whether by operation of law or
otherwise, without the prior written consent of the other party. Subject to the
foregoing, the provisions of this Agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, personal representatives,
administrators, successors, and permitted assigns.
12.3 Waiver. Failure of any party at any time to require performance of
any provision of this Agreement shall not limit such party's right to enforce
such provision, nor shall any waiver of any breach of any provision of this
Agreement constitute a waiver of any succeeding breach of such provision or a
waiver of such provision itself. No attempted or purported waiver of any
provision of this Agreement shall be effective unless set forth in writing and
signed by the party to be bound.
12.4 Amendment. This Agreement may not be modified or amended except by
the written agreement of the parties.
12.5 Severability. The agreements and covenants contained in this
Agreement are severable, and in the event any of the agreements and covenants
contained in this Agreement should be held to be invalid by any court or
tribunal of competent jurisdiction, this Agreement shall be interpreted as if
such invalid agreements and covenants were not contained herein; provided,
however, that if in any legal proceeding a court shall hold unenforceable the
covenants contained in Section 7 by reason of their extent or duration or
otherwise, any such covenant shall be reduced in scope to the extent required by
law and enforced in its reduced form.
12.6 Integration. This Agreement contains the entire agreement and
understanding of the parties with respect to the employment of Xxxxxxxx by the
Company and supersedes all prior and contemporaneous agreements (oral or
written) between them with respect to such subject matter.
12.7 Attorneys' Fees. If any legal action or other proceeding is brought
for the enforcement or interpretation of this Agreement, or because of an
alleged dispute or breach in connection with any of the provisions of this
Agreement, if Xxxxxxxx is the successful or prevailing party, Xxxxxxxx shall be
entitled to recover from the Company reasonable attorneys' fees and other costs
incurred by Xxxxxxxx in connection with that action or proceeding, and in any
petition for appeal or review therefrom, in addition to any other relief to
which Xxxxxxxx may be entitled.
12.8 Third Party Beneficiaries. This Agreement does not create, and shall
not be construed as creating, any rights enforceable by any person not a party
to this Agreement.
12.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon.
12.10 Survival. In the event of termination of this Agreement by either
party, this Agreement shall become void and there shall be no liability on the
part of Xxxxxxxx or the Company except to the extent such termination results
from the breach by a party hereto of its obligations hereunder (in which case
Section 12.1 shall apply); provided that Sections 6.1, 6.2, 6.3, 6.4, 7, 8, 11,
12.7 and 12.11 shall survive the termination of this Agreement.
10
12.11 UST Guaranty. UST hereby irrevocably and unconditionally
guarantees to Xxxxxxxx the payment of all amounts and the performance of all
other obligations due from the Company in accordance with the terms of this
Agreement as and when due without requirement of presentment, demand of payment,
protest or notice of dishonor or nonpayment.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
The Company: U.S. TIMBERLANDS SERVICES COMPANY, L.L.C.,
a Delaware limited liability company
By:
----------------------------------------
Name:
Title:
UST: U.S. TIMBERLANDS COMPANY, L.P.
a Delaware limited partnership
By: New Services, L.L.C., as general partner
By:
-----------------------------------------
Name:
Title:
New Services: NEW SERVICES, L.L.C.
a Delaware limited liability company
By:
------------------------------------------
Name:
Title:
Xxxxxxxx:
-------------------------------------------
Xxxx X. Xxxxxxxx
11
EXHIBIT 10.5
FORM OF EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
the 9th day of July, 1997, by and among U.S. Timberlands Services Company,
L.L.C., a Delaware limited liability company (the "Company"), U.S. Timberlands
Company, L.P., a Delaware limited partnership ("UST"), New Services (as defined
below), a Delaware limited liability company, and Xxxxxx X. Xxxxxxxx
("Executive").
Recitals:
--------
A. The Company desires to employ Executive as its Executive Vice
President and Chief Operating Officer, and Executive desires to accept such
employment, on the terms and conditions set forth in this Agreement.
B. A new limited partnership, UST, has been formed and a new limited
liability company, to be re-named "U.S. Timberlands Service Company, L.L.C."
("New Services"), has been formed to serve as the general partner of UST and as
the managing member of certain affiliated limited liability companies (together
with any subsidiary entities, the "UST Group") and upon the initial public
offering of the units representing limited partner interests in UST (the "IPO"),
New Services will assume the obligations of the Company hereunder as more fully
described in Section 12.2.
C. To induce Executive to accept such employment, UST desires to guarantee
the performance by the Company of its obligations hereunder.
Agreements:
----------
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
Section 1. Employment.
The Company hereby employs Executive, and Executive hereby accepts
employment with the Company, on the terms and conditions set forth in this
Agreement.
Section 2. Term.
Subject to the provisions of Section 6, Executive's employment by the
Company under this Agreement shall be for a term (the "Term") commencing on the
date hereof and expiring on December 31, 2002.
Section 3. Executive's Duties.
3.1 Duties. Executive shall hold the position of the Company's Executive
Vice President and Chief Operating Officer. Subject to the control of the board
of directors or other governing body of the Company (the "Board") and the Chief
Executive Officer, and any limitations set forth in the operating agreement of
the Company (the "Company Agreement") and in the agreements of limited
partnership of the partnerships within the UST Group, Executive shall, in
general, assist the Chief Executive Officer of the Company in the supervision
and control of all the day-to-day business and affairs of the Company and the
UST Group.
3.2 Performance of Duties. Executive shall perform Executive's duties and
responsibilities during the Company's normal business hours and at all other
times reasonably necessary to comply with the terms and conditions of this
Agreement. Executive shall devote the time and attention required to the
performance of Executive's duties and responsibilities for and on behalf of the
Company on the terms set forth in this Section 3.2. In addition, Executive may
from time to time serve as a consultant to and/or as a member of the board of
directors of other entities, provided that the Board in good faith determines
that such activities do not unreasonably interfere with the business of the
Company and the UST Group and the performance of Executive's duties hereunder.
The parties acknowledge that Executive currently serves as a board member or
advisory member of various civic and charitable organizations and may continue
to participate in these activities, subject to the limitations set forth in the
first two sentences of this Section 3.2; provided, however, that such continued
participation shall in no event be deemed a violation of the limitations of the
first two sentences of this Section 3.2 unless and until Executive shall have
been notified in writing thereof and afforded a reasonable opportunity to cure
the violation.
3.3 Principal Place of Employment. Executive's principal place of
employment shall be at the location of the Company's executive offices on the
date of this Agreement or at any other location which the Company establishes as
its executive offices. The Company shall provide Executive, at his principal
place of employment, with a private office, secretarial services and such other
facilities and support services as are appropriate to the positions of Executive
Vice President and Chief Operating Officer and necessary or appropriate in the
performance of Executive's assigned duties.
Section 4. Compensation and Other Benefits.
Executive shall be entitled to receive from the Company the following
compensation and benefits for the services to be rendered by Executive
hereunder:
4.1 Salary and Bonuses. During the Term, the Company shall pay Executive an
annual base salary of $300,000, payable in equal installments during the year in
accordance with the Company's customary practices for senior executives ("Base
Salary"). The amount of Executive's Base Salary may be increased from time to
time by the Board, and, once increased, such higher amount shall become the Base
Salary for all purposes of this Agreement and may not thereafter be reduced. The
Company shall also pay to Executive, to the extent earned, an annual cash bonus,
not to exceed 100% of Base Salary, which shall be based on the performance of
Executive and the UST
2
Group's business as determined annually by the Compensation Committee of the
Board in its discretion. The Company shall have the right to deduct and withhold
from Executive's compensation all taxes and charges that are currently or that
hereafter may be required by law to be so deducted and withheld. The Company
shall establish a program whereby Executive may, at his option, defer receipt of
any or all of the Base Salary and bonuses otherwise payable to him under this
Agreement. Any amounts so deferred shall be placed in a "rabbi" trust, with a
bank or other financial institution reasonably satisfactory to Executive as
trustee providing the maximum security to Executive without causing the
constructive receipt of income for federal income tax purposes (the "Deferred
Compensation Trust") and distributed, together with interest or other earnings
thereon, according to a payment schedule to be designated by Executive.
4.2 Long Term Incentive Plan. Executive shall be entitled to participate
in the Long Term Incentive Plan ("LTIP") adopted by the Company on the terms and
conditions set forth therein. Concurrently with the IPO, Executive will be
granted Phantom Units (as defined in the LTIP) pursuant to the LTIP in an amount
equal to 12.5% of the number of Phantom Units initially available to be granted
under the LTIP and substantially in the form of the grant agreement attached
hereto as Attachment A.
4.3 Interest in the Company. Upon or as soon as reasonably practicable
following the IPO, Executive shall receive as a sign-on bonus an Interest (as
defined in the Company Agreement) in the Company which is equal to 5% of all of
the Interests to be initially issued. Executive shall be a Class B Member and
his Interest shall be subject to all of the terms of the Company Agreement that
are applicable to Class B Members (as defined therein), including, without
limitation, Section 8.4(b) thereof, which provides for the pro rata reallocation
to the then Class B Members of the Interests of Class B and Class C Members that
are acquired by the Company upon the occurrence of the events described in
Section 8.4(a) thereof.
4.4 IP Stock Option Payment. The Company acknowledges that Executive's
acceptance of employment under this Agreement has caused Executive to forfeit
his right to exercise certain in-the-money stock options granted to him by a
prior employer. In consideration thereof, the Company shall contribute to the
Deferred Compensation Trust $450,000 in three equal installments of $150,000 on
January 1, 1998, January 1, 1999 and January 1, 2000.
