SEPARATION AGREEMENT AND MUTUAL RELEASE
This is an Agreement dated as of June 1, 1998 between Fort Xxxxx Operating
Company, its parent, affiliates, subsidiaries, predecessors, successors and
assigns (collectively 'Fort Xxxxx' or the 'Company') and Xxxxx X. Xxxxxxx
('Xxxxxxx').
X. Xxxxxxx has been employed by Fort Xxxxx as President, North American
Consumer Products business under his employment agreement dated as of May 27,
1997 (the 'Employment Agreement') and wishes to resign that employment. Fort
Xxxxx and Xxxxxxx have agreed on the terms under which he will terminate his
employment with the Company. The parties desire to resolve matters involving
Xxxxxxx'x employment, the Employment Agreement and Xxxxxxx'x separation from
employment with Fort Xxxxx.
X. Xxxxxxx and Fort Xxxxx further desire to settle, resolve and release any
and all existing or potential claims, controversies, differences, disputes or
disagreements, known or unknown, that Xxxxxxx may have with Fort Xxxxx in
exchange for Fort Xxxxx' agreement to provide Xxxxxxx certain compensation and
benefits to which he otherwise he may not be entitled.
C. Fort Xxxxx also desires to provide Xxxxxxx with additional compensation
over the next two (2) years in return for Xxxxxxx agreeing (i) not to compete
against Fort Xxxxx, (ii) not to hire former Fort Xxxxx employees who worked with
Xxxxxxx in the Consumer Products Business of Fort Xxxxx and (iii) to cooperate
with Fort Xxxxx.
THEREFORE, in consideration of the above premises and the mutual covenants and
promises contained herein, Xxxxxxx and Fort Xxxxx agree as follows: 1.
Termination of Employment. Xxxxxxx agrees to voluntarily terminate his
employment effective at the close of business on June 30, 1998 (his 'Date of
Termination'). He will be paid all of his regular compensation and benefits
through that date. His last day of work and responsibilities shall be June 30,
1998. 2. Severance Payment. Fort Xxxxx shall pay Xxxxxxx in a lump sum, the
amount of $2,675,574 representing three (3) times the sum of (i) his current
base salary and (ii) his 1997 Management Incentive Bonus, less authorized
deductions and deductions for required taxes. 3. Additional Bonus Payment. Fort
Xxxxx shall pay Xxxxxxx $192,600, representing an amount equivalent to a
pro-rata bonus under the 1998 Management Incentive Plan, based on target level
company and personal performance, had Xxxxxxx been otherwise eligible for such a
MIP bonus, as well as payments for any unused and accrued vacation to which
Xxxxxxx might be entitled on termination and which payment shall be in lieu of
any other benefit continuation which Xxxxxxx shall expressly waive and elect not
to accept in this Agreement. 4. Pension, SERP and Other Benefits. (a) The
Company shall pay Xxxxxxx in a lump sum an amount equal to the excess of (A) the
actuarial equivalent of the benefit under the Company's qualified defined
benefit retirement plan and any excess or supplemental retirement plan in which
Xxxxxxx participates (the'SERP') which Xxxxxxx would receive if his employment
continued for three (3) years after the Effective Date, over (B) the actuarial
equivalent of Xxxxxxx'x actual benefit, as provided in Section 4(a)(i)(C) of the
Employment Agreement. (b) All Company provided medical, prescription and dental
coverage, life insurance, accidental death and dismemberment and long term
disability benefits shall be provided to Xxxxxxx and members of his family for
three (3) years following his Date of Termination, to the extent provided in
Section (a)(iii) of his Employment Agreement. (c) Xxxxxxx is the beneficiary of
27,650 restricted shares and 75,650 performance shares issued pursuant to the
1996 Stock Incentive Plan (the 'Plan'). Xxxxxxx agrees to relinquish all right
to the restricted and performance shares as of June 1, 1998. In return, the
Company agrees to pay Xxxxxxx as follows:
(i) On July 15, 1998, an amount equivalent to the value on July 1, 1998 of
54,913 shares of Common Stock of the Company (the 'Common Stock') determined by
calculating the average of the high and low price (the 'Average Price') of the
Common Stock plus an amount equal to $61,747.80, representing the accrued
dividends on such shares.
