Exhibit 10.33
EMPLOYMENT
AGREEMENT
AGREEMENT by and between
MeadWestvaco Corporation, a Delaware corporation (the
“Company”) and Wendell L. Willkie, II (the
“Executive”), dated as of the 29th day of January
2004.
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 assure that
the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change
of Control (as defined below) of the Company. The Board believes it
is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created
by a pending or threatened Change of Control and to encourage the
Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and
benefits arrangements upon a Change of Control which ensure that
the compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives,
the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED
AS FOLLOWS:
1. Change of Control . For
the purpose of this Agreement, a “Change of Control”
shall mean:
(a) The acquisition by any
individual, 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”)) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding
shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for
purposes of this subsection (a), the following acquisitions shall
not constitute a Change of Control: (i) any acquisition directly
from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (c) of this Section 1;
or
(b) Individuals who, as of the date
hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual 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 directors then comprising the
Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office 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 Person
other than the Board; or
(c) Consummation of a
reorganization, merger, statutory share exchange or consolidation
or similar corporate transaction involving the Company or any of
its subsidiaries, or a sale or other disposition of all or
substantially all of the assets of the Company (each, a
“Business Combination”), in each case, unless,
following such Business Combination, (i) all or substantially all
of the individuals and entities that were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 60% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or
through one or more subsidiaries) (the “Resulting
Corporation”) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding the
Resulting Corporation and its affiliates or any employee benefit
plan (or related trust) of the Resulting Corporation and its
affiliates) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then-outstanding shares of common stock of
the Resulting corporation or the combined voting power of the then
outstanding voting securities of the Resulting Corporation except
to the extent that such ownership existed with respect to the
Company prior to the Business Combination, and (iii) at least a
majority of the members of the board of directors of the Resulting
Corporation (the “Resulting Board”) were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval by the shareholders of
the Company of a complete liquidation or dissolution of the
Company.
2. Certain Other Definitions
. (a) “Affiliated Companies” shall include any company
controlled by, controlling or under common control with the
Company.
(b) The “Change of Control
Period” shall mean the period commencing on the date hereof
and ending on the third anniversary of the date hereof; provided,
however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and
each annual anniversary thereof shall be hereinafter referred to as
the “Renewal Date”), unless previously terminated, the
Change of Control Period shall be automatically extended so as to
terminate three years from such Renewal Date, unless at least 60
days prior to the Renewal Date the Company shall give notice to the
Executive that the Change of Control Period shall not be so
extended.
(c) The “Effective Date”
shall mean the first date during the Change of Control Period on
which a Change of Control occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and if the
Executive’s employment with
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the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment
(i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of
Control, then for all purposes of this Agreement the
“Effective Date” shall mean the date immediately prior
to the date of such termination of employment.
(d) “Merger of Equals
Period” shall mean (i) any portion of the Employment Period
(as defined in Section 3) up to and including the first anniversary
of the Effective Date during which the conditions set forth in the
next sentence are met, and (ii) if the conditions set forth in the
next sentence are met on the first anniversary of the Effective
Date, the portion of the Employment Period that follows the first
anniversary of the Effective Date. The conditions referred to in
the preceding sentence are that (A) the Change of Control that
occurred on the Effective Date was a Business Combination, and (B)
at the time in question, (I) at least 50% of the members of the
Resulting Board are individuals who were members of the Incumbent
Board (as defined in Section 1(b)) at the time of the execution of
the initial agreement, or of the action of the Board, providing for
such Business Combination, and (II) either (x) the position of
chief executive officer of the Resulting Corporation is occupied by
an individual who was employed by the Company immediately before
such Business Combination, or (y) a majority of the leadership
positions reporting directly to the chief executive officer of the
Resulting Corporation are occupied by individuals who were employed
by the Company immediately before such Business
Combination.
(e) The “Multiple” means
the least of (i) three, (ii) the greater of one and the number of
years and fractions thereof during the period from the Date of
Termination (as hereinafter defined) and the Executive’s 65th
birthday, and (iii) if the Executive had announced his intention to
retire before the Date of Termination, the number of years and
fractions thereof from the Date of Termination until the date of
such intended retirement; provided, that in the event of a
termination of employment by the Executive for Good Reason based
solely upon relocation during a Merger of Equals Period as
described in Section 5(c)(iii), the Multiple shall not exceed one
and one-half.