4.5 Participation in Benefit Plans. During the Term, Executive shall be
eligible to participate in all employee benefit plans and arrangements now in
effect or which may hereafter be established that are generally applicable to
other senior executives of the Company, including, without limitation, all life,
group insurance, and medical and dental care plans and all disability,
retirement, 401(k) and other employee benefit plans of the Company, as long as
any such plan or arrangement remains generally applicable to other senior
executives of the Company. Executive shall also be entitled to the same
vacation benefits as are generally available to senior executives of the
Company, provided in any case that Executive shall have a minimum of four weeks'
vacation per year.
4.6 Reimbursement of Expenses. The Company shall reimburse Executive for
reasonable expenses incurred by Executive in the performance of Executive's
duties hereunder in accordance
3
with the policy of the Company for reimbursement of expenses as adopted by the
Board from time to time and generally applicable to all senior executives of the
Company. Executive shall furnish the Company with the supporting documentation
required under the Company's policy in connection with the reimbursement of such
expenses. The Company shall directly pay all reasonable and ordinary costs of
Executive moving his principal residence from Dallas, Texas to the New York City
metropolitan area. In the event that the Company requires Executive to be based
at a principal place of employment outside of the New York City metropolitan
area, the Company shall directly pay all reasonable and ordinary costs of
Executive moving his principal residence to such principal place of employment.
Section 5. Membership on the Board.
Executive shall be entitled to membership on the Board in accordance with
the terms of the Company Agreement as in effect on the date the Company
Agreement is first executed.
Section 6. Termination.
6.1 Termination by the Company Without Cause. The Company may terminate
Executive's employment other than for Cause or Executive becoming Disabled (as
such terms are defined below) at any time during the Term if the Board
determines, in its sole discretion, that the continued employment of Executive
is not in the continued interests of the Company. In the event the Company
terminates Executive's employment pursuant to this Section 6.1, then Executive
shall be paid on termination (i) any unpaid Base Salary earned hereunder prior
to the termination date, (ii) all unused vacation time accrued by Executive as
of the termination date in accordance with the Company's vacation policy for
senior executives, (iii) all unpaid amounts of compensation in which Executive
is vested as of the termination date under any and all incentive compensation
plans or programs of the Company, (iv) any expenses in respect of which
Executive has requested, and is entitled to, reimbursement in accordance with
Section 4.6, (v) a prorated bonus for the year of such termination calculated
based on the bonus being equal to 100% of Base Salary, and (vi) (A) if such
termination occurs prior to July 1, 1999, an amount equal to the amount of Base
Salary that Executive would receive if Executive's employment had continued
without change for 24 months or (B) if such termination occurs on or after July
1, 1999, an amount equal to the amount of Base Salary that Executive would
receive if Executive's employment had continued without change through the
remainder of the Term or for 12 months, whichever is less (items (i) through
(iv) above being the "Earned Amounts").
6.2 Termination by the Company for Cause. The Company may terminate this
Agreement at any time, in the discretion of the Board, in the event of (i) any
conviction of Executive for a felony, (ii) any material breach by Executive of a
material written agreement between Executive and the Company or the UST Group,
including this Agreement, (iii) any breach caused by Executive of the Company
Agreement, the limited partnership agreement of any member of the UST Group, or
the charter or bylaws of any corporation within the UST Group, provided that
Executive had prior written notice of such agreement or other document and any
amendment thereto (including a copy of the full text thereof) and provided that
such breach has a material adverse effect on the Company, (iv) any willful
conduct by Executive materially injurious to the Company or the
4
UST Group or their respective businesses, (v) any willful failure by Executive
to comply with any material policies, procedures, or directives of the Board,
provided that, Executive shall first be given notice from the Board of such
failure and such failure shall not have been cured within three days after such
notice or, if such failure is not capable of being cured within three days,
Executive shall not have commenced and be diligently pursuing in good faith
efforts to cure such default, or (vi) any fraud, misappropriation of funds,
embezzlement, or other similar acts of misconduct by Executive with respect to
the Company or the UST Group. In the event the Company terminates Executive's
employment pursuant to this Section 6.2 for Cause, then Executive shall be paid
on termination the Earned Amounts. For purposes of this Agreement, no act or
failure to act on Executive's part shall be deemed "willful" unless done, or
omitted to be done, in bad faith or without the reasonable belief that the act
or failure to act was in the best interests of the Company or the UST Group.
Any act or failure to act on the basis of authority given by resolution duly
adopted by the Board or on the basis of advice given by legal counsel for the
Company shall be conclusively presumed to have been done, or omitted to be done,
in good faith and in the best interests of the Company or the UST Group. No
termination of Executive's employment shall be for Cause unless such termination
shall have been authorized in advance by a resolution adopted by the Board and
delivered to Executive, following a meeting of the Board at which Executive
(together with his counsel) shall have been afforded a reasonable opportunity to
refute the purported grounds for termination for Cause.
6.3 Termination Upon Death or Disability of Executive. This Agreement
shall terminate upon the death of Executive, or upon Executive becoming Disabled
(as defined below). In the event of a termination of this Agreement pursuant to
this Section 6.3, Executive (or Executive's estate, if applicable) shall be paid
on termination the Earned Amounts. For purposes of this Agreement, "Disabled"
shall mean that Executive shall have qualified for and be receiving benefits
under the Company's long-term disability insurance plan or, if there is no such
plan, that Executive shall have qualified for and be receiving disability
benefits under the federal Social Security Act.
6.4 Voluntary Resignation for Good Reason. Executive may resign
Executive's employment with the Company at any time and, if such resignation is
for "Good Reason", Executive shall be entitled to the same payments and benefits
that Executive would receive under Section 6.1 (i)-(v) and 6.1 (vi) (B) if
Executive's employment were being terminated by the Company other than for Cause
or Executive becoming Disabled. "Good Reason" shall mean any one or more of the
following: (i) failure of UST to complete its IPO on or before March 31, 1998;
(ii) failure of the Company to appoint or re-appoint Executive to the offices of
Executive Vice President and Chief Operating Officer or to more senior offices;
(iii) failure of the Company's members to elect or re-elect Executive to the
Board; (iv) failure of the Company, by act, omission, amendment to the
instruments governing its organization and operation or otherwise, to vest in
Executive the position, duties and responsibilities contemplated by this
Agreement; (v) failure by the Company to pay when due any portion of the
compensation payable to Executive hereunder; (vi) any material breach by the
Company of any material provision of this Agreement; (vii) if, prior to December
31, 2000, the Company relocates its principal executive offices more than 75
miles from the Borough of Manhattan in the City of New York and fails to provide
Executive, within such 75-mile radius, with the items set forth in the second
sentence of Section 3.3; or (viii) on or following a Change of Control (as such
term is defined in the Company's LTIP as the same may be amended from time to
time), either Executive is assigned any duties or responsibilities materially
inconsistent with, or
5
diminished from, Executive's duties and responsibilities with the Company and
the UST Group immediately prior to the Change of Control, or, Executive's
status, duties, responsibilities, titles or offices with the Company and the UST
Group are materially diminished from those in effect immediately prior to the
Change of Control, as determined in the good faith opinion of Executive;
provided, however, Good Reason shall exist with respect to a matter described in
(ii) through (viii) above that is capable of being corrected by the Company only
if such matter is not corrected by the Company within a reasonable period
following its receipt of written notice of such matter from Executive, and in no
event shall a termination by Executive occurring more than 60 days following any
such written notice or the event described in (i) above be for Good Reason.
Section 7. Covenant Not to Compete; Confidentiality.
7.1 Noncompetition. Unless granted written permission by the Board and
subject to any further restrictions contained in the agreements of limited
partnership within the UST Group, while employed by the Company and for a period
of 12 months after the termination of such employment, Executive covenants that
Executive shall not (i) own (as a proprietor, partner, or stockholder of greater
than one percent of outstanding equity securities, interests or otherwise) an
interest in, or (ii) participate (as an officer, director, or in any other
capacity) in the management, operation, or control of, or (iii) perform services
as or act in the capacity of any employee, independent contractor, consultant,
or agent of any enterprise which engages in one or more of the following
activities in a state in which the Company or the UST Group is then conducting
business and in which the Company or the UST Group commenced conducting business
prior to the commencement of such activities therein by Executive:
(a) acquisition, exchange, operation or sale of timber-producing real
property or rights to harvest timber, a principal purpose of which is
producing logs or other forest products;
(b) harvesting of timber other than harvesting which is incidental to
the ownership or operation of real property not owned or operated for a
principal purpose of producing logs or other forest products;
(c) sale, exchange or purchase of logs other than sales, exchanges or
purchases which are incidental to the ownership or operation of real
property not owned or operated for a principal purpose of producing logs or
other forest products;
(d) acquisition or sale of any facilities used to convert logs into
lumber, plywood or other wood products;
(e) conversion of logs into lumber, plywood or other wood products;
(f) marketing and sale of lumber, plywood or other wood products;
(g) import or export of logs, lumber, plywood or other wood products
to or from the United States;
6
(h) manufacture, marketing or sale of manufactured, engineered, or
substitute wood products to the extent such products compete with products
produced by the Company or any member of the UST Group; or
(i) any and all other activities relating to the United States forest
products industry to the extent such activities compete with activities of
the Company or any member of the UST Group;
The noncompetition restrictions set forth in this Section 7.1 shall not apply in
the event of a termination of this Agreement pursuant to Section 6.1 or 6.4 nor,
in the event of Executive's termination due to Executive becoming Disabled in
accordance with Section 6.3, shall they apply following Executive ceasing to be
Disabled unless the Company offers to re-employ Executive on terms and
conditions at least as favorable as those set forth in this Agreement.
7.2 Confidentiality. Executive acknowledges that in the course of
Executive's employment by the Company, including as a member of the Board
following employment, if applicable, Executive will be furnished and have access
to certain information concerning the business, financial condition, operations,
assets and liabilities of the Company and the UST Group that is confidential or
proprietary in nature. All such information (irrespective of the form of
communication) is hereinafter collectively referred to as the "Information."
