AMENDED AND
RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “
Agreement ”), dated as of December 31, 2008,
between LIBBEY INC., a Delaware corporation (the “
Company ”), and [Insert name of Executive from
Appendix 1] (the “ Executive ”).
WHEREAS,
the Company and the Executive previously entered into an Employment
Agreement dated as of March 22, 2004 (the “
March 2004 Agreement ”) setting forth the terms
and conditions upon which the Executive agreed to serve as an
officer of the Company.
WHEREAS,
the Company and the Executive desire to amend the March 2004
Agreement in certain respects and, as so amended, to restate it in
its entirety.
NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree to
amend and restate the March 2004 Agreement, effective
January 1, 2009, to provide as follows:
1.
Term of Agreement. The term of this Agreement shall commence
on January 1, 2009 and shall continue through
December 31, 2009. Commencing on January 1, 2010 and each
January 1 thereafter, the term of this Agreement shall be extended
automatically for one additional year unless, on or before
September 30 of the then-current term, the Company gives
written notice to the Executive that the Company does not wish to
extend this Agreement beyond the expiration of the then current
term. For example, if the Company does not desire to renew this
Agreement for the 2011 calendar year, the Company must, on or
before September 30, 2010, give written notice to the
Executive that the Company does not wish to extend the term of this
Agreement for the 2011 calendar year. The Company’s
employment of the Executive under this Agreement shall continue
indefinitely during the term of this Agreement until terminated as
provided in Section 4. Notwithstanding the foregoing, the term
of this Agreement shall automatically end on the last day of the
month in which the Executive reaches age 65.
(a)
Position. The Executive hereby agrees to serve as an officer
of the Company and to perform all duties assigned by the Company
commensurate with his or her position. The Executive shall devote
the Executive’s best efforts to the performance of services
to the Company in accordance with the terms of this Agreement and
as the Company reasonably may request.
(b)
Other Activities. While employed pursuant to this Agreement,
the Executive shall not, other than in the performance of duties
inherent in, and in furtherance of, the business of the Company,
engage in any other business or commercial activity as an employee,
consultant, or in any other capacity, whether or not any
compensation is received therefore. Nothing in the preceding
sentence shall prevent the Executive from (i) making and
managing personal investments, (ii) performing occasional
assistance to family members and friends, including but not limited
to service as a director of a family-owned or private business
enterprise, (iii) engaging in community and/or charitable
activities, including without limitation service as a director,
trustee or officer of an educational, welfare, social, religious or
civic organization or charity, (iv) serving as a trustee or
director or similar position of a public
corporation
or public business enterprise, but for only one such public
corporation or public business enterprise at any one time, or
(v) engaging in such other activities as are approved in
writing by the Chief Executive Officer. The Executive shall
refrain, however, from engaging in any of the acts described in
clauses (i) — (v) of the preceding sentence to the
extent that they singly or in the aggregate interfere with the
proper performance of the Executive’s duties and
responsibilities to the Company or are inconsistent with
Section 9 of this Agreement.
3.
Compensation. In consideration of the performance of his
duties under this Agreement, the Executive shall be entitled to
receive the salary, bonus and benefits set forth on
Schedule 1. All amounts payable to the Executive under this
Section 3 shall be paid in accordance with the Company’s
benefit plans and programs and regular payroll practices (
e.g ., timing of payments and standard employee deductions,
such as income and employment tax withholdings, medical benefit
contributions and parking fees, among others). No additional
compensation shall be payable to the Executive by reason of the
number of hours worked or any hours worked on Saturdays, Sundays or
holidays, by reason of special responsibilities assumed (whether on
behalf of the Company or any of its subsidiaries or affiliates),
special projects completed, or otherwise. The Executive’s
compensation shall be reviewed by the Chief Executive Officer, the
Board or the Compensation Committee of the Board (the “
Compensation Committee ”) periodically for possible
merit increases and other changes as such reviewer deems
appropriate.