(f) “Peer Executives”
shall mean, at any given time, the other persons employed by the
Company or any of the Affiliated Companies who either (1) were,
immediately before the Effective Date, party to agreements with the
Company substantially in the form of this Agreement (without regard
to the definition of “Multiple”) or (2) are similarly
situated executives who were employed, before the Effective Date,
by the other party to the transaction constituting a Change of
Control hereunder.
(g) “Relevant Time”
shall mean immediately before the Effective Date, except to the
extent otherwise provided in Section 4(b)(ix).
3. Employment Period . The
Company hereby agrees to continue the Executive in its employ,
subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the second
anniversary of such date (the “Employment Period”). The
Employment Period shall terminate upon the termination of the
Executive’s employment for any reason.
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4. Terms of Employment . (a)
Position and Duties . (i) During the Employment Period,
there shall be no material reduction in the Executive’s
position, authority, duties, responsibilities or salary grade as
compared to those held, exercised and assigned to the Executive at
the Relevant Time. Notwithstanding the foregoing, during any Merger
of Equals Period, the Executive’s position may be changed in
a manner violating the requirements of this Section 4(a)(i),
provided that the Executive continues to have responsibilities and
authority that are, in the aggregate, comparable to those held by
the Executive at the Relevant Time; and provided, further, that
neither a reduced scope of the Executive’s responsibilities
resulting from the fact that the Change of Control has created a
larger organization, nor a change in the Executive’s title
and reporting responsibilities, shall be the sole basis for
determining whether the requirements of this sentence are
met.
(ii) During the Employment Period,
the Executive’s services shall be performed at the location
where the Executive was employed immediately preceding the
Effective Date, or at any other location that does not result in
the Executive’s commuting distance from the Executive’s
residence being increased by more than 40 miles; provided ,
that if the Executive voluntarily changes his residence after the
Effective Date, then a new work location shall not be considered to
have increased the Executive’s commuting distance by more
than 40 miles unless such an increase both (I) occurs in relation
to the Executive’s new residence and (II) would have occurred
even if the Executive had not changed his residence.
(iii) During the Employment Period,
and excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive 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 Executive hereunder, to use
the Executive’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 Executive 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 Executive’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 Executive 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 Executive’s
responsibilities to the Company.
(b) Compensation . (i)
Base Salary . During the Employment Period, the Executive
shall receive an annual base salary (“Annual Base
Salary”) which shall be not less than the Executive’s
annual base salary from the Company and the Affiliated Companies as
in effect immediately before the Effective Date, except as
otherwise permitted below in this Section 4(b)(i). Any increase in
Annual Base Salary during the Employment Period shall not serve to
limit or reduce any other obligation to the Executive under this
Agreement, and except as
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provided in the next sentence, the Annual Base
Salary shall not be reduced during the Employment Period.
Notwithstanding the foregoing, during any Merger of Equals Period,
the Annual Base Salary may be decreased if all the annual base
salaries of all of the Peer Executives are decreased by the same or
a greater percentage. The term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as increased or
decreased to the extent permitted by this Section
4(b)(i).
(ii) Incentive Compensation
Opportunities . In addition to the Annual Base Salary, the
Executive shall be granted, during the Employment Period,
cash-based and equity-based awards representing the opportunity to
earn incentive compensation on terms and conditions no less
favorable to the Executive, in the aggregate, than those provided
generally at any time after the Effective Date to the Peer
Executives or, if more favorable to the Executive, than those
provided by the Company and the Affiliated Companies for the
Executive immediately before the Effective Date. In determining
whether the Executive’s incentive compensation opportunities
during the Employment Period meet the requirements of the preceding
sentence, there shall be taken into account all relevant terms and
conditions, including, without limitation and to the extent
applicable, the potential value of such awards at minimum, target
and maximum performance levels, and the difficulty of achieving the
applicable performance goals.
(iii) Savings and Retirement
Plans . During the Employment Period, the Executive shall be
entitled to participate in all savings and retirement plans,
practices, policies and programs applicable generally to the Peer
Executives, on comparable terms and conditions, but in no event
shall such plans, practices, policies and programs provide the
Executive with savings opportunities and retirement benefits, in
each case, less favorable, in the aggregate, to the Executive than
those provided by the Company and the Affiliated Companies to the
Executive at the Relevant Time.
