CHANGE OF CONTROL EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 31st day of July, 2001, by Xxxxxx Inc., a
Delaware corporation (the "Company"), and X. Xxxxx Xxxxxxxxxx ("Executive").
R E C I T A L S
The Executive is an officer of the Company and is employed by Xxxxxx
Technologies, Inc. ("Belden Technologies"), a wholly-owned subsidiary of the
Company, in a key executive capacity. The Executive's services are valuable to
the Company. The Executive possesses intimate knowledge of the business and
affairs of the Company and has acquired certain confidential information with
respect to the Company.
The Company desires to insure that it will continue to have the benefit
of the Executive's services and to protect its confidential information and
goodwill. The Company recognizes that circumstances may arise in which a change
in control of the Company occurs, through acquisition or otherwise, causing
uncertainty about the Executive's future employment with the Company without
regard to the Executive's competence or past contributions. Such uncertainty may
result in the loss of valuable services of the Executive to the detriment of the
Company and its stockholders.
The Company and the Executive desire that any proposal for a change in
control or acquisition of the Company will be considered by the Executive
objectively and with reference only to the best interests of the Company and its
stockholders. The Executive will be in a better position to consider the
Company's best interests if the Executive is afforded reasonable security, as
provided in this Agreement, against altered conditions of employment which could
result from any such change in control or acquisition.
NOW, the Company and the Executive (collectively the "Parties" or
individually a "Party"), agree as follows:
1. CERTAIN DEFINITIONS.
1.1 ACT. The term "Act" means the Securities Exchange Act of
1934, as amended.
1.2 AFFILIATE AND ASSOCIATE. The terms "Affiliate" and
"Associate" shall have the meanings given them in Rule 12b-2 of the Act.
1.3 BENEFICIAL OWNER. A Person shall be deemed to be the
"Beneficial Owner" of any securities:
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(i) that such Person or any other Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own,
(A) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase, or
(B) securities issuable upon exercise of Rights issued
pursuant to the terms of the Rights Agreement between the Company and First
Chicago Trust Company of New York (the "Rights Agreement"), dated at July 6,
1995, as amended from time to time (or any successor to such Rights Agreement),
at any time before the issuance of such securities;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the Act),
including pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if the agreement,
arrangement or understanding:
(A) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations under
the Act and
(B) is not also then reportable on a Schedule 13D under
the Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
Subsection 1.3 (ii) above) or disposing of any voting securities of the Company;
provided, however, that nothing in this paragraph (iii) shall cause a Person
engaged in the business as an underwriter of securities to be deemed the
"Beneficial Owner" of, or to "beneficially own," any securities acquired through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of forty days (40) after the date of such acquisition.
1.4 CAUSE. "Cause" for termination by the Company of the
Executive's employment with the Company, Belden Technologies or any of their
Affiliates after a Change of Control of the Company shall, for purposes of this
Agreement, be limited to:
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(i) the engaging by the Executive in intentional conduct
taken in bad faith which has caused demonstrable and serious financial injury to
the Company, as evidenced by a determination in a binding and final judgment,
order or decree of a court or administrative agency of competent jurisdiction,
in effect after exhaustion or lapse of all rights of appeal, in an action, suit
or proceeding, whether civil, criminal, administrative or investigative;
(ii) conviction of a felony (as evidenced by a binding and
final judgment, order or decree of a court of competent jurisdiction, in effect
after exhaustion of all rights of appeal) which substantially impairs the
Executive's ability to perform his duties or responsibilities; and
(iii) continuing willful and unreasonable refusal by the
Executive to perform the Executive's duties or responsibilities (unless
significantly changed without the Executive's consent).
1.5 CHANGE IN CONTROL OF THE COMPANY. A "Change in Control of the
Company" shall be deemed to have occurred if:
(i) any Person (other than any employee benefit plan of the
Company or any subsidiary of the Company, any entity holding securities of the
Company for or pursuant to the terms of any such plan or any trustee,
administrator or fiduciary of such a plan) is or becomes the Beneficial Owner of
securities of the Company representing at least 30% of the combined voting power
of the Company's then outstanding securities (other than acquisitions directly
from the Company);
(ii) a Section 11(a)(ii) Event shall have occurred under the
Rights Agreement (or a similar event shall have occurred under any successor to
such Rights Agreement) at any time any Rights are issued and outstanding
thereunder;
(iii) one-third or more of the members of the Board are not
Continuing Directors; or
(iv) there shall be consummated any merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which shares of the Company's Common Stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company's Common Stock immediately prior to the merger have the
same proportionate ownership of common stock of the surviving corporation
immediately after the merger.