4.
Termination of Employment. Either party may terminate the
Executive’s employment under this Agreement at any time and
for any reason, without advance notice. However:
(a)
Termination for Cause . If the Company terminates the
Executive’s employment for Cause, then the Company shall pay
to the Executive his base salary, through the Date of Termination
(as defined in Section 4(g) of this Agreement) at the rate in
effect at the time the Company provides the Notice of Termination
(as defined in Section 4(f)). The Company also shall pay to
the Executive all other amounts and benefits to which the Executive
is entitled under any pension plan, retirement savings plan, equity
participation plan, stock purchase plan, medical benefits and other
benefits of the Company or provided by law. The Company shall have
no further obligations to the Executive under this Agreement.
Without waiving any rights the Company may have hereunder or
otherwise, the Company expressly reserves its rights to proceed
against the Executive for damages in connection with any claim or
cause of action that the Company may have arising out of or related
to the Executive’s employment hereunder. “ Cause
” means (i) the Executive’s willful and continued
failure (other than as a result of incapacity due to physical or
mental illness or after the Executive issues a Notice of
Termination for Good Reason (as defined in Section 4(d)) to
substantially perform the Executive’s duties, after the Board
delivers to the Executive a written demand for substantial
performance that specifically identifies the manner in which the
Board believes that the Executive has not substantially performed
the Executive’s duties, (ii) the Executive’s
willful and continued failure (other than as a result of incapacity
due to physical or mental illness or after the Executive’s
issuance of a Notice of Termination for Good Reason) to
substantially follow and comply with the specific and lawful
directives of the Board, as reasonably determined by the Board,
after the Board delivers to the Executive a written demand for
substantial performance that specifically identifies the manner in
which the Board believes that the Executive has not substantially
followed or complied with the directives of the Board,
(iii) the Executive’s willful commission of an act of
fraud or dishonesty that results in material economic or financial
injury to the Company, or (iv) the Executive’s willful
engagement in illegal conduct or gross misconduct that
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is
materially and demonstrably injurious to the Company. For purposes
of this Section 4(a), no act, or failure to act, shall be
deemed “willful” unless the Executive’s
commission of the act or failure to act is not in good faith. In
any event, the Company may not terminate the Executive for Cause
unless and until the Company has delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of not less
than three-quarters ( 3
/
4
) of the
entire membership of the Board at a meeting of the Board (after
reasonable notice to the Executive, an opportunity for the
Executive, together with counsel, to be heard before the Board and
a reasonable opportunity to cure), finding, in the Board’s
good faith opinion, that the Executive engaged in any of the
conduct set forth above in clauses (i) through (iv) of
the definition of “Cause” and specifying in reasonable
detail the particulars of the conduct at issue.
(b)
Death. If the Executive is by the Company pursuant to this
Agreement at the time of the Executive’s death, then the
Executive’s employment shall be terminated automatically
concurrently with his death. In that event, the Company shall pay
to the Executive’s estate, within sixty (60) days after
the Company receives written notice of appointment of a personal
representative (on behalf of the Executive’s estate), the
amount set forth in clauses (i) through (iii) of
Section 5(a), plus all other amounts and benefits to which the
Executive is entitled under any pension plan, retirement savings
plan, equity participation plan, stock purchase plan, medical
benefits and other benefits of the Company or provided by law.
Company shall have no further obligations to the Executive’s
estate under this Agreement.
(c)
Permanent Disability. If the Company terminates the
Executive’s employment due to the Executive’s Permanent
Disability, the Company shall pay to the Executive base salary, in
accordance with the Company’s normal payroll practices,
through the Date of Termination at the rate in effect at the time
the Company gives the Executive Notice of Termination. The Company
also shall pay to the Executive all other amounts and benefits to
which the Executive is entitled under any pension plan, retirement
savings plan, equity participation plan, stock purchase plan,
long-term disability policy, medical benefits and other benefits of
the Company or provided by law. Company shall have no further
obligations to the Executive’s estate under this Agreement.