Until the later to occur of (i) the date of termination of Executive's
employment hereunder or (ii) the date of Executive's resignation or removal from
the Board, and for a period of 18 months thereafter, Executive agrees to keep
the Information confidential and agrees that Executive will use the Information
solely for the purpose of performing Executive's duties hereunder or as a member
of the Board or as otherwise authorized by the Company. This Agreement shall be
inoperative as to such portions of the Information which (a) are or become
generally available to the public other than as a result of a disclosure by
Executive in violation of this Agreement, (b) become available to Executive on a
non-confidential basis from a source other than the Company or the UST Group
that is not bound by an obligation of confidentiality to such entity or
entities, or (c) are required to be disclosed by an order or decree of a court
or other tribunal of competent jurisdiction, provided the Company is given
prompt notice of, and the opportunity to contest disclosure under, such order or
decree. Upon termination of this Agreement, Executive will return the
Information furnished by the Company or the UST Group and any documents that
contain, reflect, or are based upon, in whole or in part, the Information.
7.3 Equitable Relief. Executive acknowledges and agrees that it would be
difficult to measure damage to the Company or the UST Group from any breach by
Executive of Section 7.1 or 7.2 and that monetary damages would be an inadequate
remedy for any such breach. Accordingly, Executive agrees that if Executive
shall breach Section 7.1 or 7.2, the Company shall be entitled, in addition to
all other remedies it may have at law or in equity, to an injunction or other
appropriate orders or equitable relief to restrain any such breach, without
showing or proving any actual damage sustained by the Company or the UST Group.
Executive further agrees to waive any requirement for the securing or posting of
any bond in connection with such remedies.
7
7.4 Executive's Acknowledgment. Executive hereby expressly acknowledges
and agrees that (i) the restrictions and obligations set forth in and imposed by
this Section 7 will not prevent Executive from obtaining gainful employment in
Executive's field of expertise or cause Executive undue hardship, and (ii) in
view and consideration of the substantial benefits Executive will receive from
the Company pursuant to this Agreement and the Company Agreement, the
restrictions and obligations imposed on Executive under this Section 7 are
reasonable and necessary to protect the legitimate business interests of the
Company and its members and the UST Group.
Section 8. Indemnification.
(a) During the Term and for a period of six years thereafter, the Company
shall cause Executive to be covered by and named as an insured under any policy
or contract of insurance obtained by it to insure its directors and officers
against personal liability for acts or omissions in connection with service as
an officer or director of the Company or service in other capacities at the
request of the Company. The coverage provided to Executive pursuant to this
Section 8 shall be of a scope and on terms and conditions at least as favorable
as the coverage (if any) provided to any other officer or director of the
Company.
(b) To the maximum extent permitted under applicable law, during the Term
and for a period of six years thereafter, the Company shall indemnify Executive
against and hold Executive harmless from any costs, liabilities, losses and
exposures to the fullest extent and on the most favorable terms and conditions
that similar indemnification is offered to any director or officer of the
Company or any subsidiary or affiliate thereof.
Section 9. Representations and Warranties.
9.1 By Executive. Except for the conditions and limitations set forth
in the waiver of the employment agreement from Executive's prior employer, IP
Forest Resources Company, a copy of which is attached hereto as Exhibit B and
the terms and conditions of which the parties hereto agree Executive may comply
with without breaching the terms of this Agreement, Executive represents and
warrants to the Company that (i) Executive is under no contractual or other
restriction or obligation which would prevent the performance of Executive's
duties hereunder or interfere with the rights of the Company hereunder and (ii)
this Agreement has been duly executed and delivered by Executive, is the legal,
valid and binding obligation of Executive, and is enforceable against Executive
in accordance with its terms, except that no representation or warranty is made
with respect to the provisions of Section 7.
9.2 By the Company. The Company represents and warrants to Executive
that (i) it has all requisite limited liability company power and authority to
execute, deliver and perform this Agreement, (ii) all necessary proceedings of
the Company have been duly taken to authorize the execution, delivery and
performance of this Agreement, and (iii) this Agreement has been duly
authorized, executed and delivered by the Company, is the legal, valid and
binding obligation of the Company, and is enforceable against the Company in
accordance with its terms.
8
Section 10. Life Insurance.
If requested by the Company, Executive shall submit to such physical
examinations by a physician and otherwise take such actions and execute and
deliver such documents as may be reasonably necessary to enable the Company to
obtain life insurance on the life of Executive for the benefit of the Company,
but in no event shall Executive's failure to qualify for such coverage, as a
result of the outcome of the medical examination or otherwise, be grounds for a
termination of Executive's employment.
Section 11. Notices.
Any notice given pursuant to this Agreement shall be in writing and shall
be deemed given on the earlier of the date (i) the notice is personally
delivered to the party to be notified, (ii) that is three days after the notice
is mailed, postage prepaid, certified with return receipt requested, addressed
as follows, or at such other address as a party may from time to time designate
by notice to the other party, (iii) the notice is delivered at the party's
address via courier service, or (iv) the notice is received by fax or
telecopier:
To the Company: U.S. Timberlands Services Company, L.L.C.
000 Xxxxxxx Xxxxxx - Xxxxx 00-X
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxx
Facsimile No: (000) 000-0000
To Executive: Xxxxxx X. Xxxxxxxx
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Section 12. General Provisions.
12.1 Remedies on Default. In the event either party breaches this
Agreement, the other party shall be entitled to pursue all remedies available at
law or in equity. Except as otherwise provided herein, in the event this
Agreement is breached by either party, the non-breaching party shall not
terminate this Agreement without notice and a reasonable opportunity to cure
such breach.
12.2 Assignment; Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the Company and any successor of the Company, by
merger or otherwise. The parties understand and hereby acknowledge that, upon
the consummation of the IPO and related transactions, the obligations of the
Company under this Agreement shall be assumed by New Services. It is further
agreed that the Interest in the Company provided for in Section 4.3 shall refer
to an Interest in New Services as successor to the Company, unless the Company
remains the general partner of UST upon the effectiveness of UST. The Company
will require any successor, other than New Services, which is already a party to
this Agreement, by agreement in form and substance
9
reasonably acceptable to Executive, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place and following
such assumption all references to the Company herein shall be deemed to mean
such successor, including New Services. Except as provided in the preceding
sentence, this Agreement, and the rights and obligations of the parties
hereunder, are personal and neither this Agreement, nor any right, benefit, or
obligation of either party hereto, shall be subject to voluntary or involuntary
assignment, alienation or transfer, whether by operation of law or otherwise,
without the prior written consent of the other party. Subject to the foregoing,
the provisions of this Agreement shall be binding upon and inure to the benefit
of the parties and their respective heirs, personal representatives,
administrators, successors, and permitted assigns.
12.3 Waiver. Failure of any party at any time to require performance of
any provision of this Agreement shall not limit such party's right to enforce
such provision, nor shall any waiver of any breach of any provision of this
Agreement constitute a waiver of any succeeding breach of such provision or a
waiver of such provision itself. No attempted or purported waiver of any
provision of this Agreement shall be effective unless set forth in writing and
signed by the party to be bound.
12.4 Amendment. This Agreement may not be modified or amended except by
the written agreement of the parties.
12.5 Severability. The agreements and covenants contained in this
Agreement are severable, and in the event any of the agreements and covenants
contained in this Agreement should be held to be invalid by any court or
tribunal of competent jurisdiction, this Agreement shall be interpreted as if
such invalid agreements and covenants were not contained herein; provided,
however, that if in any legal proceeding a court shall hold unenforceable the
covenants contained in Section 7 by reason of their extent or duration or
otherwise, any such covenant shall be reduced in scope to the extent required by
law and enforced in its reduced form.
12.6 Integration. This Agreement contains the entire agreement and
understanding of the parties with respect to the employment of Executive by the
Company and supersedes all prior and contemporaneous agreements (oral or
written) between them with respect to such subject matter.
12.7 Attorneys' Fees. If any legal action or other proceeding is brought
for the enforcement or interpretation of this Agreement, or because of an
alleged dispute or breach in connection with any of the provisions of this
Agreement, if Executive is the successful or prevailing party, Executive shall
be entitled to recover from the Company reasonable attorneys' fees and other
costs incurred by Executive in connection with that action or proceeding, and in
any petition for appeal or review therefrom, in addition to any other relief to
which Executive may be entitled. The Company shall reimburse Executive for the
reasonable attorney's fees and expenses Executive has incurred in the
negotiation of this Agreement.
12.8 Third Party Beneficiaries. This Agreement does not create, and shall
not be construed as creating, any rights enforceable by any person not a party
to this Agreement.
12.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
10
12.10 Survival. In the event of termination of this Agreement by either
party, this Agreement shall become void and there shall be no liability on the
part of Executive or the Company except to the extent such termination results
from the breach by a party hereto of its obligations hereunder (in which case
Section 12.1 shall apply); provided that Sections 6.1, 6.2, 6.3, 6.4, 7, 8, 11,
12.7 and 12.11 shall survive the termination of this Agreement.