1.6 CODE. The term "Code" means the Internal Revenue Code of
1986, as amended.
1.7 CONTINUING DIRECTOR. The term "Continuing Director" means (i)
any member of the Board of Directors of the Company (the "Board") who was a
member of such Board
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on August 15, 1996, (ii) any successor of a Continuing Director who is
recommended to succeed a Continuing Director by a majority of the Continuing
Directors then on the Board, and (iii) any appointee who is recommended by a
majority of the Continuing Directors then on the Board.
1.8 COVERED TERMINATION. The term "Covered Termination" means any
termination of the Executive's employment where the Termination Date is any date
prior to the end of the Employment Period.
1.9 EMPLOYMENT PERIOD. The term "Employment Period" means a
period beginning on the date of a Change in Control of the Company (as defined
in Section 1.5 above), and ending at 11:59 p.m. St. Louis Time on the earlier of
the third anniversary of such date or the Executive's Normal Retirement Date.
1.10 GOOD REASON. The Executive shall have a "Good Reason" for
termination of employment after a Change in Control of the Company in the event
of:
(i) any breach of this Agreement by the Company, including
specifically any breach by the Company of its agreements contained in Sections 4
(Duties), 5 (Compensation) or 6 (Annual Compensation Adjustments) hereof;
(ii) the removal of the Executive from, or any failure to
reelect or reappoint the Executive to, any of the positions held with the
Company, Belden Technologies or any of their affiliates on the date of the
Change in Control of the Company or any other positions with the Company, Belden
Technologies or any of their affiliates, to which the Executive shall thereafter
be elected, appointed or assigned, except when such removal or failure to
reelect or reappoint relates to the termination by the Company of the
Executive's employment for Cause or by reason of disability pursuant to Section
12;
(iii) a good faith determination by the Executive that there
has been a significant adverse change, without the Executive's written consent,
in the Executive's working conditions or status with the Company, Belden
Technologies or any of their affiliates from such working conditions or status
in effect immediately prior to the Change in Control of the Company, including
but not limited to;
(A) a significant change in the nature or scope of the
Executive's authority, powers, functions, duties or responsibilities, or
(B) a significant reduction in the level of support
services, staff, secretarial and other assistance, office space and
accoutrements; or
(iv) failure by the Company to obtain the Agreement referred
to in Section 17.1 (Successors) below; or
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(v) any voluntary termination of employment by the Executive
where the Notice of Termination is delivered within 30 days of the first
anniversary of the Effective Date.
1.11 NORMAL RETIREMENT DATE. The term "Normal Retirement Date"
means the date Executive attains the age of 70.
1.12 PERSON. The term "Person" shall mean any individual, firm,
partnership, corporation or other entity, including any successor (by merger or
otherwise) of such entity, or a group of any of the foregoing acting in concert.
1.13 TERMINATION DATE. For purposes of this Agreement, except as
otherwise provided in Section 10.2 (Death) and Section 17.1 (Successors), the
term "Termination Date" means:
(i) if the Executive's employment is terminated by the
Executive's death, the date of death;
(ii) if the Executive's employment is terminated by reason
of voluntary early retirement, as agreed in writing by the Company and the
Executive, the date of such early retirement which is set forth in such written
agreement;
(iii) if the Executive's employment is terminated for
purposes of this Agreement by reason of disability pursuant to Section 12, the
earlier of thirty days after the Notice of Termination is given or one day prior
to the end of the Employment Period;
(iv) if the Executive's employment is terminated by the
Executive voluntarily (other than for Good Reason), the date the Notice of
Termination is given; and
(v) if the Executive's employment is terminated by the
Company (whether or not for Cause), or by the Executive for Good Reason, the
earlier of thirty days after the Notice of Termination is given or one day prior
to the end of the Employment Period. Notwithstanding the foregoing;
(A) If termination is for Cause pursuant to Section
1.4(iii) of this Agreement and if the Executive has cured the conduct
constituting such Cause as described by the Company in its Notice of Termination
within such thirty day or shorter period, then the Executive's employment under
this Agreement shall continue as if the Company had not delivered its Notice of
Termination.
