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EXHIBIT 10.5
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of September 29, 2000, between VERSO TECHNOLOGIES, INC., a
Minnesota corporation (the "Company"), and XXXXX X. XXXXXXX (the "Employee"), an
individual resident of the State of Texas.
1. TERM. The term (the "Term") of this Agreement shall begin on
the date hereof (the "Effective Date") and shall continue in effect for a period
of three (3) years from the Effective Date; provided, however, the Term shall be
extended automatically for an additional year on each anniversary of the
Effective Date unless either party hereto gives written notice to the other
party not to so extend at least ninety (90) days prior thereto, in which case no
further extension shall occur; provided further, however, that notwithstanding
any such notice by the Company not to extend, the Term shall not expire prior to
the expiration of twenty-four (24) months after the occurrence of a Change in
Control (as hereinafter defined).
2. EMPLOYMENT AND DUTIES. The Employee shall serve as the
Company's President and Chief Operating Officer, reporting to the Company's
Board of Directors (the "Board") and shall have such powers and duties as may
from time to time be prescribed by the Company's Board of Directors (the
"Board"), provided that such duties are consistent with the Employee's position
as the chief operating officer of the Company. The Company shall provide the
Employee with a private office, secretarial and administrative assistance,
office equipment, supplies and other facilities and services suitable to the
Employee's position.
3. COMPENSATION.
3.1 SALARY. For all services to be rendered by the
Employee pursuant to this Agreement, the Company hereby agrees to pay the
Employee a base salary at an annual rate per year of $175,000 through and
including February 1, 2001 and at an annual rate per year of $225,000 thereafter
(the "Base Salary"), payable in accordance with the Company's payroll practices
in effect from time to time; provided, however, that in the event of the
occurrence of a Change in Control prior to February 1, 2001, the Base Salary
hereunder shall be immediately increased to $225,000. The Base Salary shall be
reviewed at least annually and shall be increased pursuant to such review by a
percentage no less than the percentage increase in the consumer price index, as
published by the Bureau of Labor Statistics of the U.S. Department of Labor, for
the calendar year immediately preceding such review. Any increase in Base Salary
or other compensation granted by the compensation committee of the Board shall
in no way limit or reduce any other obligation of the Company hereunder. Once
established at an increased specified rate, the Base Salary hereunder shall not
thereafter be reduced, and the term Base Salary used in this Agreement shall
refer to the Base Salary as so increased.
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3.2 BONUS. In addition to his Base Salary, in the
discretion of the Board, the Employee may be awarded for each calendar year
during the Term an annual bonus (an "Annual Bonus") either pursuant to a bonus
or incentive plan of the Company or otherwise on terms no less favorable than
those awarded to other executive officers of the Company.
4. WARRANTS. The Employee shall be entitled to purchase shares of
the Company's common stock pursuant to a warrant certificate issued to the
Employee concurrent herewith.
5. BENEFITS. The Employee shall be entitled to all benefits and
conditions of employment provided by the Company to its executive officers,
including, without limitation, insurance, participation in the Company's
vacation policy, and participation in any stock option or incentive compensation
plans, pension, profit sharing or other retirement plans, subject (in each case)
to the terms of such plans and any provisions, rules, regulations and laws
applicable to such plans.
6. REIMBURSEMENT FOR BUSINESS EXPENSES. The Employee shall be
reimbursed for all reasonable out-of-pocket business expenses incurred by him in
the direct performance of his duties during his employment with the Company
pursuant to the terms of this Agreement and in accordance with the Company's
policies in effect from time to time. All requests for reimbursement shall be
substantiated by invoices and other pertinent data reasonably satisfactory to
the Company.
7. PERFORMANCE. The Employee shall devote all of his working time
and efforts to the business and affairs of the Company and to the diligent
performance of the duties and responsibilities assigned to him pursuant to this
Agreement, except for vacations, weekends and holidays. Notwithstanding the
foregoing, the Employee may render charitable, civic and outside board services
so long as such services do not materially interfere with the Employee's ability
to discharge his duties, including, without limitation, such outside services as
the Employee is currently performing.
8. NON-DISCLOSURE OF PROPRIETARY INFORMATION; NON-COMPETITION;
NON-SOLICITATION.
