CHANGE IN CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT
by and between P.H. Glatfelter Company (the “Company”),
and George H. Glatfelter II (the “Employee”), dated as
of the 3rd day of December, 2008 [This Agreement replaces the
Change in Control Employment Agreement between the parties dated as
of March 7, 2008.]
The Board of
Directors of the Company (the “Board”) has determined
that it is in the best interests of the Company and its
shareholders to ensure that the Company and its subsidiaries will
have the continued dedication of the Employee, notwithstanding the
possibility, threat, or occurrence of a Change in Control (as
defined below) of the Company. The Board believes it is imperative
to diminish the inevitable distraction of the Employee by virtue of
the personal uncertainties and risks created by a threatened or
pending Change in Control, to encourage the Employee’s full
attention and dedication to the Company currently and in the event
of any threatened or pending Change in Control, and to provide the
Employee with compensation arrangements upon a Change in Control
that provide the Employee with individual financial security and
which are competitive with those of other comparably situated
companies and, in order to accomplish these objectives, the Board
has authorized the Company to enter into this Agreement.
NOW,
THEREFORE , the parties hereto, intending to be legally bound,
agree as follows:
(a) The
“Effective Date” shall be the first date during the
“Change in Control Period” (as defined in
Section 1(b)) on which a Change in Control occurs. Anything
in
this Agreement
to the contrary notwithstanding, if the Employee’s employment
with the Company is terminated prior to the date on which a Change
in Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has
taken steps reasonably calculated to effect a Change in Control or
(ii) otherwise arose in connection with or anticipation of a
Change in Control, then for all purposes of this Agreement the
“Effective Date” shall mean the date immediately prior
to the date of such termination.
(b) The
“Change in Control Period” is the period commencing on
the date hereof and ending on the second December 31
immediately following such date; provided , however ,
that commencing on the first December 31 immediately following
the date hereof, and on each annual anniversary of such
December 31 (such December 31 and each annual anniversary
thereof is hereinafter referred to as the “Renewal
Date”), the Change in Control Period shall be automatically
extended so as to terminate two years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company
shall give notice that the Change in Control Period shall not be so
extended.
(c) Neither
the Employee nor the Company shall have any obligations under this
Agreement in the event that (i) prior to the Effective Date,
the Change in Control Period expires as set forth in paragraph
(b) without renewal, or (ii) the Employee’s
employment with the Company is terminated for any reason prior to
the Effective Date. In such event, the obligations of the Employee
and Company shall be limited to such obligations as exist under
Company policy or agreement, applicable law, and/or the terms of
Company’s benefit plans, without regard to this
Agreement.
2.
Change in Control . For the purpose of this
Agreement, a “Change in Control” shall mean:
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(a) Any
person, entity or “group” (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), excluding, for
this purpose, the Company, its subsidiaries, any employee benefit
plan of the Company or its subsidiaries, and any purchaser or group
of purchasers who are descendants of, or entities controlled by
descendants of, P.H. Glatfelter which acquires beneficial ownership
of voting securities of the Company) (a “Third Party”)
becomes the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company’s then outstanding voting
securities entitled to vote generally in the election of directors,
other than in connection with an acquisition from the Company;
or
(b) Individuals
who, as of the date hereof, constitute the Board (the
“Incumbent Directors”) cease in any twelve
(12) month period for any reason to constitute at least a
majority of the Board, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a
vote of at least a majority of the Incumbent Directors who are
directors at the time of such vote shall be, for purposes of this
Agreement, an Incumbent Director, but, excluding for this purpose,
any such person whose initial election as a member of the Board
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Third Party other than the Board; or
(c) Consummation
of (i) a reorganization, merger or consolidation, in each
case, with respect to which persons who were the shareholders of
the Company immediately prior to such reorganization, merger or
consolidation (other than the acquiror) do
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not,
immediately thereafter, beneficially own more than 50% of the
combined voting power of the reorganized, merged or consolidated
company’s then outstanding voting securities entitled to vote
generally in the election of directors, or (ii) a liquidation
or dissolution of the Company or the sale of all or substantially
all of the assets of the Company (whether such assets are held
directly or indirectly) to a Third Party.
3.
Employment Period . The Company hereby agrees to
continue the Employee in its employ, and the Employee hereby agrees
to remain in the employ of the Company, for the period commencing
on the Effective Date and ending on the second anniversary of such
date (the “Employment Period”).
(a)
Position and Duties .
(i) During
the Employment Period,
(A) the
Employee’s position (including status, offices, titles and
reporting requirements), authority, duties and responsibilities
shall be at least commensurate in all material respects with the
most significant of those held, exercised and assigned at any time
during the 90-day period immediately preceding the Effective Date
and
(B) the
Employee’s services shall be performed at the location where
the Employee was employed immediately preceding the Effective Date
or any office or location less than forty (40) miles from such
location.