(iv) Welfare Benefit Plans .
During the Employment Period, the Executive and/or the
Executive’s family, 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 the Affiliated Companies (including, without
limitation, medical, prescription, dental, disability, employee
life, group life, accidental death and travel accident insurance
plans and programs) (collectively, “Welfare Benefits”)
to the extent applicable generally to the Peer Executives, on
comparable terms and conditions, but in no event shall such Welfare
Benefits for the Executive be less favorable, in the aggregate, to
the Executive than the Welfare Benefits provided by the Company and
the Affiliated Companies to the Executive at the Relevant
Time.
(v) Expenses . During the
Employment Period, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the policies, practices and procedures
as in effect for the Peer Executives; provided, that such policies,
practices and procedures shall not be less favorable to the
Executive than those provided by the Company and the Affiliated
Companies to the Executive at the Relevant Time.
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(vi) Fringe Benefits . During
the Employment Period, the Executive shall be entitled to fringe
benefits, including, without limitation, tax and financial planning
services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, as in effect for Peer
Executives; provided, that such fringe benefits shall not be less
favorable, in the aggregate, to the Executive than those provided
by the Company and the Affiliated Companies to the Executive at the
Relevant Time.
(vii) Office and Support
Staff . During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and
other appointments, and to personal secretarial and other
assistance, as in effect for the Peer Executives; provided, that
such facilities and assistance shall not be less favorable, in the
aggregate, to the Executive than those provided by the Company and
the Affiliated Companies to the Executive at the Relevant
Time.
(viii) Vacation . During the
Employment Period, the Executive shall be entitled to paid vacation
in accordance with the plans, policies, programs and practices of
the Company and the Affiliated Companies as in effect for the Peer
Executives; provided, that such plans, policies, programs and
practices shall not be less favorable to the Executive than those
provided by the Company and the Affiliated Companies to the
Executive at the Relevant Time.
(ix) Changes During Merger of
Equals Period . Notwithstanding the foregoing, during any
Merger of Equals Period, the incentive compensation opportunities
and benefits provided to the Executive may be changed in a manner
violating the requirements of any of Sections 4(b)(ii)-(viii), if
such changes apply to Peer Executives generally. Following any such
change, the “Relevant Time” for determining whether
such requirements continue to be satisfied with respect to the
particular benefit that has been changed shall be immediately
following the effectiveness of such change.
5. Termination of Employment
. (a) Death or Disability . The Executive’s employment
shall terminate automatically upon the Executive’s death
during the Employment Period. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set
forth below), it may give to the Executive written notice in
accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the
Executive (the “Disability Effective Date”), provided
that, within the 30 days after such receipt, the Executive shall
not have returned to full-time performance of the Executive’s
duties. For purposes of this Agreement, “Disability”
shall mean the absence of the Executive from the Executive’s
duties with the Company on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or the Executive’s legal
representative.
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(b) Cause . The Company may
terminate the Executive’s employment during the Employment
Period for Cause or without Cause. For purposes of this Agreement,
“Cause” shall mean:
(i) the willful and continued
failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief
Executive Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes that
the Executive has not substantially performed the Executive’s
duties, or
(ii) the willful engaging by the
Executive in illegal conduct or gross misconduct; or
(iii) a clearly established
violation by the Executive of the Company’s Code of Conduct
that is materially and demonstrably injurious to the
Company.
For purposes of this provision, no act or
failure to act, on the part of the Executive, shall be considered
“willful” unless it is done, or omitted to be done, by
the Executive in bad faith or without reasonable belief that the
Executive’s action or omission 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 the Chief Executive Officer or a 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 Executive in good faith and in the best interests of the
Company.
(c) Good Reason . The
Executive’s employment may be terminated by the Executive for
Good Reason or without Good Reason. For purposes of this Agreement,
“Good Reason” shall mean:
(i) any material reduction in the
Executive’s position, authority, duties, responsibilities or
salary grade that is not permitted by Section 4(a) of this
Agreement, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied
by the Company promptly after receipt of notice thereof given by
the Executive;
(ii) any failure by the Company to
comply with any of the provisions of Section 4(b) of this
Agreement, other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by the
Company promptly after r