8.1. CONFIDENTIAL INFORMATION; TRADE SECRETS. As used in
this Agreement, the term "Confidential Information" shall mean valuable,
non-public, competitively sensitive data and information relating to the
Company's business or the business of any entity affiliated with the Company,
other than (i) Trade Secrets (as defined below); (ii) information contained in
any publicly available press release, a regulatory filing or other public
communication which is otherwise in the public domain on the date of this
Agreement; (iii) information that hereafter enters the public domain through no
action on the part of the Employee; (iv) information that is known by the
Employee or becomes available to him from a source other than the Company or any
of its affiliates, provided that such information was not obtained as a result
of a breach of any confidentiality obligation by the source of such information;
(v) information that was already in the possession of the
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Employee prior to the date hereof and which was not acquired from the Company or
any of its affiliates; or (vi) information obtained from discovery in a legal
proceeding, but only to the extent such information is used in such a
proceeding. "Confidential Information" shall include, among other things,
information specifically designated as a Trade Secret that is, notwithstanding
the designation, determined by a court of competent jurisdiction not to be a
"trade secret" under applicable law. As used in this Agreement, the term "Trade
Secrets" shall mean information or data of or about the Company or any entity
affiliated with the Company, including, without limitation, technical or
non-technical data, formulas, patterns, compilations, programs, devices,
methods, techniques, drawings, processes, financial data, financial plans,
product plans, or lists of actual or potential customers or suppliers, that (i)
derive economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from their disclosure or use; and (ii) are subject of
efforts that are reasonable under the circumstances to maintain their secrecy.
To the extent that the foregoing definition is inconsistent with a definition of
"trade secret" under applicable law, the foregoing definition shall be deemed
amended to the extent necessary to render it consistent with applicable law.
8.2. NON-DISCLOSURE. The Employee will be exposed to Trade
Secrets and Confidential Information as a result of his employment by the
Company as provided in this Agreement. The Employee acknowledges and agrees that
any unauthorized disclosure or use of any of the Trade Secrets or Confidential
Information of the Company would be wrongful and would likely result in
immediate and irreparable injury to the Company. In consideration of the
Employee's right to employment (or continued employment) under the terms of this
Agreement, except as appropriate in connection with the performance of his
obligations under this Agreement, the Employee shall not, without the express
prior written consent of an executive officer of the Company other than the
Employee, redistribute, market, publish, disclose or divulge to any other person
or entity, or use or modify for use, directly or indirectly, in any way for any
person or entity (i) any Confidential Information during the Term of this
Agreement and for a period of two (2) years after the final date of the Term of
this Agreement; and (ii) any Trade Secrets at any time (during or after the Term
of this Agreement) during which such information or data shall continue to
constitute a "trade secret" under applicable law. The Employee agrees to
cooperate with any reasonable confidentiality requirements of the Company. The
Employee shall immediately notify the Company of any unauthorized disclosure or
use of any Trade Secrets or Confidential Information of which the Employee
becomes aware.
8.3. NON-COMPETITION. The Employee shall not, either
directly or indirectly, alone or in partnership, manage, control, operate or own
any business that is substantially similar to the business of the Company during
the term hereof in any geographic area of the United States of America (a
"Competing Business") during the term hereof and, if the Employee's employment
with the Company shall be terminated pursuant to Section 12.1 or Section 12.3
hereof, during the one (1) year period following the term hereof, except that
the Employee may own up to three percent (3%) of the outstanding securities of a
Competing Business the securities of which are registered with the Securities
and Exchange
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Commission if such Competing Business is subject to the periodic reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act").
8.4. NON-SOLICITATION. For a period of one (1) year
immediately following any termination of the Employee's employment (other than a
termination pursuant to Section 12.2. or Section 12.4 hereof), the Employee will
not solicit, or participate in any solicitation of, the customers, suppliers,
employees or representatives of the Company (or any of its subsidiaries or
affiliated companies) to breach any contract with the Company, terminate any
relationship with the Company or leave the Company. For purposes of this
Agreement, customers shall be limited to actual customers or actively-sought
prospective customers of the Company or any subsidiary or affiliate of the
Company with whom the Employee has had substantial contact during the Term of
this Agreement.
9. CERTAIN DEFINITIONS.
9.1. ACCRUED COMPENSATION. For purposes of this Agreement,
"Accrued Compensation" shall mean an amount which shall include all amounts
earned or accrued through the "Termination Date" (as hereinafter defined) but
not paid as of the Termination Date, including, without limitation, (i) Base
Salary, (ii) reimbursement for reasonable and necessary expenses incurred by the
Employee on behalf of the Company during the period ending on the Termination
Date, (iii) vacation pay, (iv) bonuses, including, without limitation, any
Annual Bonus, and incentive compensation, and (v) all other amounts to which the
Employee is entitled under any compensation plan of the Company at the times
such payments are due.