(ii) During
the Employment Period, excluding any periods of vacation and sick
leave to which the Employee is entitled, the Employee agrees to
devote reasonable attention and time during normal business hours
to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the
Employee
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hereunder, to
use the Employee’s reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for
the Employee to
(A) serve
on corporate, civic or charitable boards or committees,
(B) deliver
lectures, fulfill speaking engagements or teach at educational
institutions, and
(C) manage
personal investments,
so long as such
activities do not significantly interfere with the performance of
the Employee’s responsibilities as an employee of the Company
in accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been
conducted by the Employee prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the
performance of the Employee’s responsibilities to the
Company.
(iii) During
the Employment Period, the Employee shall be subject to, and shall
comply with, the Company’s policies regarding sexual
harassment, insider trading, confidentiality, non-disclosure,
non-competition, non-disparagement, substance abuse, and conflicts
of interest and any other written policy of the Company, the
violation of which could result in termination of
employment.
(i)
Base Salary . During the Employment Period, the Employee
shall receive a base salary (“Base Salary”) at a
monthly rate at least equal to the
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highest monthly
base salary paid or payable to the Employee by the Company during
the twelve-month period immediately preceding the month in which
the Effective Date occurs. During the Employment Period, the Base
Salary shall be reviewed at least annually and shall be increased
at any time and from time to time as shall be substantially
consistent with increases in base salary awarded in the ordinary
course of business to other key employees of the Company and its
subsidiaries in the same salary grade (or, if there are no salary
grades, to other key employees of the Company and its subsidiaries
in comparable positions). Any increase in Base Salary shall not
serve to limit or reduce any other obligation to the Employee under
this Agreement. Base Salary shall not be reduced after any such
increase.
(ii)
Annual Bonus . In addition to Base Salary, the Employee
shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (an “Annual Bonus”), either
pursuant to the Company’s Management Incentive Plan or
otherwise, in cash at least equal to the average Annual Bonus paid
to the Employee for each of the three fiscal years immediately
preceding the Effective Date (or for such fewer number of such
years as the Employee has been employed by the Company, with the
bonus for any partial year in such period being annualized), but
not less than the target bonus for the Employee under the
Company’s Management Incentive Plan for the fiscal year
during which the Effective Date occurs, provided that the Employee
is employed as of the last day of the fiscal year in respect of
which such Annual Bonus is paid.
(iii)
Incentive, Savings and Retirement Plans . In addition to
Base Salary and Annual Bonus payable as hereinabove provided, the
Employee shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans, practices,
policies and programs applicable to other key employees of the
Company and its
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subsidiaries
(including the 2005 Long-Term Incentive Plan or any successor
thereto). Such plans, practices, policies and programs, in the
aggregate, shall provide the Employee with compensation, benefits
and reward opportunities at least as favorable as the most
favorable of such compensation, benefits and reward opportunities
provided by the Company to the Employee under such plans,
practices, policies and programs as in effect at any time during
the 90-day period immediately preceding the Effective Date or, if
more favorable to the Employee, as provided at any time thereafter
with respect to other key employees of the Company and its
subsidiaries in the same salary grade (or, if there are no salary
grades, to other key employees of the Company and its subsidiaries
in comparable positions).
(iv)
Welfare Benefit Plans . During the Employment Period, the
Employee and/or the Employee’s covered dependents, as the
case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company and its subsidiaries
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs),
at least as favorable as the most favorable of such plans,
practices, policies and programs of the Company and its
subsidiaries in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Employee and/or the Employee’s covered dependents, as
applicable, as in effect at any time thereafter with respect to
other key employees of the Company and its subsidiaries in the same
salary grade (or, if there are no salary grades, to other key
employees of the Company and its subsidiaries in comparable
positions).
(v)
Expenses . During the Employment Period, the Employee shall
be entitled to receive prompt reimbursement for all reasonable
business expenses incurred
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by the Employee
in accordance with the most favorable policies, practices and
procedures of the Company and its subsidiaries in effect at any
time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Employee, as in effect at any
time thereafter with respect to other key employees of the Company
and its subsidiaries in the same salary grade (or, if there are no
salary grades, to other key employees of the Company and its
subsidiaries in comparable positions). Notwithstanding anything to
the contrary in the preceding sentence, the amount of expenses
eligible for reimbursement during a calendar year may not affect
the expenses eligible for reimbursement in any other calendar year
and all reimbursements must be made on or before the last day of
the calendar year following the calendar year in which the expense
was incurred.
(vi)
Fringe Benefits . During the Employment Period, the Employee
shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company
and its subsidiaries in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Employee, as in effect at any time thereafter with respect to
other key employees of the Company and its subsidiaries in the same
salary grade (or, if there are no salary grades, to other key
employees of the Company and its subsidiaries in comparable
positions).
(vii)
Vacation . During the Employment Period, the Employee shall
be entitled to paid holidays and vacation in accordance with the
most favorable plans, policies, programs and practices of the
Company and its subsidiaries as in effect at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Employee, as in effect at any time thereafter with
respect to other key employees of the
8
Company and its
subsidiaries in the same salary grade (or, if there are no salary
grades, to other key employees of the Company and its subsidiaries
in comparable positions).