12.11 UST Guaranty. UST hereby irrevocably and unconditionally
guarantees to Executive the payment of all amounts and the performance of all
other obligations due from the Company in accordance with the terms of this
Agreement as and when due without requirement of presentment, demand of payment,
protest or notice of dishonor or nonpayment.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
The Company: U.S. TIMBERLANDS SERVICES COMPANY, L.L.C.,
a Delaware limited liability company
By:
-----------------------------------------
Name:
Title:
UST: U.S. TIMBERLANDS COMPANY, L.P.
a Delaware limited partnership
By: New Services, L.L.C., as general partner
By:
----------------------------------------
Name:
Title:
New Services: NEW SERVICES, L.L.C.
a Delaware limited liability company
By:
----------------------------------------
Name:
Title:
Executive:
----------------------------------------
Xxxxxx X. Xxxxxxxx
11
EXHIBIT 10.5
FORM OF EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
the ____ day of November, 1997, by and among U.S. Timberlands Services Company,
L.L.C., a Delaware limited liability company (the "Company"), U.S. Timberlands
Company, L.P., a Delaware limited partnership ("UST"), New Services (as defined
below), a Delaware limited liability company, and Xxxx X. Xxxxx ("Executive").
Recitals:
--------
A. The Company desires to employ Executive as its Chairman, and Executive
desires to accept such employment, on the terms and conditions set forth in this
Agreement.
B. A new limited partnership, UST, has been formed and a new limited
liability company to be re-named "U.S. Timberlands Service Company, L.L.C."
("New Services"), has been formed to serve as the general partner of UST and as
the managing member of certain affiliated limited liability companies (together
with any subsidiary entities, the "UST Group") and upon the initial public
offering of the units representing limited partner interests in UST (the "IPO"),
New Services will assume the obligations of the Company hereunder as more fully
described in Section 12.2.
C. To induce Executive to accept such employment, UST desires to guarantee
the performance by the Company of its obligations hereunder.
Agreements:
----------
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
Section 1. Employment.
The Company hereby employs Executive, and Executive hereby accepts
employment with the Company, on the terms and conditions set forth in this
Agreement.
Section 2. Term.
Subject to the provisions of Section 6, Executive's employment by the
Company under this Agreement shall be for a term (the "Term") commencing on the
date hereof and expiring on December 31, 2002.
Section 3. Executive's Duties.
3.1 Duties. Executive shall hold the position of the Company's Chairman.
Subject to the control of the board of directors or other governing body of the
Company (the "Board"), and any limitations set forth in the operating agreement
of the Company (the "Company Agreement") and in the agreements of limited
partnership of the partnerships and the operating agreements of the limited
liability companies within the UST Group, Executive shall, in general, oversee
the Chief Executive Officer of the Company in the supervision and control of all
the day-to-day business and affairs of the Company and the UST Group.
3.2 Performance of Duties. Executive shall perform Executive's duties and
responsibilities during the Company's normal business hours and at all other
times reasonably necessary to comply with the terms and conditions of this
Agreement. Executive shall devote the time and attention required to the
performance of Executive's duties and responsibilities for and on behalf of the
Company on the terms set forth in this Section 3.2. In addition, Executive may
from time to time serve as a consultant to and/or as a member of the board of
directors of other entities, provided that the Board in good faith determines
that such activities do not unreasonably interfere with the business of the
Company and the UST Group and the performance of Executive's duties hereunder.
The parties acknowledge that Executive currently serves as a board member or
advisory member of various civic and charitable organizations and may continue
to participate in these activities, subject to the limitations set forth in the
first two sentences of this Section 3.2; provided, however, that such continued
participation shall in no event be deemed a violation the limitations of the
first two sentences of this Section 3.2 unless and until Executive shall have
been notified in writing thereof and afforded a reasonable opportunity to cure
the violation.
3.3 Principal Place of Employment. Executive's principal place of
employment shall be at the location of the Company's executive offices in New
York City or at any other location which the Company establishes as its
executive offices. The Company shall provide Executive, at his principal place
of employment, with a private office, secretarial services and such other
facilities and support services as are appropriate to the position of Chairman
and necessary or appropriate in the performance of Executive's assigned duties.
Section 4. Compensation and Other Benefits.
Executive shall be entitled to receive from the Company the following
compensation and benefits for the services to be rendered by Executive
hereunder:
4.1 Salary and Bonuses. During the Term, the Company shall pay Executive an
annual base salary of $300,000, payable in equal installments during the year in
accordance with the Company's customary practices for senior executives ("Base
Salary"). The amount of Executive's Base Salary may be increased from time to
time by the Board, and, once increased, such higher amount shall become the Base
Salary for all purposes of this Agreement and may not thereafter be reduced. The
Company shall also pay to Executive, to the extent earned, an annual cash bonus,
not
2
to exceed 100% of Base Salary, which shall be based on the performance of
Executive and the UST Group's business as determined annually by the
Compensation Committee of the Board in its discretion. The Company shall have
the right to deduct and withhold from Executive's compensation all taxes and
charges that are currently or that hereafter may be required by law to be so
deducted and withheld.
The Company shall establish a program whereby Executive may, at his option,
defer receipt of any or all of the Base Salary and bonuses otherwise payable to
him under this Agreement. Any amounts so deferred shall be placed in a "rabbi"
trust, with a bank or other financial institution reasonably satisfactory to
Executive, as trustee, providing the maximum security to Executive without
causing the constructive receipt of income for federal income tax purposes and
distributed, together with interest or other earnings thereon, according to a
payment schedule to be designated by Executive.
4.2 Long Term Incentive Plan. Executive shall be entitled to participate in
the Long Term Incentive Plan ("LTIP") adopted by the Company on the terms and
conditions set forth therein. Concurrently with the IPO, Executive will be
granted Unit Options (as defined in the LTIP) pursuant to the LTIP in an amount
equal to 12.5% of the number of Unit Options initially available to be granted
under the LTIP and substantially in the form of the grant agreement attached
hereto as Attachment A.
4.3 Participation in Benefit Plans. During the Term, Executive shall be
eligible to participate in all employee benefit plans and arrangements now in
effect or which may hereafter be established that are generally applicable to
other senior executives of the Company, including, without limitation, all life,
group insurance, and medical and dental care plans and all disability,
retirement, 401(k) and other employee benefit plans of the Company, as long as
any such plan or arrangement remains generally applicable to other senior
executives of the Company. Executive shall also be entitled to the same
vacation benefits as are generally available to senior executives of the
Company, provided in any case that Executive shall have a minimum of four weeks'
vacation per year.
4.4 Reimbursement of Expenses. The Company shall reimburse Executive for
reasonable expenses incurred by Executive in the performance of Executive's
duties hereunder in accordance with the policy of the Company for reimbursement
of expenses as adopted by the Board from time to time and generally applicable
to all senior executives of the Company. Executive shall furnish the Company
with the supporting documentation required under the Company's policy in
connection with the reimbursement of such expenses.
Section 5. Membership on the Board.
Executive shall be entitled to membership on the Board in accordance with
the terms of the Company Agreement as in effect on the date the Company
Agreement is first executed.
3
Section 6. Termination.
6.1 Termination by the Company Without Cause. The Company may terminate
Executive's employment other than for Cause or Executive becoming Disabled (as
such terms are defined below) at any time during the Term if the Board
determines, in its sole discretion, that the continued employment of Executive
is not in the continued interests of the Company. In the event the Company
terminates Executive's employment pursuant to this Section 6.1, then Executive
shall be paid on termination (i) any unpaid Base Salary earned hereunder prior
to the termination date, (ii) all unused vacation time accrued by Executive as
of the termination date in accordance with the Company's vacation policy for
senior executives, (iii) all unpaid amounts of compensation in which Executive
is vested as of the termination date under any and all incentive compensation
plans or programs of the Company, (iv) any expenses in respect of which
Executive has requested, and is entitled to, reimbursement in accordance with
Section 4.4, (v) a prorated bonus for the year of such termination calculated
based on the bonus being equal to 100% of Base Salary, and (vi) an amount equal
to the amount of Base Salary that Executive would receive if Executive's
employment had continued without change through the remainder of the Term or for
12 months, whichever is less, (items (i) through (iv) above being the "Earned
Amounts").
6.2 Termination by the Company for Cause. The Company may terminate this
Agreement at any time, in the discretion of the Board, in the event of (i) any
conviction of Executive for a felony, (ii) any material breach by Executive of a
material written agreement between Executive and the Company or the UST Group,
including this Agreement, (iii) any breach caused by Executive of the Company
Agreement, the limited partnership agreement of any member of the UST Group, or
the charter or bylaws of any corporation within the UST Group, provided that
Executive had prior written notice of such agreement or other document and any
amendment thereto (including a copy of the full text thereof) and provided
further that such breach has a material adverse effect on the Company, (iv) any
willful conduct by Executive materially injurious to the Company or the UST
Group or their respective businesses, (v) any willful failure by Executive to
comply with any material policies, procedures, or directives of the Board,
provided that, Executive shall first be given notice from the Board of such
failure and such failure shall not have been cured within three days after such
notice or, if such failure is not capable of being cured within three days,
Executive shall not have commenced and be diligently pursuing in good faith
efforts to cure such default, or (vi) any fraud, misappropriation of funds,
embezzlement, or other similar acts of misconduct by Executive with respect to
the Company or the UST Group. In the event the Company terminates Executive's
employment pursuant to this Section 6.2 for Cause, then Executive shall be paid
on termination the Earned Amounts. For purposes of this Agreement, no act or
failure to act on Executive's part shall be deemed "willful" unless done, or
omitted to be done, in bad faith or without the reasonable belief that the act
or failure to act was in the best interests of the Company or the UST Group.
Any act or failure to act on the basis of authority given by resolution duly
adopted by the Board or on the basis of advice given by legal counsel for the
Company shall be conclusively presumed to have been done, or omitted to be done,
in good faith and in the best interests of the Company or the UST Group. No
termination of Executive's employment shall be for Cause unless such termination
shall have been authorized in advance by a resolution adopted by
4
the Board and delivered to Executive, following a meeting of the Board at which
Executive (together with his counsel) shall have been afforded a reasonable
opportunity to refute the purported grounds for termination for Cause.