9.2. BASE AMOUNT. For purposes of this Agreement, "Base
Amount" shall mean the Employee's annual Base Salary at the highest rate in
effect on, or at any time during the ninety (90) day period prior to, the
Termination Date and shall include all amounts of the Employee's Base Salary
that are deferred under any qualified and non-qualified employee benefit plans
of the Company or any other agreement or arrangement.
9.3. CAUSE. For purposes of this Agreement, a termination
of employment is for "Cause" if the Employee has been convicted of a felony or
if the termination is evidenced by a resolution adopted in good faith by
two-thirds (2/3) of the Board that the Employee (i) intentionally and
continually failed substantially to perform his reasonably assigned duties with
the Company (other than a failure resulting from the Employee's incapacity due
to physical or mental illness or from the Employee's assignment of duties that
would constitute "Good Reason" (as hereinafter defined)) which failure continued
for a period of at least thirty (30) days after a written notice of demand for
substantial performance has been delivered to the Employee specifying the manner
in which the Employee has failed substantially to perform, or (ii) intentionally
engaged in illegal conduct or gross misconduct which results in material
economic harm to the Company; provided, however, that (A) where the Employee has
been terminated for Cause because a felony prosecution has been brought against
him and no conviction or plea of guilty or plea of nolo contendere or its
equivalent results therefrom, then said termination shall no longer be deemed to
have been for Cause
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and the Employee shall be entitled to all the benefits provided by Section
11.1(i) hereof from and after the date on which the prosecution of the Employee
has been dismissed or a judgement of acquittal has been entered, whichever shall
first occur; and (B) no termination of the Employee's employment shall be for
Cause as set forth in clause (ii) above until (x) there shall have been
delivered to the Employee a copy of a written notice setting forth that the
Employee was guilty of the conduct set forth in clause (ii) and specifying the
particulars thereof in detail, and (y) the Employee shall have been provided an
opportunity to be heard in person by the Board (with the assistance of the
Employee's counsel if the Employee so desires). No act, or failure to act, on
the Employee's part shall be considered "intentional" unless the Employee has
acted or failed to act with a lack of good faith and with a lack of reasonable
belief that the Employee's action or failure to act was in the best interests of
the Company. Any act, or failure to act, based upon authority given pursuant to
a resolution duly adopted by the Board or upon the instructions of any senior
officer of the Company or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the Employee in
good faith and in the best interests of the Company. Any termination of the
Employee's employment by the Company hereunder shall be deemed to be a
termination other than for Cause unless it meets all requirements of this
Section 9.3.
9.4. CHANGE IN CONTROL. For purposes of this Agreement, a
"Change in Control" shall have occurred if:
(i) a majority of the directors of the Company
shall be persons other than persons: (A) for whose election proxies shall have
been solicited by the Board, or (B) who are then serving as directors appointed
by the Board to fill vacancies on the Board caused by death or resignation (but
not by removal) or to fill newly-created directorships;
(ii) a majority of the outstanding voting power
of the Company shall have been acquired or beneficially owned (as defined in
Rule 13d-3 under the 1934 Act or any successor rule thereto) by any person
(other than the Company, a subsidiary of the Company or the Employee) or Group
(as defined below), which Group does not include the Employee; or
(iii) there shall have occurred:
(A) a merger or consolidation of the
Company with or into another corporation (other than (1) a merger or
consolidation with a subsidiary of the Company or (2) a merger or consolidation
in which (a) the holders of voting stock of the Company immediately prior to the
merger as a class continue to hold immediately after the merger at least a
majority of all outstanding voting power of the surviving or resulting
corporation or its parent and (b) all holders of each outstanding class or
series of voting stock of the Company immediately prior to the merger or
consolidation have the right to receive substantially the same cash, securities
or other property in exchange for their voting stock of the Company as all other
holders of such class or series);
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(B) a statutory exchange of shares of
one or more classes or series of outstanding voting stock of the Company for
cash, securities or other property;
(C) the sale or other disposition of
all or substantially all of the assets of the Company (in one transaction or a
series of transactions); or
(D) the liquidation or dissolution of
the Company;
unless more than twenty-five percent (25%) of the voting stock (or the voting
equity interest) of the surviving corporation or the corporation or other entity
acquiring all or substantially all of the assets of the Company (in the case of
a merger, consolidation or disposition of assets) or of the Company or its
resulting parent corporation (in the case of a statutory share exchange) is
beneficially owned by the Employee or a Group that includes the Employee.