For purposes of this Agreement, “ Permanent Disability
” means any incapacity due to physical or mental illness as a
result of which the Executive is absent from the full-time
performance of his duties with the Company for six
(6) consecutive months and does not return to the full-time
performance of his duties within thirty (30) days after the
Company gives Notice of Termination to the Executive.
(d)
Termination Without Cause or For Good Reason. If the Company
terminates the Executive’s employment without Cause or the
Executive terminates his employment for “Good Reason”
(other than on account of death or Permanent Disability), the
Executive shall be entitled to the compensation, vesting and
benefits as described in Section 5(b) below. For purposes of this
Agreement, “ Good Reason ” means the occurrence
of any of the following events unless they are fully corrected
(provided such circumstances are capable of correction) prior to
the Date of Termination:
(i)
The Executive ceases to be an Officer of the Company reporting to
the Chief Executive Officer;
(ii)
The Executive’s Base Salary is reduced by a greater
percentage than the reduction applicable to any other
Officer;
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(iii)
There is a reduction in the annual incentive compensation
opportunity or Equity Compensation (as defined in
Section 5(b)(iii)(A) below) opportunity (i.e., percentage of
the Executive’s base salary represented by awards of Equity
Compensation of any type) established for the position held by the
Executive and the reduction is not applied in the same or similar
manner to all other executive officers;
(iv)
There is a reduction or elimination of an executive benefit or an
employee benefit and the reduction is not applicable to all other
Officers in the same or similar manner;
(v)
There is a material breach of this Agreement by the Company and the
Company does not remedy it prior to the expiration of thirty
(30) days after receipt of written notice of the breach given
by the Executive to the Company;
(vi)
The Company exercises its right not to extend the term of this
Agreement beyond the then current term, unless the Company
concurrently exercises its right not to renew the employment
agreements in effect with respect to the then-current members of
Group B (as defined below). “Group B” means the
following individuals Kenneth A. Boerger, Jonathan S. Freeman,
Daniel P. Ibele, Susan Allene Kovach, Timothy T. Paige, Scott M.
Sellick and Kenneth G. Wilkes. If the employment of any individual
listed in the preceding sentence is terminated by the Company for
Cause or by the individual without Good Reason, that individual
shall no longer be a member of Group B. For purposes of this
Section 4 (d)(6), the term “employment agreements”
does not include the Letter Agreement (as defined in
Section 11(n)) or similar agreements relating to a change in
control of the Company.
If the
Executive does not deliver to the Chief Executive Officer, within
ninety (90) days after the date on which the Executive knew or
should have known of the Good Reason event, written notice
specifying in reasonable detail the particulars giving rise to the
Good Reason Event, the Executive shall be deemed conclusively to
have waived that particular Good Reason Event (but not any
subsequent Good Reason Event) even if the Executive’s failure
to give timely notice of the Good Reason event is a result of the
Executive’s incapacity due to physical or mental
illness.
(e)
Termination by Resignation or Retirement. If the Executive
terminates his employment by resigning or retiring, other than at
the written request of the Company or for Good Reason, the Company
shall pay the Executive base salary through the Date of Termination
at the rate in effect at the time the Notice of Termination is
given. In addition, the Company shall pay or provide to the
Executive all other amounts and benefits to which the Executive is
entitled under any compensation plan or practice of the Company,
pension plan, retirement savings plan, equity participation plan,
stock purchase plan, medical benefits and other benefits of the
Company or provided by law, at the time such payments are due. The
Company shall have no further obligations to the Executive under
this Agreement.
(f)
Notice of Termination. A party who purports to terminate the
Executive’s employment (other than as a result of death or as
a result of resignation or retirement that is not at the written
request of the Company and is not for Good Reason) shall provide to
the other party Notice of Termination in accordance with
Section 4. “ Notice of Termination ” means
a
4
written
notice that indicates the specific termination provision in this
Agreement upon which the terminating party is relying and that sets
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment
under the provision so indicated.