6.3 Termination Upon Death or Disability of Executive. This Agreement shall
terminate upon the death of Executive, or upon Executive becoming Disabled (as
defined below). In the event of a termination of this Agreement pursuant to this
Section 6.3, Executive (or Executive's estate, if applicable) shall be paid on
termination the Earned Amounts. For purposes of this Agreement, "Disabled" shall
mean that Executive shall have qualified for and be receiving benefits under the
Company's long-term disability insurance plan or, if there is no such plan, that
Executive shall have qualified for and be receiving disability benefits under
the federal Social Security Act.
6.4 Voluntary Resignation for Good Reason. Executive may resign
Executive's employment with the Company at any time and, if such resignation is
for "Good Reason", Executive shall be entitled to the same payments and benefits
that Executive would receive under Section 6.1 if Executive's employment were
being terminated by the Company other than for Cause or Executive becoming
Disabled. "Good Reason" shall mean any one or more of the following: (i)
failure of UST to complete its IPO on or before March 31, 1998; (ii) failure of
the Company to appoint or re-appoint Executive to the office of Chairman; (iii)
failure of the Company's members to elect or re-elect Executive to the Board;
(iv) failure of the Company, by act, omission, amendment to the instruments
governing its organization and operation or otherwise, to vest in Executive the
position, duties and responsibilities contemplated by this Agreement; (v)
failure by the Company to pay when due any portion of the compensation payable
to Executive hereunder; (vi) any material breach by the Company of any material
provision of this Agreement; or (vii) on or following a Change of Control (as
such term is defined in the Company's LTIP, as the same may be amended from time
to time) either Executive is assigned any duties or responsibilities materially
inconsistent with, or diminished from, Executive's duties and responsibilities
with the Company and the UST Group immediately prior to the Change of Control,
or, Executive's status, duties, responsibilities, titles or offices with the
Company and the UST Group are materially diminished from those in effect
immediately prior to the Change of Control, as determined in the good faith
opinion of Executive; provided, however, Good Reason shall exist with respect to
a matter described in (ii) through (vii) above that is capable of being
corrected by the Company only if such matter is not corrected by the Company
within a reasonable period following its receipt of written notice of such
matter from Executive, and in no event shall a termination by Executive
occurring more than 60 days following any such written notice or the event
described in (i) above be for Good Reason.
Section 7. Covenant Not to Compete; Confidentiality.
7.1 Noncompetition. Unless granted written permission by the Board and
subject to any further restrictions contained in the agreements of limited
partnership within the UST Group, while employed by the Company or a member of
the Board and for a period of 12 months after the termination of such employment
or membership on the Board, Executive covenants that Executive shall not (i) own
(as a proprietor, partner, or stockholder of greater than one percent of
outstanding
5
equity securities, interests or otherwise) an interest in, or (ii) participate
(as an officer, director, or in any other capacity) in the management,
operation, or control of, or (iii) perform services as or act in the capacity of
any employee, independent contractor, consultant, or agent of any enterprise
which engages in one or more of the following activities in a state in which the
Company or the UST Group is then conducting business and in which the Company or
the UST Group commenced conducting business prior to the commencement of such
activities therein by Executive:
(a) acquisition, exchange, operation or sale of timber-producing real
property or rights to harvest timber, a principal purpose of which is
producing logs or other forest products;
(b) harvesting of timber other than harvesting which is incidental to
the ownership or operation of real property not owned or operated for a
principal purpose of producing logs or other forest products;
(c) sale, exchange or purchase of logs other than sales, exchanges or
purchases which are incidental to the ownership or operation of real
property not owned or operated for a principal purpose of producing logs or
other forest products;
(d) acquisition or sale of any facilities used to convert logs into
lumber, plywood or other wood products;
(e) conversion of logs into lumber, plywood or other wood products;
(f) marketing and sale of lumber, plywood or other wood products;
(g) import or export of logs, lumber, plywood or other wood products
to or from the United States;
(h) manufacture, marketing or sale of manufactured, engineered, or
substitute wood products to the extent such products compete with products
produced by the Company or any member of the UST Group; or
(i) any and all other activities relating to the United States forest
products industry to the extent such activities compete with activities of
the Company or any member of the UST Group.
The noncompetition restrictions set forth in this Section 7.1 shall not apply in
the event of a termination of this Agreement pursuant to Section 6.1 or 6.4,
nor, in the event of Executive's termination due to Executive becoming Disabled
in accordance with Section 6.3, shall they apply following Executive ceasing to
be Disabled unless the Company offers to re-employ Executive on terms and
conditions at least as favorable as those set forth in this Agreement.
6
7.2 Confidentiality. Executive acknowledges that in the course of
Executive's employment by the Company, including as a member of the Board
following employment, if applicable, Executive will be furnished and have access
to certain information concerning the business, financial condition, operations,
assets and liabilities of the Company and the UST Group that is confidential or
proprietary in nature. All such information (irrespective of the form of
communication) is hereinafter collectively referred to as the "Information."
Until the later to occur of (i) the date of termination of Executive's
employment hereunder or (ii) the date of Executive's resignation or removal from
the Board, and for a period of 18 months thereafter, Executive agrees to keep
the Information confidential and agrees that Executive will use the Information
solely for the purpose of performing Executive's duties hereunder or as a member
of the Board or as otherwise authorized by the Company. This Agreement shall be
inoperative as to such portions of the Information which (a) are or become
generally available to the public other than as a result of a disclosure by
Executive in violation of this Agreement, (b) become available to Executive on a
non-confidential basis from a source other than the Company or the UST Group
that is not bound by an obligation of confidentiality to such entity or
entities, or (c) are required to be disclosed by an order or decree of a court
or other tribunal of competent jurisdiction, provided the Company is given
prompt notice of, and the opportunity to contest disclosure under, such order or
decree. Upon termination of this Agreement, Executive will return the
Information furnished by the Company or the UST Group and any documents that
contain, reflect, or are based upon, in whole or in part, the Information.
7.3 Equitable Relief. Executive acknowledges and agrees that it would be
difficult to measure damage to the Company or the UST Group from any breach by
Executive of Section 7.1 or 7.2 and that monetary damages would be an inadequate
remedy for any such breach. Accordingly, Executive agrees that if Executive
shall breach Section 7.1 or 7.2, the Company shall be entitled, in addition to
all other remedies it may have at law or in equity, to an injunction or other
appropriate orders or equitable relief to restrain any such breach, without
showing or proving any actual damage sustained by the Company or the UST Group.
Executive further agrees to waive any requirement for the securing or posting of
any bond in connection with such remedies.
7.4 Executive's Acknowledgment. Executive hereby expressly acknowledges and
agrees that (i) the restrictions and obligations set forth in and imposed by
this Section 7 will not prevent Executive from obtaining gainful employment in
Executive's field of expertise or cause Executive undue hardship, and (ii) in
view and consideration of the substantial benefits Executive will receive from
the Company pursuant to this Agreement and the Company Agreement, the
restrictions and obligations imposed on Executive under this Section 7 are
reasonable and necessary to protect the legitimate business interests of the
Company and its members and the UST Group.
Section 8. Indemnification.
(a) During the Term and for a period of six years thereafter, the Company
shall cause Executive to be covered by and named as an insured under any policy
or contract of insurance obtained by it to insure its directors and officers
against personal liability for acts or omissions in
7
connection with service as an officer or director of the Company or service in
other capacities at the request of the Company. The coverage provided to
Executive pursuant to this Section 8 shall be or a scope and on terms and
conditions at least as favorable as the coverage (if any) provided to any other
officer or director of the Company.
(b) To the maximum extent permitted under applicable law, during the Term
and for a period of six years thereafter, the Company shall indemnify Executive
against and hold Executive harmless from any costs, liabilities, losses and
exposures to the fullest extent and on the most favorable terms and conditions
that similar indemnification is offered to any director or officer of the
Company.
Section 9. Representations and Warranties.
9.1 By Executive. Executive represents and warrants to the Company that (i)
Executive is under no contractual or other restriction or obligation which would
prevent the performance of Executive's duties hereunder or interfere with the
rights of the Company hereunder and (ii) this Agreement has been duly executed
and delivered by Executive, is the legal, valid and binding obligation of
Executive, and is enforceable against Executive in accordance with its terms,
except that no representation or warranty is made with respect to the provisions
of Section 7.
9.2 By the Company. The Company represents and warrants to Executive that
(i) it has all requisite limited liability company power and authority to
execute, deliver and perform this Agreement, (ii) all necessary proceedings of
the Company have been duly taken to authorize the execution, delivery and
performance of this Agreement, and (iii) this Agreement has been duly
authorized, executed and delivered by the Company, is the legal, valid and
binding obligation of the Company, and is enforceable against the Company in
accordance with its terms.
Section 10. Life Insurance.
If requested by the Company, Executive shall submit to such physical
examinations by a physician and otherwise take such actions and execute and
deliver such documents as may be reasonably necessary to enable the Company to
obtain life insurance on the life of Executive for the benefit of the Company,
but in no event shall Executive's failure to qualify for such coverage, as a
result of the outcome of the medical examination or otherwise, be grounds for a
termination of Executive's employment.
Section 11. Notices.
Any notice given pursuant to this Agreement shall be in writing and shall
be deemed given on the earlier of the date (i) the notice is personally
delivered to the party to be notified, (ii) that is three days after the notice
is mailed, postage prepaid, certified with return receipt requested, addressed
as follows, or at such other address as a party may from time to time designate
by notice
8
to the other party, (iii) the notice is delivered at the party's address via
courier service, or (iv) the notice is received by fax or telecopier:
To the Company: U.S. Timberlands Services Company, L.L.C.
000 Xxxxxxx Xxxxxx - Xxxxx 00-X
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chairman, Compensation Committee of the Board
Facsimile No: (000) 000-0000
To Executive: Xxxx X. Xxxxx
0000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Section 12. General Provisions.