9.5. GROUP. For purposes of this Agreement, "Group" shall
mean any two or more persons acting as a partnership, limited partnership,
syndicate, or other group acting in concert for the purpose of acquiring,
holding or disposing of voting stock of the Company.
9.6. DISABILITY. For purposes of this Agreement,
"Disability" shall mean a physical or mental infirmity which impairs the
Employee's ability to substantially perform his duties with the Company for a
period of one hundred eighty (180) consecutive days and the Employee has not
returned to his full time employment prior to the Termination Date as stated in
the "Notice of Termination" (as hereinafter defined).
9.7. GOOD REASON.
9.7.1. For purposes of this Agreement, "Good
Reason" shall mean a good faith determination by the Employee, in the Employee's
sole and absolute judgment, that any one or more of the following events has
occurred, without the Employee's express written consent:
(i) the assignment to the Employee of
any duties inconsistent with the Employee's position (including, without
limitation, status, titles and reporting requirements), authority, duties or
responsibilities as in effect immediately prior to the date of such assignment,
or any other action by the Company that results in a material diminution in such
position, authority, duties or responsibilities, excluding for this purpose
isolated and inadvertent action not taken in bad faith and remedied by the
Company promptly after receipt of notice thereof given by the Employee;
(ii) a reduction by the Company in the
Employee's Base Salary, as the same may be increased from time to time, or a
change in the eligibility requirements or performance criteria under any bonus,
incentive or compensation plan, program or arrangement under which the Employee
is covered immediately prior to the Termination Date which adversely affects the
Employee;
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(iii) any failure to pay the Employee any
compensation or benefits to which he is entitled within five (5) days of the
date due after notice of the failure to so pay is given by the Employee;
(iv) the Company's requiring the
Employee to be based anywhere other than within fifty (50) miles of the
Employee's job location as of the date hereof, except for reasonably required
travel on the Company's business which is not greater than such travel
requirements prior to the date hereof;
(v) the taking of any action by the
Company that would materially adversely affect the physical conditions existing
in or under which the Employee performs his employment duties;
(vi) the insolvency or the filing (by
any party, including the Company) of a petition for bankruptcy by the Company;
(vii) any purported termination of the
Employee's employment for Cause by the Company which does not comply with the
terms of Section 9.3 hereof; or
(viii) any breach by the Company of any
provision of this Agreement.
9.7.2. The Employee's right to terminate his
employment pursuant to this Section 9 shall not be affected by his incapacity
due to physical or mental illness.
9.8. NOTICE OF TERMINATION. For purposes of this
Agreement, "Notice of Termination" shall mean a written notice of termination
from the Company of the Employee's employment which indicates the specific
termination provision in this Agreement relied upon and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so indicated.
9.9. TERMINATION DATE. For purposes of this Agreement,
"Termination Date" shall mean, in the case of the Employee's death, his date of
death, in the case of the Employee's voluntary termination, the last day of
employment, and in all other cases (other than in the case of a successor or an
assignee, which is provided for in Section 13.1 hereof), the date specified in
the Notice of Termination; provided, however, that if the Employee's employment
is terminated by the Company for Cause or due to Disability, the date specified
in the Notice of Termination shall be at least thirty (30) days from the date
the Notice of Termination is given to the Employee; and provided further that in
the case of Disability the Employee shall not have returned to the full-time
performance of his duties during such period of at least thirty (30) days.
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10. BENEFITS AND PAYMENTS UPON TERMINATION OF EMPLOYMENT.
10.1. COMPENSATION AND BENEFITS. If, during the term of
this Agreement, the Employee's employment with the Company shall be terminated,
the Employee shall be entitled to the following compensation and benefits in the
following circumstances:
(i) If the Employee's employment with the
Company shall be terminated (A) by the Company for Cause or Disability; (B) by
reason of the Employee's death; or (C) by the Employee pursuant to Section 12.3
hereof, then the Company shall pay to the Employee all Accrued Compensation.