(B) If the Company shall give a Notice of Termination
for Cause or by reason of disability and the Executive in good faith notifies
the Company that a dispute exists concerning the termination within the
applicable period following receipt of notice, then the Executive may elect to
continue his employment (or, if the Executive ceased performing his duties under
this Agreement at the request of the Company at the time of delivery of Notice
of Termination,
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resume and continue employment) during such dispute and the Termination Date
shall be determined under this paragraph. If the Executive so elects and it is
thereafter determined that Cause or disability (as the case may be ) did exist,
the Termination Date shall be the earliest of (1) the date on which the dispute
is finally determined, either (x) by mutual written agreement of the parties or
(y) in accordance with Section 22 (Governing Law; Resolution of Disputes), (2)
the date of the Executive's death, or (3) one day prior to the end of the
Employment Period. If the Executive so elects and it is subsequently determined
that Cause or disability (as the case may be ) did not exist, then the
employment of the Executive under this Agreement shall continue after such
determination as if the Company had not delivered its Notice of Termination and
there shall be no Termination Date arising out of such Notice. In either case,
this Agreement continues, until the Termination Date, if any, as if the Company
had not delivered the Notice of Termination except that, if it is finally
determined that the Company properly terminated the Executive for the reason
asserted in the Notice of Termination, the Executive shall in no case be
entitled to a Termination Payment (as defined below) arising out of events
occurring after the Company delivered its Notice of Termination.
(C) If the Executive shall in good faith give a Notice
of Termination for Good Reason and the Company notifies the Executive that a
dispute exists concerning the termination within the applicable period following
receipt of notice, then the Executive may elect to continue his employment
during such dispute and the Termination Date shall be determined under this
paragraph. If the Executive so elects and it is subsequently determined that
Good Reason did exist, the Termination Date shall be the earliest of (1) the
date on which the dispute is finally determined, either (x) by mutual written
agreement of the parties or (y) in accordance with Section 22 (Governing Law;
Resolution of Disputes), (2) the date of the Executive's death or (3) one day
prior to the end of the Employment Period. If the Executive so elects and it is
subsequently determined that Good Reason did not exist, then the employment of
the Executive under this Agreement shall continue after such determination as if
the Executive had not delivered the Notice of Termination asserting Good Reason
and there shall be no Termination Date arising out of such Notice. In either
case, this Agreement continues, until the Termination Date, if any, as if the
Company had not delivered the Notice of Termination except that, if it is
finally determined that Good Reason did exist, the Executive shall in no case be
denied the benefits described in Sections 8 and 9 (including a Termination
Payment) based on events occurring after the Executive delivered his Notice of
Termination.
(D) If an opinion is required to be delivered pursuant
to Section 9.3 hereof and such opinion shall not have been delivered, the
Termination Date shall be the earlier of the date on which such opinion is
delivered or one day prior to the end of the Employment Period.
(E) Except as provided in Paragraphs (B) and (C) above,
if the party receiving the Notice of Termination notifies the other Party that a
dispute exists concerning the termination within the appropriate period
following receipt of notice and it is finally determined that the reason
asserted in such Notice of Termination did not exist, then (1) if such Notice
was delivered by the Executive, the Executive will be deemed to have voluntarily
terminated his
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employment and the Termination Date shall be the earlier of the date thirty days
after the Notice of Termination is given or one day prior to the end of the
Employment Period and (2) if delivered by the Company, the Company will be
deemed to have terminated the Executive other than by reason of death,
disability or Cause.
2. TERMINATION PRIOR TO CHANGE IN CONTROL. The Company and the
Executive shall each retain the right to terminate the employment of the
Executive at any time prior to a Change in Control of the Company. If the
Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and all rights and obligations of
the parties under it shall cease.
3. EMPLOYMENT PERIOD. If a Change in Control of the Company occurs
when the Executive is employed by Belden Technologies, Belden Technologies will
continue subsequently to employ the Executive during the Employment Period, and
the Executive will remain in the employ of Belden Technologies, in accordance
with and subject to the provisions of this Agreement.