12.1 Remedies on Default. In the event either party breaches this
Agreement, the other party shall be entitled to pursue all remedies available at
law or in equity. Except as otherwise provided herein, in the event this
Agreement is breached by either party, the non-breaching party shall not
terminate this Agreement without notice and a reasonable opportunity to cure
such breach.
12.2 Assignment; Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor of the Company, by merger
or otherwise. The parties understand and hereby acknowledge that upon the
consummation of the IPO and related transactions, the obligations of the Company
under this Agreement shall be assumed by New Services. The Company will require
any successor, other than New Services, which is already a party to this
Agreement, by agreement in form and substance reasonably acceptable to
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place and following such assumption all
references to the Company herein shall be deemed to mean such successor
including New Services. Except as provided in the preceding sentence, this
Agreement, and the rights and obligations of the parties hereunder, are personal
and neither this Agreement, nor any right, benefit, or obligation of either
party hereto, shall be subject to voluntary or involuntary assignment,
alienation or transfer, whether by operation of law or otherwise, without the
prior written consent of the other party. Subject to the foregoing, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties and their respective heirs, personal representatives,
administrators, successors, and permitted assigns.
12.3 Waiver. Failure of any party at any time to require performance of any
provision of this Agreement shall not limit such party's right to enforce such
provision, nor shall any waiver of any breach of any provision of this Agreement
constitute a waiver of any succeeding breach of such provision or a waiver of
such provision itself. No attempted or purported waiver of any provision of this
Agreement shall be effective unless set forth in writing and signed by the party
to be bound.
9
12.4 Amendment. This Agreement may not be modified or amended except by
the written agreement of the parties.
12.5 Severability. The agreements and covenants contained in this Agreement
are severable, and in the event any of the agreements and covenants contained in
this Agreement should be held to be invalid by any court or tribunal of
competent jurisdiction, this Agreement shall be interpreted as if such invalid
agreements and covenants were not contained herein; provided, however, that if
in any legal proceeding a court shall hold unenforceable the covenants contained
in Section 7 by reason of their extent or duration or otherwise, any such
covenant shall be reduced in scope to the extent required by law and enforced in
its reduced form.
12.6 Integration. This Agreement contains the entire agreement and
understanding of the parties with respect to the employment of Executive by the
Company and supersedes all prior and contemporaneous agreements (oral or
written) between them with respect to such subject matter.
12.7 Attorneys' Fees. If any legal action or other proceeding is brought
for the enforcement or interpretation of this Agreement, or because of an
alleged dispute or breach in connection with any of the provisions of this
Agreement, if Executive is the successful or prevailing party, Executive shall
be entitled to recover from the Company reasonable attorneys' fees and other
costs incurred by Executive in connection with that action or proceeding, and in
any petition for appeal or review therefrom, in addition to any other relief to
which Executive may be entitled.
12.8 Third Party Beneficiaries. This Agreement does not create, and shall
not be construed as creating, any rights enforceable by any person not a party
to this Agreement.
12.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
12.10 Survival. In the event of termination of this Agreement by either
party, this Agreement shall become void and there shall be no liability on the
part of Executive or the Company except to the extent such termination results
from the breach by a party hereto of its obligations hereunder (in which case
Section 12.1 shall apply); provided that Sections 6.1, 6.2, 6.3, 6.4, 7, 8, 11,
12.7 and 12.11 shall survive the termination of this Agreement.
12.11 UST Guaranty. UST hereby irrevocably and unconditionally
guarantees to Executive the payment of all amounts and the performance of all
other obligations due from the Company in accordance with the terms of this
Agreement as and when due without requirement of presentment, demand of payment,
protest or notice of dishonor or nonpayment.
10
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
The Company: U.S. TIMBERLANDS SERVICES COMPANY, L.L.C.,
a Delaware limited liability company
By:
-----------------------------------------
Name:
Title:
UST: U.S. TIMBERLANDS COMPANY, L.P.
a Delaware limited partnership
By: New Services, L.L.C., as general partner
By:
-----------------------------------------
Name:
Title:
New Services: NEW SERVICES, L.L.C.
a Delaware limited liability company
By:
-----------------------------------------
Name:
Title:
Executive:
------------------------------------------
Xxxx X. Xxxxx
11
EXHIBIT 10.5
FORM OF EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
the day of November, 1997, by and among U.S. Timberlands Services Company,
--
L.L.C., a Delaware limited liability company (the "Company"), U.S. Timberlands
Company, L.P., a Delaware limited partnership ("UST"), New Services (as defined
below), a Delaware limited liability company, and Xxxxxxx X. Xxxxxx
("Executive").
W I T N E S S E T H
-------------------
WHEREAS, the Company desires to employ Executive as its Vice President and
Chief Financial Officer, and Executive desires to accept such employment on the
terms and conditions set forth in this Agreement;
WHEREAS, a new limited partnership, UST, has been formed and a new limited
liability company, to be re-named "U.S. Timberlands Service Company, L.L.C."
("New Services"), has been formed to serve as the general partner of UST and as
the managing member of certain affiliated limited liability companies (together
with any subsidiary entities, the "UST Group") and upon the initial public
offering of the units representing limited partner interests in UST (the "IPO"),
New Services will assume the obligations of the Company hereunder as more fully
described in Section 12.2; and
WHEREAS, to induce Executive to accept such employment, UST desires to
guarantee the performance by the Company of its obligations hereunder,
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
Section 1. Employment.
The Company hereby employs Executive, and Executive hereby accepts
employment with the Company, on the terms and conditions set forth in this
Agreement.
Section 2. Term.
Subject to the provisions of Section 6, Executive's employment by the
Company under this Agreement shall be for a term (the "Term") commencing on the
date hereof and expiring on December 31, 2002.
Section 3. Executive's Duties.
3.1 Duties. Executive shall hold the position of the Company's Vice
President and Chief Financial Officer. Subject to the control of the board of
directors or other governing body of the Company (the "Board"), the President,
and any limitations set forth in the operating agreement of the Company (the
"Company Agreement") and in the agreements of limited partnership of the
partnerships and the operating agreements of the limited liability companies
within the UST Group, Executive shall, in general, supervise and control all the
day-to-day financial and accounting affairs of the Company and the UST Group.
3.2 Performance of Duties. Executive shall perform Executive's duties and
responsibilities as Vice President and Chief Financial Officer during the
Company's normal business hours and at all other times reasonably necessary to
comply with the terms and conditions of this Agreement. Executive shall devote
the time and attention required to the performance of Executive's duties and
responsibilities as Vice President and Chief Financial Officer for and on behalf
of the Company on the terms set forth in this Section 3.2. In addition,
Executive may from time to time serve as a consultant to and/or as a member of
the board of directors of other entities, provided that the Board in good faith
determines that such activities do not unreasonably interfere with the business
of the Company and the UST Group and the performance of Executive's duties
hereunder. The parties acknowledge that Executive currently serves as a board
member or advisory member of various civic and charitable organizations and may
continue to participate in these activities, subject to the limitations set
forth in the first two sentences of this Section 3.2; provided, however, that
such continued participation shall in no event be deemed a violation the
limitations of the first two sentences of this Section 3.2 unless and until
Executive shall have been notified in writing thereof and afforded a reasonable
opportunity to cure the violation.
3.3 Principal Place of Employment. Executive's principal place of
employment shall be (i) prior to July 1, 1998, at Roseburg, Oregon and (ii)
after June 30, 1998, at Klamath Falls, Oregon or at any other location which the
Company establishes as its operating offices. The Company shall provide
Executive, at his principal place of employment, with a private office,
secretarial services and such other facilities and support services as are
appropriate to the position of Vice President and Chief Financial Officer and
necessary or appropriate in the performance of Executive's duties as the Vice
President and Chief Financial Officer.
Section 4. Compensation and Other Benefits.
Executive shall be entitled to receive from the Company the following
compensation and benefits for the services to be rendered by Executive
hereunder:
4.1 Salary and Bonuses. During the Term, the Company shall pay Executive an
annual base salary of $126,000, payable in equal installments during the year in
accordance with the Company's customary practices for senior executives ("Base
Salary"). The amount of Executive's Base Salary may be increased from time to
time by the Board, and, once increased, such higher
2
amount shall become the Base Salary for all purposes of this Agreement and may
not thereafter be reduced. The Company shall also pay to Executive, to the
extent earned, an annual cash bonus, not to exceed 100% of Base Salary, which
shall be based on the performance of Executive and the UST Group's business as
determined annually by the Compensation Committee of the Board in its
discretion. The Company shall have the right to deduct and withhold from
Executive's compensation all taxes and charges that are currently or that
hereafter may be required by law to be so deducted and withheld.
The Company shall establish a program whereby Executive may, at his option,
defer receipt of any or all of the Base Salary and bonuses otherwise payable to
him under this Agreement. Any amounts so deferred shall be placed in a "rabbi"
trust, with a bank or other financial institution reasonably satisfactory to
Executive, as trustee, providing the maximum security to Executive without
causing the constructive receipt of income for federal income tax purposes and
distributed, together with interest or other earnings thereon, according to a
payment schedule to be designated by Executive.
4.2 Long Term Incentive Plan. Executive shall be entitled to participate in
the Long Term Incentive Plan ("LTIP") and Management Incentive Plan adopted by
the Company on the terms and conditions set forth therein. Concurrently with the
IPO, Executive will be granted Unit Options (as defined in the LTIP) pursuant to
the LTIP in an amount equal to 7.5% of the number of Unit Options initially
available to be granted under the LTIP and substantially in the form of the
grant agreement attached hereto as Attachment A.