(a)
Death or Disability . This Agreement shall
terminate automatically upon the Employee’s death. If the
Company determines in good faith that the Disability of the
Employee has occurred (pursuant to the definition of
“Disability” set forth below), it may give to the
Employee written notice of its intention to terminate, or its
intention to cause its subsidiary to terminate, the
Employee’s employment. In such event, the Employee’s
employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Employee (the
“Disability Effective Date”), provided that, within
30 days after such receipt, the Employee shall not have
returned to full-time performance of the Employee’s duties.
For purposes of this Agreement, a “Disability” shall
occur if the Employee, by reason of any medically determinable
physical or mental impairment, is determined to be disabled and
eligible for benefits under the terms of the Company’s
long-term disability plan or policy applicable to the Employee.
Such determination of Disability shall be made by the plan
administrator or insurer with respect to such Company long-term
disability plan or policy.
(b)
Cause . The Company may terminate the
Employee’s employment pursuant to this Agreement for
“Cause.” For purposes of this Agreement,
“Cause” means (i) an act or acts of personal
dishonesty taken by the Employee and intended to result in
substantial personal enrichment of the Employee at the expense of
the Company, (ii) repeated violations by the Employee of the
Employee’s obligations under Section 4(a) of this Agreement
or illegal conduct or gross misconduct by the Employee which is
materially injurious to the Company and which violations, conduct
or misconduct are demonstrably willful and deliberate on
the
9
Employee’s part and which are not remedied
within thirty (30) days after receipt of written notice from
the Company, (iii) violation by the Employee of any of the
Company’s policies, including, but not limited to, policies
regarding sexual harassment, insider trading, confidentiality,
non-disclosure, non-competition, non-disparagement, substance abuse
and conflicts of interest and any other written policy of the
Company, which violation could result in the termination of the
Employee’s employment; or (iv) the conviction of the
Employee of a felony which is materially injurious to the Company
or a plea by the Employee of guilty or no contest to a charge of a
felony which is materially injurious to the Company.
(c)
Good Reason . The Employee’s employment
pursuant to this Agreement may be terminated by the Employee for
Good Reason. For purposes of this Agreement, “Good
Reason” means
(i) a
material diminution in the Employee’s authority, duties or
responsibilities, including without limitation a material
diminution in the authority, duties or responsibilities of the
supervisor to whom the Employee is expected to report;
(ii) a
material diminution in Employee’s Base Salary or other
failure to comply with any of the other provisions of Section 4(b)
of this Agreement that represents a material diminution in the
Employee’s authority, duties or responsibilities or which
represent a material breach by the Company of the terms of
employment described in this Agreement;
(iii) a
material change in the geographic location at which Employee must
perform services; provided however, that a requirement that
Employee’s services be performed at a location less than
forty (40) miles from the location where the Employee
was
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employed
immediately preceding the Effective Date shall not be considered a
material change; or
(iv) any
other action or inaction that constitute a material breach by the
Company of this Agreement, including without limitations any
failure by the Company to comply with and satisfy Section 11(c) of
this Agreement; provided that within ninety (90) days after
the occurrence of any of the events listed in clauses (i), (ii),
(iii), or (iv) above the Employee delivers written notice to
the Company of his intention to terminate for Good Reason
specifying in reasonable detail the facts and circumstances claimed
to give rise to the Employee’s right to terminate his
employment for Good Reason and the Company shall not have cured
such facts and circumstances within thirty (30) days after
delivery of such notice by the Employee to the Company (unless the
Company shall have waived its right to cure by written notice to
the Employee), and provided further that within thirty
(30) days after the expiration of such thirty (30) day
period or the date of receipt of such waiver notice, if earlier,
the Employee delivers a Notice of Termination to the Company under
Section 5(d) based on the same Good Reason specified in the notice
of intent to terminate delivered to the Company under this
Section 5(c).
(d)
Notice of Termination . Any termination by the
Company for Cause or by the Employee for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 14(b) of this Agreement. For
purposes of this Agreement, a “Notice of Termination”
means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) 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 and (iii) if the Date of
Termination (as defined
11
below) is other
than the date of receipt of such notice, specifies the termination
date (which date shall not be prior to the date of receipt of such
notice). The failure by the Employee to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing
of Good Reason shall not waive any right of the Employee hereunder
or preclude the Employee from asserting such fact or circumstance
in enforcing his rights hereunder.
(e)
Date of Termination . “Date of
Termination” means the date of receipt of the Notice of
Termination or any later date specified therein as permitted by
Section 5(d), as the case may be; provided ,
however , that (i) if the Employee’s employment
is terminated by the Company or a subsidiary of the Company other
than for Cause, death or Disability, the Date of Termination shall
be the date on which the Employee receives notice from the Company
or such subsidiary of such termination and (ii) if the
Employee’s employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of
the Employee or the Disability Effective Date, as the case may
be.
6.
Obligations of the Company upon Termination
.
(a)
Death . If the Employee’s employment is
terminated during the Employment Period by reason of the
Employee’s death, this Agreement shall terminate without
further obligations to the Employee’s legal representatives
under this Agreement, other than (i) those obligations accrued
or earned and ves
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