(ii) If the Employee's employment with the
Company shall be terminated (A) by the Company pursuant to Section 12.2 hereof
or (B) by the Employee pursuant to Section 12.4 hereof, then the Employee shall
be entitled to the following:
(1) the Company shall pay the Employee
all Accrued Compensation;
(2) the Company shall pay the Employee
as severance pay and in lieu of any further compensation for periods subsequent
to the Termination Date an amount in cash equal to two (2) times the Base
Amount;
(3) for twenty-four (24) months or such
longer period as may be provided by the terms of the appropriate program,
practice or policy, the Company shall, at its expense, continue on behalf of the
Employee and his dependents and beneficiaries the life insurance, disability,
medical, dental and hospitalization benefits generally made available to the
Company's executive officers at any time during the 90-day period prior to the
Termination Date or at any time thereafter, provided that (i) the Company's
obligation hereunder with respect to the foregoing benefits shall be limited to
the extent that the Employee obtains any such benefits pursuant to a subsequent
employer's benefit plans, in which case the Company may reduce the coverage of
any benefits it is required to provide the Employee hereunder as long as the
aggregate coverages and benefits of the combined benefit plans are no less
favorable to the Employee than the coverages and benefits required to be
provided hereunder, and (ii) this clause (3) shall not be interpreted so as to
limit any benefits to which the Employee or his dependents or beneficiaries may
be entitled under any of the Company's employee benefit plans, programs or
practices following the Employee's termination of employment, including, without
limitation, retiree medical and life insurance benefits; and
(4) the restrictions on any outstanding
incentive awards (including, without limitation, restricted stock and granted
performance shares or units) under any incentive plan or arrangement shall lapse
and such incentive award shall become 100% vested, all stock options, warrants
and stock appreciation rights granted to the Employee on or prior to the date of
this Agreement shall become immediately exercisable and 100% vested and,
notwithstanding anything to the contrary contained in the plan,
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agreement or other instrument relating to such stock option, warrant or stock
appreciation rights with regard to the period of time within which such stock
option, warrant or stock appreciation rights must be exercised following the
Employee's termination of employment or provision of services to the Company,
all such stock options, warrants and stock appreciation rights may be exercised
at any time and from time to time until the one (1) year anniversary of the
Termination Date, and all performance units granted to the Employee shall become
100% vested.
(iii) The amounts provided for in subsection
10.1(i) shall be payable to Employee in a lump-sum on the Termination Date, and
the amounts provided for in subsection 10.1(ii) shall be payable to the Employee
in substantially equal bi-weekly installments for a twenty-four (24) month
period commending on the Termination Date and otherwise in accordance with the
Company's payroll practices in effect from time to time.
(iv) The Employee shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, and no such payment shall be offset or reduced by
the amount of any compensation or benefits provided to the Employee in any
subsequent employment, except as provided in subsection 10.1(ii)(3).
10.2. NO SEVERANCE. The severance pay and benefits provided
for in this Section 10 shall be in lieu of any other severance or termination
pay to which the Employee may be entitled under any Company severance or
termination plan, program, practice or arrangement.
10.3. OTHER COMPENSATION AND BENEFITS. The Employee's
entitlement to any other compensation or benefits shall be determined in
accordance with the Company's employee benefit plans and other applicable
programs, policies and practices then in effect.
11. GROSS-UP PAYMENTS.
11.1. ADDITIONAL PAYMENTS. Anything in this Agreement to
the contrary notwithstanding and except as set forth below, in the event it
shall be determined that any payment or distribution by the Company to or for
the benefit of the Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
11) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Employee with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Employee of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
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Notwithstanding the foregoing provisions of this Section 11.1, if it shall be
determined that the Employee is entitled to a Gross-Up Payment, but that the
Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that
could be paid to the Employee such that the receipt of Payments would not give
rise to any Excise Tax, then no Gross-Up Payment shall be made to the Employee
and the Payments, in the aggregate, shall be reduced to the Reduced Amount.
11.2 DETERMINATION. Subject to the provisions of Section
11.3, all determinations required to be made under this Section 11, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by a nationally-recognized accounting firm selected by the Company
and reasonably acceptable to the Employee (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the Employee
within fifteen (15) business days of the receipt of notice from the Employee
that there has been a Payment, or such earlier times as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne solely by
the Company. Any Gross-Up Payment, as determined pursuant to this Section 11,
shall be paid by the Company to the Employee within five (5) days of the receipt
of the Accounting Firm's determination. Any determination by the accounting Firm
shall be binding upon the Company and the Employee. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 11.3 and the Employee thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee.