(g)
Date of Termination, Etc. “ Date of Termination
” means the date on which the Executive incurs a
“separation from service” within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended
(the “ Code ”).
5.
Compensation upon Termination.
(a)
Death. If the Executive’s employment with the Company
is terminated by reason of the Executive’s death, the
Executive’s estate shall be entitled to the
following:
(i)
Payment of the Executive’s base salary accrued through the
Date of Termination;
(ii)
Payment of the Executive’s incentive compensation under all
plans in effect at the Date of Termination paid at target but
prorated over the period of each applicable plan through the Date
of Termination;
(iii)
One (1) times the sum of the Executive’s annual base
salary at the then current rate in effect as of the Date of
Termination payable in one (1) lump-sum payment;
(iv)
Continuation of the Executive’s medical, prescription drug,
dental and vision benefits (collectively, “ Medical
Insurance Benefits ”) for the Executive’s covered
dependents for a period of twelve (12) months following the
Date of Termination. On or about January 31 of the first full
calendar year after the Date of Termination, and on each
anniversary thereof for each year during which the
Executive’s dependents are eligible for coverage pursuant to
this Section 5(a)(iv), the Executive’s dependents shall
pay the cost, on an after-tax basis, for the continued Medical
Insurance Benefits, and concurrently therewith the Company will
make a payment to the Executive’s dependents such that, after
payment of all taxes incurred by the Executive’s dependents
as a result of their receipt of the Medical Insurance Benefits and
payment by the Company, the Executive’s dependents will
retain an amount equal to the amount they paid during the
immediately preceding calendar year for the Medical Insurance
Benefits; and
(v)
Awards to the Executive pursuant to any Equity Compensation plan of
the Company shall vest immediately as of the Date of Termination
and, if applicable, be exercisable for a period of three years
following the Date of Termination or for such longer period
following the Date of Termination specified by the award granted to
the Executive; provided however, that nothing in this Agreement
shall act to extend the term of any Equity Compensation award and
no Equity Compensation award that has an option feature (i.e., a
feature that requires that the grantee take an affirmative action
to obtain the benefit of the award) may be exercised after the
expiration of the term of the award specified in the award granted
to the Executive.
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(b)
Termination for Permanent Disability, Without Cause or for Good
Reason. If the Company terminates the Executive’s
employment for Permanent Disability or without Cause, or the
Executive terminates his employment for Good Reason (other than as
a result of the Executive’s death or Permanent Disability),
the Executive shall be entitled to the following:
(i)
Payment, not later than five (5) business days after the Date
of Termination, of the Executive’s base salary accrued
through the Date of Termination;
(ii)
With respect to the Executive’s annual incentive compensation
opportunity during the year in which the Date of Termination
occurs, payment of an amount equal to the Executive’s target
award, prorated through the Date of Termination; provided, however,
that in any event the amount payable pursuant to this clause shall
not be less than 50% of the Executive’s target award. The
amount payable pursuant to this clause shall be paid, subject to
Section 5(c), between January 1 and March 15 of the year
following the year in which the Date of Termination
occurs;
(iii)
If the Executive is eligible under any
“performance-based” equity Compensation plans (as
defined below) as of the date on which Notice of Termination is
given, payment of the applicable Equity Compensation (or, in the
Compensation Committee’s discretion, cash equal in value to
the applicable Equity Compensation) actually earned for each
performance cycle during which the Date of Termination occurs, but
prorated through the Date of Termination. The amount required to be
paid pursuant to this clause (iii) shall be paid, subject to
Section 5(c), between January 1 and March 15 of the year
following the end of each applicable performance cycle. For
purposes of this Agreement, the following terms have the meanings
given them below:
(A)
“Equity Compensation” means shares of common stock,
whether or not restricted, restricted stock units, performance
shares, performance units, stock options, stock appreciation rights
and/ or any other equity-based or equity-related award.