4.3 Participation in Benefit Plans. During the Term, Executive shall be
eligible to participate in all employee benefit plans and arrangements now in
effect or which may hereafter be established that are generally applicable to
other senior executives of the Company, including, without limitation, all life,
group insurance, and medical and dental care plans and all disability,
retirement, 401(k) and other employee benefit plans of the Company, as long as
any such plan or arrangement remains generally applicable to other senior
executives of the Company. Executive shall also be entitled to the same
vacation benefits as are generally available to senior executives of the
Company, provided in any case that Executive shall have a minimum of four weeks'
vacation per year.
4.4 Reimbursement of Expenses. The Company shall reimburse Executive for
reasonable expenses incurred by Executive in the performance of Executive's
duties hereunder in accordance with the policy of the Company for reimbursement
of expenses as adopted by the Board from time to time and generally applicable
to all senior executives of the Company. Executive shall furnish the Company
with the supporting documentation required under the Company's policy in
connection with the reimbursement of such expenses.
3
Section 5. Relocation Expenses.
5.1 Relocation Expenses. The Company shall directly pay all reasonable
and ordinary costs incurred by Executive in moving his principal residence from
Roseburg, Oregon to the Klamath Falls, Oregon area, including brokerage
commissions, legal fees and other similar expenses incurred in selling his
residence, and shall also pay or reimburse Executive for all reasonable
incidental moving and relocation expenses incurred by Executive with respect to
his relocation, but not to exceed $10,000, upon Executive's furnishing the
Company appropriate documentation of such incidental expenses.
5.2 Existing Home Costs. Commencing on the date Executive is required to
make his first monthly mortgage payment on his principal residence in Xxxxxxx
Xxxxx, Xxxxxx and continuing for so long as Executive continues to use his
reasonable best efforts to sell his house in Roseburg, Oregon and remains an
employee of the Company, each month the Company shall reimburse Executive for
the monthly mortgage payment (principal, interest, taxes and insurance) paid by
Executive on his Roseburg, Oregon house (less the amount of any rent or lease
payments received by Executive for such month with respect to the house) and any
other ordinary and reasonable (noncapital) expenses incurred by Executive in the
maintenance of such house. Such reimbursement payment shall be made by the
Company as soon as reasonably practicable following its receipt of appropriate
documentation from Executive of such amounts, which shall include any lease or
rent payments received by Executive.
Section 6. Termination.
6.1 Termination by the Company Without Cause. The Company may terminate
Executive's employment as Vice President and Chief Financial Officer other than
for Cause or Executive becoming Disabled (as such terms are defined below) at
any time during the Term if the Board determines, in its sole discretion, that
the continued employment of Executive is not in the continued interests of the
Company. In the event the Company terminates Executive's employment pursuant to
this Section 6.1, then Executive shall be paid on termination, (i) any unpaid
Base Salary earned hereunder prior to the termination date, (ii) all unused
vacation time accrued by Executive as of the termination date in accordance with
the Company's vacation policy for senior executives, (iii) all unpaid amounts of
compensation in which Executive is vested as of the termination date under any
and all incentive compensation plans or programs of the Company, (iv) any
expenses in respect of which Executive has requested, and is entitled to,
reimbursement in accordance with Section 4.4, (v) a prorated bonus for the year
of such termination calculated based on the bonus being equal to 100% of Base
Salary, and (vi) an amount equal to the amount of Base Salary that Executive
would receive if Executive's employment had continued without change through the
remainder of the Term or for 14 months, whichever is less, (items (i) through
(iv) above being the "Earned Amounts").
6.2 Termination by the Company for Cause. The Company may terminate this
Agreement at any time, in the discretion of the Board, in the event of (i) any
conviction of Executive
4
for a felony, (ii) any material breach by Executive of a material written
agreement between Executive and the Company or the UST Group, including this
Agreement, (iii) any breach caused by Executive of the Company Agreement, the
limited partnership agreement of any member of the UST Group, or the charter or
bylaws of any corporation within the UST Group, provided that Executive had
prior written notice of such agreement or other document and any amendment
thereto (including a copy of the full text thereof) and provided further that
such breach has a material adverse effect on the Company, (iv) any willful
conduct by Executive materially injurious to the Company or the UST Group or
their respective businesses, (v) any willful failure by Executive to comply with
any material policies, procedures, or directives of the Board, provided that,
Executive shall first be given notice from the Board of such failure and such
failure shall not have been cured within three days after such notice or, if
such failure is not capable of being cured within three days, Executive shall
not have commenced and be diligently pursuing in good faith efforts to cure such
default, or (vi) any fraud, misappropriation of funds, embezzlement, or other
similar acts of misconduct by Executive with respect to the Company or the UST
Group. In the event the Company terminates Executive's employment pursuant to
this Section 6.2 for Cause, then Executive shall be paid on termination the
Earned Amounts. For purposes of this Agreement, no act or failure to act on
Executive's part shall be deemed "willful" unless done, or omitted to be done,
in bad faith or without the reasonable belief that the act or failure to act was
in the best interests of the Company or the UST Group. Any act or failure to
act on the basis of authority given by resolution duly adopted by the Board or
on the basis of advice given by legal counsel for the Company shall be
conclusively presumed to have been done, or omitted to be done, in good faith
and in the best interests of the Company or the UST Group. No termination of
Executive's employment shall be for Cause unless such termination shall have
been authorized in advance by a resolution adopted by the Board and delivered to
Executive, following a meeting of the Board at which Executive (together with
his counsel) shall have been afforded a reasonable opportunity to refute the
purported grounds for termination for Cause.
6.3 Termination Upon Death or Disability of Executive. This Agreement shall
terminate upon the death of Executive, or upon Executive becoming Disabled (as
defined below). In the event of a termination of this Agreement pursuant to this
Section 6.3, Executive (or Executive's estate, if applicable) shall be paid on
termination the Earned Amounts. For purposes of this Agreement, "Disabled" shall
mean that Executive shall have qualified for and be receiving benefits under the
Company's long-term disability insurance plan or, if there is no such plan, that
Executive shall have qualified for and be receiving disability benefits under
the federal Social Security Act.
6.4 Voluntary Resignation for Good Reason. Executive may resign Executive's
employment as Vice President and Chief Financial Officer of the Company at any
time and, if such resignation is (x) prior to July 1, 1998, and for any reason
other than Executive becoming Disabled or (y) after June 30, 1998, and for "Good
Reason", Executive shall be entitled to the same payments and benefits that
Executive would receive under Section 6.1 if Executive's employment were being
terminated by the Company other than for Cause or Executive becoming Disabled.
"Good Reason" shall mean any one or more of the following: (i) failure of UST to
complete its IPO on or before March 31, 1998; (ii) failure of the Company to
appoint or re-appoint Executive to the office of Vice
5
President and Chief Financial Officer; (iii) failure of the Company, by act,
omission, amendment to the instruments governing its organization and operation
or otherwise, to vest in Executive the position, duties and responsibilities
contemplated by this Agreement; (iv) failure by the Company to pay when due any
portion of the compensation payable to Executive hereunder; (v) any material
breach by the Company of any material provision of this Agreement; or (vi) on or
following a Change of Control (as such term is defined in the Company's LTIP, as
the same may be amended from time to time), either Executive is assigned any
duties or responsibilities materially inconsistent with, or diminished from,
Executive's duties and responsibilities with the Company and the UST Group
immediately prior to the Change of Control, or, Executive's status, duties,
responsibilities, titles or offices with the Company and the UST Group are
materially diminished from those in effect immediately prior to the Change of
Control, as determined in the good faith opinion of Executive; provided,
however, Good Reason shall exist with respect to a matter described in (ii)
through (vi) above that is capable of being corrected by the Company only if
such matter is not corrected by the Company within a reasonable period following
its receipt of written notice of such matter from Executive, and in no event
shall a termination by Executive occurring more than 60 days following any such
written notice or the event described in (i) above be for Good Reason.
Section 7. Covenant Not to Compete; Confidentiality.
7.1 Noncompetition. Unless granted written permission by the Board and
subject to any further restrictions contained in the agreements of limited
partnership within the UST Group, while employed by the Company and for a period
of six months after the termination of such employment, Executive covenants that
Executive shall not (i) own (as a proprietor, partner, or stockholder of greater
than one percent of outstanding equity securities, interests or otherwise) an
interest in, or (ii) participate (as an officer, director, or in any other
capacity) in the management, operation, or control of, or (iii) perform services
as or act in the capacity of any employee, independent contractor, consultant,
or agent of any enterprise which engages in one or more of the following
activities in a state in which the Company or the UST Group is then conducting
business and in which the Company or the UST Group commenced conducting business
prior to the commencement of such activities therein by Executive:
(a) acquisition, exchange, operation or sale of timber-producing real
property or rights to harvest timber, a principal purpose of which is
producing logs or other forest products;
(b) harvesting of timber other than harvesting which is incidental to
the ownership or operation of real property not owned or operated for a
principal purpose of producing logs or other forest products;
(c) sale, exchange or purchase of logs other than sales, exchanges or
purchases which are incidental to the ownership or operation of real
property not owned or operated for a principal purpose of producing logs or
other forest products;
6
(d) manufacture, marketing or sale of manufactured, engineered, or
substitute wood products to the extent such products compete with products
produced by the Company or any member of the UST Group; or
(e) any and all other activities relating to the United States forest
products industry to the extent such activities compete with activities of
the Company or any member of the UST Group.
The noncompetition restrictions set forth in this Section 7.1 shall not apply in
the event of a termination of this Agreement pursuant to Section 6.1 or 6.4
(provided that the non-competition restrictions shall apply in the event of a
termination of this Agreement pursuant to Section 6.4 for any reason other than
Good Reason) nor, in the event of Executive's termination due to Executive
becoming Disabled in accordance with Section 6.3, shall they apply following
Executive ceasing to be Disabled unless the Company offers to re-employ
Executive on terms and conditions at least as favorable as those set forth in
this Agreement.