11.3 INTERNAL REVENUE SERVICE CLAIM. The Employee shall
notify the Company in writing of any claim by the Internal Revenue Service that,
if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten
(10) business days after the Employee is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Employee shall not pay such claim prior to
the expiration of the 30-day period following the date on which the Employee
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies
the Employee in writing prior to the expiration of such period that it desires
to contest such claim, the Employee shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim;
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(ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in
order effectively to contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, without limitation, additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Employee harmless, on an after-tax basis, for any Excise Tax or income tax
(including, without limitation, interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 11.3, the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Employee to pay the
tax claimed and xxx for a refund or contest the claim in any permissible manner,
and the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Employee to pay such claim and xxx for a refund, the Company
shall advance the amount of such payment to the Employee on an interest-free
basis and shall indemnify and hold the Employee harmless, on an after-tax basis,
from any Excise Tax or income tax (including, without limitation, interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Employee with respect to which such contested amount
is claimed to be due is limited solely to such contested amount. Furthermore,
the Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Employee shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
11.4 REFUNDS. If, after the receipt by the Employee of an
amount advanced by the Company pursuant to Section 11.3, the Employee becomes
entitled to receive any refund with respect to such claim, then the Employee
shall (subject to the Company's complying with the requirements of Section 11.3)
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Employee of an amount advanced by the Company pursuant to Section
11.3, a determination is made that the Employee shall not be entitled to any
refund with respect to such claim and the Company does not notify the Employee
in
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writing of its intent to contest such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
12. TERMINATION. The Employee's employment hereunder may be
terminated without any breach of this Agreement only in accordance with this
Section 12.
12.1. TERMINATION BY THE COMPANY FOR CAUSE. The Company may
terminate the Employee's employment at any time for Cause by providing to the
Employee a Notice of Termination, whereupon the Employee shall be entitled to
all of the benefits and payments provided for under Section 10 hereof.
12.2. TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company
may terminate the Employee's employment at any time without Cause by providing
to the Employee a Notice of Termination, whereupon the Employee shall be
entitled to all of the benefits and payments provided for under Section 10
hereof.
12.3. TERMINATION BY THE EMPLOYEE. The Employee's
employment may be terminated by the Employee at any time by providing the
Company with notice of such termination and specifying in the notice the
effective date of such termination, which shall not be less than one hundred
twenty (120) days after giving such notice, whereupon the Employee's employment
shall terminate on the date specified in such notice and the Employee shall be
entitled to all of the benefits and payments provided for under Section 10
hereof; provided, however, that following receipt of such notice, the Company
may specify, in its discretion, the date on which the Employee's employment
shall terminate so long as the date so specified is not more than one hundred
twenty (120) days after the date on which the Employee shall have given notice,
in which case the Employee's employment shall terminate on the date so specified
by the Company.
12.4. TERMINATION BY THE EMPLOYEE FOR GOOD REASON FOLLOWING
A CHANGE OF CONTROL. For a (1) year period following a Change of Control, the
Employee's employment may be terminated by the Employee for Good Reason at any
such time during such one (1) year period by providing the Company with a notice
of such termination and specifying in the notice the effective date of such
termination, whereupon the Employee's employment shall terminate on the date
specified in such notice and the Employee shall be entitled to all of the
benefits and payments provided for under Section 10 hereof.
12.5. TERMINATION UPON DISABILITY. The Company may
terminate the Employee's employment upon the Disability of the Employee by
providing to the Employee a Notice of Termination, whereupon the Employee shall
be entitled to all of the benefits and payments provided for under Section 10
hereof.
12.6. DEATH. In the event of the Employee's death during
his employment hereunder, the Employee's employment shall be automatically
terminated, whereupon the
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Employee shall be entitled to all of the benefits and payments provided for
under Section 10 hereof.