(ii) On July 15, 1998, an amount equivalent to the value on July 1, 1998 of
9,217 shares of Common Stock determined by calculating the Average Price of the
Common Stock plus an amount equal to $1,382.55, representing the quarterly
dividend on such shares.
(iii) On July 15, 1999, an amount equivalent to the value on July 1, 1999
of 19,585 shares of Common Stock using the Average Price of the Common Stock
plus an amount equal to the dividends which would have accrued but have been
unpaid on such shares as of July 1, 1999.
(iv) On July 15, 2000, an amount equivalent to the value on July 1, 2000 of
19,585 shares of Common Stock using the Average Price of the Common Stock plus
an amount equal to the dividends which would have accrued but have been unpaid
on such shares as of July 1, 2000.
(d) Xxxxxxx'x existing stock options shall be amended effective June
30, 1998 as set forth in Exhibit A hereto.
(e) Nothing herein shall forfeit or otherwise affect Xxxxxxx'x right
to vested benefits in Fort James's StockPlus or Retirement Plans, including SERP
Plans which benefits shall be paid to Xxxxxxx according to such plans.
(f) Xxxxxxx shall not be entitled to any other bonus payments or
profit sharing awards including any payments under the Management Incentive
Plan.
(g) All payments referred to herein are gross payments from which Fort
Xxxxx xxx withhold legal and authorized amounts for payment to taxing
authorities as required by law.
(h) The Company shall reimburse Xxxxxxx for reasonable tax preparation
expenses for calendar year 1998 and for legal expenses in 1998 for tax advice,
estate planning and negotiation of this Agreement.
5. Method of Payment. All cash payments required by this Agreement shall be
made by wire transfer to Xxxxxxx'x account or accounts which he shall designate
in writing to the Company's Senior Vice President, General Counsel. Such
transfers shall be authorized and released in advance so as to arrive in
Xxxxxxx'x account(s) by July 15, 1998, the 'Payment Date', except for amounts
representing shares vesting in 1999 and 2000, which will be paid July 15, 1999
and July 15, 2000 respectively.
6. Company Car. Fort Xxxxx agrees to transfer to Xxxxxxx no later than July
31, 1998, the certificate of title to the automobile previously provided him for
his personal and business use. Xxxxxxx acknowledges that after transfer of the
title to the car to him, Fort Xxxxx will no longer be responsible for providing
insurance or maintenance for the vehicle in any manner and he shall be
responsible for all costs associated with the vehicle from that date forward.
7. General Release. In consideration of all payments due him hereunder or
under the Employment Agreement, Xxxxxxx hereby agrees, for himself, his
successors, heirs, representatives, executors, agents and assigns, to release
and forever discharge Fort Xxxxx, including its affiliates, subsidiaries,
parents, predecessors, successors and assigns and their respective directors,
officers, employees and agents thereof from any and all claims, debts,
responsibilities and liabilities of every kind and character whatsoever, known
or unknown, suspected or unsuspected, which he has ever had or may have against
Fort Xxxxx, including but not limited to, any and all claims arising out of
Xxxxxxx'x employment or termination of employment with Fort Xxxxx. Xxxxxxx
acknowledges that this Release includes any and all claims whether in contract
or in tort, claims that may be brought on his behalf by others, claims brought
before any court or administrative agency, or claims under any national,
federal, state or local statute or ordinance, including any claims under Title
VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act,
the Americans with Disabilities Act or any other law.
It is acknowledged that this Separation Agreement does not release
Xxxxxxx'x right to any vested benefits under the Fort Xxxxx Corporation
Retirement Plan for Salaried and Other Non-Bargaining Unit Employees (the
'Retirement Plan') or any vested rights in the Fort Xxxxx Corporation StockPlus
Plan (the 'StockPlus Plan'). Xxxxxxx'x eligibility for benefits under the
Retirement Plan, or the StockPlus Plan will be controlled by the terms of the
plans.