7.2 Confidentiality. Executive acknowledges that in the course of
Executive's employment by the Company, Executive will be furnished and have
access to certain information concerning the business, financial condition,
operations, assets and liabilities of the Company and the UST Group that is
confidential or proprietary in nature. All such information (irrespective of the
form of communication) is hereinafter collectively referred to as the
"Information." Until the later to occur of (i) the date of termination of
Executive's employment hereunder or (ii) the date of Executive's resignation,
and for a period of 18 months thereafter, Executive agrees to keep the
Information confidential and agrees that Executive will use the Information
solely for the purpose of performing Executive's duties hereunder or as
otherwise authorized by the Company. This Agreement shall be inoperative as to
such portions of the Information which (a) are or become generally available to
the public other than as a result of a disclosure by Executive in violation of
this Agreement, (b) become available to Executive on a non-confidential basis
from a source other than the Company or the UST Group that is not bound by an
obligation of confidentiality to such entity or entities, or (c) are required to
be disclosed by an order or decree of a court or other tribunal of competent
jurisdiction, provided the Company is given prompt notice of, and the
opportunity to contest disclosure under, such order or decree. Upon termination
of this Agreement, Executive will return the Information furnished by the
Company or the UST Group and any documents that contain, reflect, or are based
upon, in whole or in part, the Information.
7.3 Equitable Relief. Executive acknowledges and agrees that it would be
difficult to measure damage to the Company or the UST Group from any breach by
Executive of Section 7.1 or 7.2 and that monetary damages would be an inadequate
remedy for any such breach. Accordingly, Executive agrees that if Executive
shall breach Section 7.1 or 7.2, the Company shall be entitled, in addition to
all other remedies it may have at law or in equity, to an injunction or other
appropriate orders or equitable relief to restrain any such breach, without
showing or proving any actual damage sustained by the Company or the UST Group.
Executive further agrees to waive any requirement for the securing or posting of
any bond in connection with such remedies.
7
7.4 Executive's Acknowledgment. Executive hereby expressly acknowledges and
agrees that (i) the restrictions and obligations set forth in and imposed by
this Section 7 will not prevent Executive from obtaining gainful employment in
Executive's field of expertise or cause Executive undue hardship, and (ii) in
view and consideration of the substantial benefits Executive will receive from
the Company pursuant to this Agreement and the Company Agreement, the
restrictions and obligations imposed on Executive under this Section 7 are
reasonable and necessary to protect the legitimate business interests of the
Company and its members and the UST Group.
Section 8. Indemnification.
(a) During the Term and for a period of six years thereafter or, if longer,
the period of any applicable statute of limitations, the Company shall cause
Executive to be covered by and named as an insured under any policy or contract
of insurance obtained by it to insure its officers against personal liability
for acts or omissions in connection with service as an officer of the Company or
service in other capacities at the request of the Company. The coverage
provided to Executive pursuant to this Section 8 shall be of a scope and on
terms and conditions at least as favorable as the coverage (if any) provided to
any other officer of the Company.
(b) To the maximum extent permitted under applicable law, during the Term
and for a period of six years thereafter or, if longer, the period of any
applicable statute of limitations, the Company shall indemnify Executive against
and hold Executive harmless from any costs, liabilities, losses and exposures to
the fullest extent and on the most favorable terms and conditions that similar
indemnification is offered to any officer of the Company.
Section 9. Representations and Warranties.
9.1 By Executive. Executive represents and warrants to the Company that (i)
Executive is under no contractual or other restriction or obligation which would
prevent the performance of Executive's duties hereunder or interfere with the
rights of the Company hereunder and (ii) this Agreement has been duly executed
and delivered by Executive, is the legal, valid and binding obligation of
Executive, and is enforceable against Executive in accordance with its terms,
except that no representation or warranty is made with respect to the provisions
of Section 7.
9.2 By the Company. The Company represents and warrants to Executive that
(i) it has all requisite limited liability company power and authority to
execute, deliver and perform this Agreement, (ii) all necessary proceedings of
the Company have been duly taken to authorize the execution, delivery and
performance of this Agreement, and (iii) this Agreement has been duly
authorized, executed and delivered by the Company, is the legal, valid and
binding obligation of the Company, and is enforceable against the Company in
accordance with its terms.
8
Section 10. Life Insurance.
If requested by the Company, Executive shall submit to such physical
examinations by a physician and otherwise take such actions and execute and
deliver such documents as may be reasonably necessary to enable the Company to
obtain life insurance on the life of Executive for the benefit of the Company,
but in no event shall Executive's failure to qualify for such coverage, as a
result of the outcome of the medical examination or otherwise, be grounds for a
termination of Executive's employment.
Section 11. Notices.
Any notice given pursuant to this Agreement shall be in writing and shall
be deemed given on the earlier of the date (i) the notice is personally
delivered to the party to be notified, (ii) that is three days after the notice
is mailed, postage prepaid, certified with return receipt requested, addressed
as follows, or at such other address as a party may from time to time designate
by notice to the other party, (iii) the notice is delivered at the party's
address via courier service, or (iv) the notice is received by fax or
telecopier:
To the Company: U.S. Timberlands Services Company, L.L.C.
000 Xxxxxxx Xxxxxx - Xxxxx 00-X
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxx
Facsimile No: (000) 000-0000
To Executive: Xxxxxxx X. Xxxxxx
000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxx 00000
Section 12. General Provisions.
12.1 Remedies on Default. In the event either party breaches this
Agreement, the other party shall be entitled to pursue all remedies available at
law or in equity. Except as otherwise provided herein, in the event this
Agreement is breached by either party, the non-breaching party shall not
terminate this Agreement without notice and a reasonable opportunity to cure
such breach.
12.2 Assignment; Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor of the Company, by merger
or otherwise. The parties understand and hereby acknowledge that upon the
consummation of the IPO and related transactions, the obligations of the Company
under this Agreement shall be assumed by New Services. The Company will require
any successor, other than New Services, which is already a party to this
Agreement, by agreement in form and substance reasonably acceptable to
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place and following such
9
assumption all references to the Company herein shall be deemed to mean such
successor, including New Services. Except as provided in the preceding
sentence, this Agreement, and the rights and obligations of the parties
hereunder, are personal and neither this Agreement, nor any right, benefit, or
obligation of either party hereto, shall be subject to voluntary or involuntary
assignment, alienation or transfer, whether by operation of law or otherwise,
without the prior written consent of the other party. Subject to the foregoing,
the provisions of this Agreement shall be binding upon and inure to the benefit
of the parties and their respective heirs, personal representatives,
administrators, successors, and permitted assigns.
12.3 Waiver. Failure of any party at any time to require performance of any
provision of this Agreement shall not limit such party's right to enforce such
provision, nor shall any waiver of any breach of any provision of this Agreement
constitute a waiver of any succeeding breach of such provision or a waiver of
such provision itself. No attempted or purported waiver of any provision of this
Agreement shall be effective unless set forth in writing and signed by the party
to be bound.
12.4 Amendment. This Agreement may not be modified or amended except by the
written agreement of the parties.
12.5 Severability. The agreements and covenants contained in this Agreement
are severable, and in the event any of the agreements and covenants contained in
this Agreement should be held to be invalid by any court or tribunal of
competent jurisdiction, this Agreement shall be interpreted as if such invalid
agreements and covenants were not contained herein; provided, however, that if
in any legal proceeding a court shall hold unenforceable the covenants contained
in Section 7 by reason of their extent or duration or otherwise, any such
covenant shall be reduced in scope to the extent required by law and enforced in
its reduced form.
12.6 Integration. This Agreement contains the entire agreement and
understanding of the parties with respect to the employment of Executive by the
Company and supersedes all prior and contemporaneous agreements (oral or
written) between them with respect to such subject matter.
12.7 Attorneys' Fees. If any legal action or other proceeding is brought
for the enforcement or interpretation of this Agreement, or because of an
alleged dispute or breach in connection with any of the provisions of this
Agreement, if Executive is the successful or prevailing party, Executive shall
be entitled to recover from the Company reasonable attorneys' fees and other
costs incurred by Executive in connection with that action or proceeding, and in
any petition for appeal or review therefrom, in addition to any other relief to
which Executive may be entitled.
12.8 Third Party Beneficiaries. This Agreement does not create, and shall
not be construed as creating, any rights enforceable by any person not a party
to this Agreement.
12.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
10
12.10 Survival. In the event of termination of this Agreement by either
party, this Agreement shall become void and there shall be no liability on the
part of Executive or the Company except to the extent such termination results
from the breach by a party hereto of its obligations hereunder (in which case
Section 12.1 shall apply); provided that Sections 5.3, 6.1, 6.2, 6.3, 6.4, 7, 8,
11, 12.7 and 12.11 shall survive the termination of this Agreement.
12.11 UST Guaranty. UST hereby irrevocably and unconditionally
guarantees to Executive the payment of all amounts and the performance of all
other obligations due from the Company in accordance with the terms of this
Agreement as and when due without requirement of presentment, demand of payment,
protest or notice of dishonor or nonpayment.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
The Company: U.S. TIMBERLANDS SERVICES COMPANY, L.L.C.,
a Delaware limited liability company
By:
-------------------------------------------
Name:
Title:
UST: U.S. TIMBERLANDS COMPANY, L.P.
a Delaware limited partnership
By: New Services, L.L.C., as general partner
By:
-------------------------------------------
Name:
Title:
New Services: NEW SERVICES, L.L.C.
a Delaware limited liability company
By:
-------------------------------------------
Name:
Title:
Executive:
-------------------------------------------
Xxxxxxx X. Xxxxxx
11