13. SUCCESSORS AND ASSIGNS.
13.1. ASSUMPTION AND AGREEMENT. This Agreement shall be
binding upon and shall inure to the benefit of the Company, its successors and
assigns, and the Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) or assign, by agreement in form
and substance satisfactory to the Employee, 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 or assignment had
taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession or assignment shall be a
breach of this Agreement and shall entitle the Employee to compensation from the
Company in the same amount and on the same terms as he would be entitled to
hereunder if his employment had been terminated pursuant to Section 12.2 hereof,
except that for purposes of implementing the foregoing, the date on which any
such succession or assignment becomes effective shall be deemed the Termination
Date hereunder. As used in the Agreement, Company shall mean the Company as
hereinbefore defined and any successor or assign that executes and delivers the
agreement provided for in this Section 13.1 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
13.2. RIGHTS OF EMPLOYEE. This Agreement and all rights of
the Employee hereunder shall inure to the benefit of and be enforceable by the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees. If the Employee should
die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Employee's devise,
legatee or other designee or, if there be no such designee, to the Employee's
estate.
14. INJUNCTIVE RELIEF. The Company and the Employee agree that
damages are an inadequate remedy for, and that the Company or any successor to
the business of the Company would be irreparably harmed by, any breach of
Section 8 of this Agreement, and that the Company, any successor to the business
of the Company or any permitted assignee of the Company shall be entitled to
equitable relief in the form of a preliminary or permanent injunction upon any
breach of Section 8 hereof.
15. NOTICES. For the purpose of this Agreement, notices and all
other communications to either party hereunder provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when delivered
in person or mailed by first-class mail or airmail, postage prepaid, addressed:
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If to the Employee:
Xx. Xxxxx X. Xxxxxxx
0000 Xxxxxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxx 00000
If to the Company:
Verso Technologies, Inc.
000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: President
or to such other address(es) as either party may have furnished to the other
party in writing in accordance with this Section.
16. MISCELLANEOUS. No provision of this Agreement may be amended,
modified or waived unless such amendment, modification or waiver (i) is agreed
to in writing and is signed by the Employee and a representative of the Company,
its successor or permitted assignee and (ii) has been approved by the Board, its
successor or any permitted assignee of the Company. No waiver by either party to
this Agreement at any time of breach by the other party of, or compliance by the
other party with, any condition or provision of this Agreement to be performed
by the other party shall be deemed to be a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time. No
agreements or representations, oral or otherwise, expressed or implied, with
respect to the subject matter of this Agreement have been made by either party
that are not expressly set forth in this Agreement.
17. VALIDITY . The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of the other provisions of this Agreement, which other provisions shall remain
in full force and effect, nor shall the invalidity or unenforceability of a
portion of any provision of this Agreement affect the validity or enforceability
of the balance of such provision.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute a single agreement.
19. HEADINGS. The headings of the paragraphs contained in this
Agreement are for reference purposes only and shall not, in any way, affect the
meaning or interpretation of any provision of this Agreement.
20. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal substantive laws, and not the choice
of law rules, of the State of Georgia.
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21. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof, other than the provisions of
Section 8 hereof, shall, on the written request of one party served upon the
other, be settled by binding arbitration in Xxxxxx County, Georgia in accordance
with the commercial arbitration rules then recognized by the American
Arbitration Association, and judgment upon the award rendered may be entered and
enforced in any court having jurisdiction thereof.
22. FEES AND EXPENSES. The Company shall pay all legal fees and
related expenses incurred by the Employee as they become due as a result of or
in connection with (i) the Employee's termination of employment (including,
without limitation, all such fees and expenses, if any, incurred in contesting
or disputing any such termination of employment), (ii) the Employee seeking to
obtain or enforce any right or benefit provided by this Agreement (including,
without limitation, any such fees and expenses incurred in connection therewith)
or by any other plan or arrangement maintained by the Company under which the
Employee is or may be entitled to receive benefits, (iii) the Employee's hearing
before the Board as contemplated in Section 9.3 of this Agreement, (iv) any tax
audit or proceeding to the extent attributable to the application of any Excise
Tax with respect to any Payment or Payments hereunder, plus in each case
interest on any delayed payment at the "Applicable Federal Rate," as defined in
Section 1274(d) of the Code, as then in effect, and (v) the preparation and
execution of this Agreement.
23. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements (if
any), understandings and arrangements (oral or written) between the parties
hereto, including, without limitation, that certain Executive Employment
Agreement between the Employee and Cereus Technology Partners, Inc, now a
wholly-owned subsidiary of the Company, dated as of January 10, 2000.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and delivered by its duly authorized officer, and the Employee has
executed and delivered this Agreement, all as of the date first written above.
VERSO TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Its: Executive Vice President
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Chief Financial Officer
---------------------------
/s/ Xxxxx X. Xxxxxxx
-------------------------------------
XXXXX X. XXXXXXX
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