(B)
A compensation plan shall be deemed a “performance-based
equity compensation plan” if the plan provides that Equity
Compensation may be earned pursuant to the plan and the plan
provides that the amount of, or the entitlement to, the Equity
Compensation is contingent on the satisfaction of pre-established
organizational or individual performance criteria relating to a
performance period of at least twelve (12) consecutive months.
Organizational or individual performance criteria are considered
pre-established if established in writing by the date not later
than ninety (90) days after the commencement of the
performance period, provided that the outcome is substantially
uncertain at the time the criteria are established. A
performance-based equity compensation plan also may provide for
payments based upon subjective performance criteria, provided
that—
(1)
The subjective performance criteria are bona fide and relate to the
performance of the Executive, a group of employees that
6
includes
the Executive, or a business unit for which the Executive provides
services (which may include the entire Company); and
(2)
The determination that any subjective performance criteria have
been met is not made by the Executive or a family member of the
Executive, or a person under the effective control of the Executive
or such a family member, and no amount of the compensation of the
person making the determination is effectively controlled in whole
or in part by the Executive or such a family member;
(iv)
A lump sum payment equal to two (2) times the sum of
(A) Executive’s annual Base Compensation at the rate in
effect on the date on which Notice of Termination is given and
(B) the Executive’s target annual incentive compensation
opportunity at the time the Notice of Termination is given. The
amount required to be paid pursuant to this clause (iv) shall
be paid, subject to Section 5(c), not later than five
(5) business days after the Date of Termination;
(v)
Continuation of the Executive’s medical, prescription drug,
dental and life insurance benefits (collectively, “
Insurance Benefits ”) for a period of twenty-four
(24) months following the Date of Termination. On or about
January 31 of the first full calendar year after the Date of
Termination, and on each anniversary thereof for each year during
which the Executive is eligible for coverage pursuant to this
Section 5(a)(v), Executive shall pay the cost, on an after-tax
basis, for the continued Insurance Benefits, and concurrently
therewith the Company will make a payment to the Executive such
that, after payment of all taxes incurred by the Executive as a
result of his receipt of the Insurance Benefits and payment by the
Company, the Executive will retain an amount equal to the amount
the Executive paid during the immediately preceding calendar year
for the Insurance Benefits; and
(vi)
Any awards of Equity Compensation (other than
“performance-based” Equity Compensation”) that
have been granted to the Executive and that have not vested as of
the Date of Termination shall vest immediately on the Date of
Termination. To the extent that any such awards (such as stock
options or stock appreciation rights) contain an option feature
(i.e., a feature that requires that the grantee take an affirmative
action in order to obtain the benefit of the award), they shall be
exercisable for a period of three years following the Date of
Termination or for such longer period following the Date of
Termination as is specified in the award agreements governing the
award(s). However, the immediately preceding sentence shall not be
deemed to extend the term of any award of Equity Compensation that,
by the terms of the agreement governing it, is scheduled to expire
unless exercised prior to the expiration of the three (3) year
period referred to in the immediately preceding
sentence.
(c)
Payments. Payment of benefits under Section 5(a) is subject
to reasonable evidence of authority to act for the decedent’s
estate. Payment of benefits under clauses (ii), (iii), (iv),
(v) and (vi) of Section 5(b) is conditioned on the
release provided under Section 5(d) becoming effective. Except as
otherwise provided in this Agreement, all payments under this
Agreement shall be subject to applicable withholdings.