8. Special Release Notification. This Mutual Release includes a release of
all claims under the Age Discrimination in Employment Act, ('ADEA'), and,
therefore, pursuant to the requirements of the ADEA, Xxxxxxx acknowledges that
he has been advised (1) that this Release includes but is not limited to, all
rights or claims arising under the ADEA up to and including the date of
execution of this release, but does not waive rights or claims that may arise
after the date of execution; (2) to consult with an attorney or other advisor of
his choosing concerning his rights and obligations under this Release; (3) to
fully consider this Release before executing it, and that he has been offered at
least twenty-one (21) days to do so; (4) that this Release shall become
effective and enforceable seven (7) days following execution of this Separation
Agreement, during which seven (7) day period Xxxxxxx understands that he may
revoke his acceptance of this Separation Agreement and Mutual Release by
delivering written notice to Xxxxxxxx X. Xxxxxxxx, XX, Senior Vice President and
General Counsel, Fort Xxxxx Corporation, 0000 Xxxx Xxxx Xxxx, Xxxxxxxxx,
Xxxxxxxx 00000.
9. Post Employment Restrictions, Obligations
(a) Xxxxxxx agrees to comply with the terms of his Confidentiality
Agreement executed May 13, 1991 between himself and Fort Xxxxx and not to
otherwise use or disclose Fort Xxxxx confidential information in the future. A
copy of this Agreement is attached as Exhibit B.
(b) In return for the extension of the option exercise period, the
extension of the vesting period for the restricted shares and the conversion of
the performance shares to restricted shares as set forth herein, Xxxxxxx agrees,
in order to protect the Company's goodwill, trade secrets and confidential
information and thereby help ensure the long-term success and development of the
business, not to engage in competitive activities on behalf of a competitive
business for a period of two (2) years following the Date of Termination with
the Company for whatever reason, without first obtaining written permission from
either the Senior Vice President and General Counsel or the Senior Vice
President, Human Resources, which shall not be unnecessarily withheld or
delayed. 'Engage in competitive activities' means rendering services or being
involved directly or indirectly in any way or in any capacity whether as an
officer, director, employee, agent, owner, shareholder or consultant (excluding
ownership of less than 5% of the stock of a publicly traded company), in the
manufacture, development, promotion or sale of any towel, tissue, foodservice,
communications paper, or folding cartons for food packaging, of the type
manufactured by Fort Xxxxx (the 'Covered Products'). A 'competitive business'
means any person or entity engaged in the manufacture or non-retail sale of the
Covered Products. Xxxxxxx acknowledges that products of the Company are sold
throughout North America and Western Europe. Accordingly, the geographic area
covered by this restraint shall include any county, city, town, province or
comparable unit of local government where the Covered Products are manufactured,
marketed or sold by the Company. The parties agree that this non-compete
provision supersedes all prior agreements between them on this subject. The
foregoing shall not prevent Xxxxxxx from lecturing on behalf of companies not in
competition with the Company at which lecture employees of competitors may be
present.
(c) Xxxxxxx agrees for a period of two (2) years not to solicit
directly or indirectly for employment any employee or former employee of Fort
Xxxxx or its affiliates, who worked in the Consumer Products business, without
the written consent of the Senior Vice President, Human Resources for the
Company, which shall not be unreasonably withheld or delayed. Further, Xxxxxxx
agrees that if any Fort Xxxxx employee approaches him for employment, he will
refer them to the appropriate hiring official of his employer and will have no
involvement either in the hiring of the employee or in working with the employee
should such employee work for the same company for which Xxxxxxx works.