Notwithstanding any provisions of this Section 5 to the
contrary, if the Executive is a “specified employee”
(within the
7
meaning of
Section 409A of the Code and determined pursuant to policies
adopted by the Company) on the Executive’s Date of
Termination, amounts that otherwise would be payable, pursuant to
clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b)
of this Agreement (as well as any other payment or benefit that the
Executive is entitled to receive upon the Executive’s
separation from service that would be considered to be deferred
compensation under Section 409A of the Code), during the six
(6) month period immediately following the Date of Termination (the
“ Delayed Payments ”) will instead be paid or
made available on the earlier of (i) the first day of the
seventh month following the Executive’s Date of Termination
and (ii) the Executive’s death (the applicable date, the
“ Initial Payment Date ”). Continuation of
benefits under Section 5(a)(iv) or 5(b)(vi), shall be in
addition to and not concurrent with any continuation rights
Executive may have under the Consolidated Omnibus Budget
Reconciliation Act of 1985, or similar state law.
(d)
Release. Payment of any amount to and the provision of any
benefits to, or on behalf of, the Executive pursuant to any of
clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b)
of this Agreement and Executive’s acceptance of such amounts
shall be conditioned on the Executive’s execution and
delivery to the Company, no later than sixty (60) days after
the Date of Termination, of a general waiver and release of claims
in the form attached hereto as Exhibit A or in such other form
as the Company may reasonably request to provide a complete release
of all claims and causes of action the Executive or the
Executive’s estate may have against the Company, except
claims and causes of action arising out of, or related to, the
obligations of the Company pursuant to this Agreement and Claims
(as defined in Exhibit A) for vested benefits under any
pension plan, retirement plan and savings plan, rights under any
Equity Compensation plan and stock purchase plan and rights to
continuation of medical care coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985 and any similar state
law.
(e)
No Offset for Benefits. There shall be no offset to any
compensation or other benefits otherwise payable to, or on behalf
of, the Executive pursuant to the terms of Section 5 of this
Agreement as a result of the receipt by Executive of any pension,
retirement or other benefit payments (including, but not limited
to, accrued vacation) except as provided by
Section 11(n).
(i)
Anything in this Agreement to the contrary notwithstanding, if it
shall be determined that any payment or distribution to the
Executive or for the Executive’s benefit (whether paid or
payable or distributed or distributable) pursuant to the terms of
this Agreement or otherwise (the “ Payment ”)
would be subject to the excise tax imposed by section 4999 of the
Code or any successor provision (the “ Excise Tax
”), then the Executive shall be entitled to receive from the
Company an additional payment (the “ Gross-Up Payment
”) in an amount such that the net amount of the Payment and
the Gross-Up Payment retained by the Executive after the
calculation and deduction of all Excise Taxes (including any
interest or penalties imposed with respect to such taxes) on the
payment and all federal, state and local income tax, employment tax
and Excise Tax (including any interest or penalties imposed with
respect to such taxes) on the Gross-Up Payment provided for in this
Section 5(g), and taking into account any lost or reduced tax
deductions on account of the Gross-Up Payment, shall be equal to
the Payment;
8
(ii)
Notwithstanding any provision of this Agreement to the contrary,
but giving effect to any redetermination of the amount of Gross-Up
payments otherwise required by this Section 5(f), if but for
this sentence the Company would be obligated to make a Gross-Up
Payment to the Executive, and the aggregate “present
value” of the “parachute payments” to be paid or
provided to the Executive under this Agreement or otherwise does
not exceed 1.10 multiplied by three times the Executive’s
“base amount,” then the payments and benefits to be
paid or provided under this Agreement will be reduced (or repaid to
the Company, if previously paid or provided) to the minimum extent
necessary so that no portion of any payment or benefit to the
Executive, as so reduced or repaid, constitutes an “excess
parachute payment.” For purposes of this
Section 5(f)(ii), the terms “excess parachute
payment,” “present value,” “parachute
payment,” and “base amount” have the meanings
assigned to them by Section 280G of the Code. The
determination of whether any reduction in or repayment of such
payments or benefits to be provided under this Agreement is
required pursuant to this Section 5(f)(ii) will be made at the
expense of the Company, if requested by the Executive or the
Company, by the Accountants (as defined in Section 5(f)(iii)).
Appropriate
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