(d) Xxxxxxx agrees that as President of the Company's North American
Consumer Products business, he possesses intimate knowledge about all aspects of
the Company's business, business plans and other confidential or propriety
information. He also agrees that these restrictions are reasonable and necessary
to protect the Company's business and in consideration of the substantial
benefits provided him hereunder. If Xxxxxxx violates any of his obligations
under this paragraph 9, the Company shall have no further obligation to him
under this Agreement as on the date of breach. Xxxxxxx agrees that the Company
will be irreparably harmed and will be entitled to immediate injunctive relief
in the event of such breach in addition to any other monetary remedies.
(e) If any aspect of the above post employment restrictions are deemed
void or unenforceable by any court of competent jurisdiction, the parties agree
that the court should modify these restrictions to a point they would be
enforceable and enforce the restrictions to that extent.
10. Indemnity. Fort Xxxxx agrees to continue to indemnify and save Xxxxxxx
harmless from all claims, actions and liabilities which may arise in connection
with his reasonable performance of his duties for the Company. Such
indemnification shall be to the same extent as its indemnification of active
executives of equal rank but shall relate only to Xxxxxxx'x alleged actions or
failure to act during the period in which he was employed by the Company.
11. Future Cooperation. Xxxxxxx agrees to cooperate in providing transition
assistance related to his departure as may be reasonably required of him by Fort
Xxxxx, including presences as a witness in legal proceedings as may be
necessary, both before and after his Date of Termination. Fort Xxxxx will
reimburse Xxxxxxx for any reasonable expenses incurred in this regard.
12. Resignation. By his signature hereto, Xxxxxxx hereby resigns his
position as President, North American Consumer Products and any and all other
positions with the Company, its subsidiaries, its parent and its affiliates.
13. Confidentiality. Xxxxxxx agrees that he will not divulge the contents
of this Agreement which are agreed to be confidential in nature except (a)
Xxxxxxx may divulge the contents to his spouse, attorney, financial advisor and
income tax preparer; or (b) except as may be required to comply with legal
process. It is further agreed by Xxxxxxx that if it is necessary that this
Agreement or a significant portion be disclosed to those listed above, Xxxxxxx
agrees to instruct and request each of them, or use such other efforts as may be
reasonable, to keep any information so disclosed confidential. If Xxxxxxx
materially breaches this provision, the Company will have no further obligation
to him under this Agreement.
14. Entire Agreement. Xxxxxxx understands and agrees that all terms of this
Separation Agreement and Mutual Release are contractual and are not a mere
recital. The parties represent and warrant that in negotiating and executing
this Separation Agreement and Mutual Release, each have had an opportunity to
consult with legal counsel or other representatives of their own choosing
concerning the meaning and effect of each term or provision hereof, and that
there are no representations, promises or agreements other than those
specifically referred to or set forth in writing herein.
The parties represent and warrant that they have read this Separation
Agreement and Mutual Release in its entirety, fully understand and agree to its
term and provisions, and intend and agree that it is a final and legal binding
settlement and release of all claims Xxxxxxx and/or Fort Xxxxx xxx have.
15. Severability. If any portions of this Separation Agreement and Mutual
Release are void or deemed unenforceable for any reason, the unenforceable
portions shall be deemed severed from the remaining portions of this Agreement
which shall otherwise remain in full force and effect.
16. No Waiver. The decision of either party not to assert a claim for
breach of the Agreement shall not be construed as a waiver of that or any
subsequent breach which might occur.
17. Corporate Authority. The officer executing this Agreement on behalf of
Fort Xxxxx represents that he has full corporate authority to do so and to bind
the Company, its parents, affiliates, subsidiaries, predecessors, successors and
assigns.
18. Governing Law. This Agreement shall be governed and construed according
to the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties have affixed their signatures:
By:/s/Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
FORT XXXXX OPERATING COMPANY
By:/s/Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Senior Vice President
FORT XXXXX CORPORATION
AMENDMENT TO STOCK OPTIONS
FORT XXXXX CORPORATION (the "Company") and Xxxxx X. Xxxxxxx (the
"Participant") hereby agree to this Amendment to Stock Options as of June
30, 1998.
WHEREAS, the Participant has been granted certain options to
acquire the shares of common stock of the Company ("Company Stock")which are
listed below.
WHEREAS, in connection with the Participant's termination of
employment, the Company and the Participant wish to modify certain
terms of such options.
WHEREAS, the terms of this Amendment to Stock Options have been
approved by the Compensation Committee of Fort Xxxxx Corporation
(the "Committee").
THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter, the Company and the Participant agree as
follows:
1. In addition to any portion that has previously vested, the
options granted to the Participant on July 24, 1995 for 50,800
shares (the '1995 Option') and on July 1, 1996 for 30,000 shares
(the 1996 Option) shall be fully vested and exercisable as of
July 1, 1998.
2. To the extent vested, the 1995 Option and the 1996 Option and
all previously vested options being the May 6, 1991 grant, the
June 13, 1991 grant, the May 1, 1992 grant and the May 23, 1994
grant may be exercised at any time on or before June 30, 2000. To
the extent not previously exercised, the 1995 Option and the 1996
Option shall expire and cease to be exercisable on July 1, 2000.
3. The options granted to the Participant on January 6, 1998 for
80,000 shares (the '1998 Option') shall be vested and exercisable
under the following schedule:
Tranche Number of Shares Vesting Date
1 40,000 January 6, 1999
2 40,000 January 6, 2000
4. When vested, Tranche 1 of the 1998 Option may be exercised at
any time on or before January 5, 2001. To the extent not
previously exercised, Tranche 1 of the 1998 Option shall expire
and cease to be exercisable of January 6, 2001. When vested,
Tranche 2 of the 1998 Option may be exercised at any time on or
before January 5, 2002. To the extent not previously exercised,
Tranche 2 of the 1998 Option shall expire and cease to be
exercisable on January 6, 2002.
5. Any provisions of the options relating to the time for vesting or the period
to exercise the options are superseded by this
Amendment to Stock Options, including provisions requiring the
continuing employment of the Participant or measuring periods to
exercise the options based on termination of employment by the
Participant.
6. To the extent not specifically amended by the provisions of this Amendment
to Stock Options, the terms and conditions of the
options shall continue to apply.
7. Any controversy concerning this Amendment to Stock Options shall be
resolved by the Committee as it deems proper, and any
interpretation of this Amendment to Stock Options or other
decision of the Committee shall be final and conclusive.
8. If the Participant dies before an option expires as provided
in Sections 2 or 4, all of the options that he held at the time
of his death (without regard to whether it has become exercisable
pursuant to Sections 1 or 3) may be exercised by the personal
representative of his estate. The options may be exercised at any
time until the expiration date of the options as provided in
Sections 2 or 4.
9. As a further condition of this Amendment to Stock Options, and in
consideration of receipt of these rights, the Participant
agrees to comply with all provisions of the Separation Agreement
and Mutual Release between the Participant and Fort Xxxxx
Operating Company. If the Committee determines that the
Participant has violated the provisions of the Separation
Agreement, the options shall terminate as of the date when a
violation of the Separation Agreement first occurred as
determined by the Committee (the 'Violation Date') and the
options shall no longer be exercisable as of the Violation Date.
10. Any notice to be given under the terms of this Amendment to Stock Options
shall be addressed to Fort Xxxxx Corporation,
Corporate Secretary, X.X. Xxx 00, Xxxxxxxxx, Xxxxxxxx 00000, and
any notice to be given to the Participant or to his personal
representative shall be addressed to him at the last address on
the records of the Company or at such other address as either
party may hereafter designate in writing to the other. Notices
shall be deemed to have been duly given if mailed, postage
prepaid, addressed as aforesaid.
IN WITNESS WHEREOF, the Company and the Participant have caused this
Amendment to Stock Options to be signed, as of the dates below.
FORT XXXXX CORPORATION
Date ____________________ By:/s/Miles Xxxxx
Miles Xxxxx
Chairman of the Board and CEO
XXXXX X. XXXXXXX
Date ____________________ By:/s/Xxxxx X. Xxxxxxx