4. DUTIES. During the Employment Period, the Executive shall, in the
same capacities and positions held by the Executive at the time of the Change in
Control of the Company or in such other capacities and positions as may be
agreed to by the Company and the Executive in writing, devote the Executive's
best efforts and all of the Executive's business time, attention and skill to
the business and affairs of the Company, as such business and affairs now exist
and as they may subsequently be conducted. The services that are to be performed
by the Executive under this Agreement are to be rendered in the same
metropolitan area in which the Executive was employed at the time of such Change
in Control of the Company, or in such other place or places as shall be agreed
upon in writing by the Executive and the Company from time to time. Without the
Executive's consent, the Executive shall not be required to be absent from such
metropolitan area more than 45 days in any fiscal year of the Company.
5. COMPENSATION. During the Employment Period, the Executive shall be
compensated as follows:
5.1 The Executive shall receive, at reasonable intervals (but not
less often than monthly) and in accordance with such standard policies as may be
in effect immediately prior to the Change in Control of the Company, an annual
base salary in cash equivalent of not less than the Executive's annual base
salary as in effect immediately prior to the Change in Control of the Company
(which base salary shall, unless otherwise agreed in writing by the Executive,
include the current receipt by the Executive of any amounts that, prior to the
Change in Control of the Company, the Executive had elected to defer, whether
such compensation is deferred under Section 401(k) of the Code or otherwise),
subject to adjustment as provided below.
5.2 The Executive shall receive fringe benefits at least equal in
value to those provided for the Executive immediately prior to the Change in
Control of the Company, and shall be reimbursed, at such intervals and in
accordance with such standard policies as may be in effect immediately prior to
the Change in Control of the Company, for any monies advanced in connection
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with the Executive's employment for reasonable and necessary expenses incurred
by the Executive on behalf of the Company, Belden Technologies or their
affiliates, including travel expenses.
5.3 The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's salary
grade or on any other requirement that excludes persons of comparable status to
the Executive unless such exclusion was in effect for such plan or an equivalent
plan immediately prior to the Change in Control of the Company), in any plan
providing benefits for the Company's salaried employees in general of the
Company, Belden Technologies or their Affiliates, including but not limited to
the Management Incentive Plan, the Long-Term Incentive Plan, group life
insurance, hospitalization, medical, dental, savings, profit sharing and stock
bonus plans. However, in no event shall the aggregate level of benefits under
such plans in which the Executive is included be less than the aggregate level
of benefits under plans of the Company, Belden Technologies or their Affiliates
of the type referred to in this Section 5.3 in which the Executive was
participating immediately prior to the Change in Control of the Company.
5.4 The Executive shall annually be entitled to not less than the
amount of paid vacation and not fewer than the number of paid holidays to which
the Executive was entitled annually immediately prior to the Change in Control
of the Company or such greater amount of paid vacation and number of paid
holidays as may be made available annually to other executives of the Company,
Belden Technologies or their Affiliates of comparable status and position to the
Executive.
5.5 The Executive shall be included in all plans providing
additional benefits to executives of the Company, Belden Technologies or their
Affiliates of comparable status and position to the Executive, including
deferred compensation, split-dollar life insurance, supplemental retirement,
stock option, stock appreciation, stock bonus and similar or comparable plans.
However, in no event shall the aggregate level of benefits under such plans be
less than the aggregate level of benefits under plans of the Company, Belden
Technologies or their Affiliates of the type referred to in this Section 5.5 in
which the Executive was participating immediately prior to the Change in Control
of the Company. Moreover, the obligation of the Company, Belden Technologies or
their Affiliates to include the Executive in bonus or incentive compensation
plans shall be determined by Section 5.6.
5.6 To assure that the Executive will have an opportunity to earn
incentive compensation after a Change in Control of the Company, the Executive
shall be included in a bonus plan of the Company, Belden Technologies or their
Affiliates that shall satisfy the standards described below (such plan, the
"Bonus Plan"). Bonuses under the Bonus Plan shall be payable with respect to
achieving such financial or other goals reasonably related to the business of
the Company as the Company shall establish (the "Goals"), all of which Goals
shall be attainable, prior to the end of the Employment Period, with
approximately the same degree of probability as the goals under the bonus plan
of the Company, Belden Technologies or their Affiliates as in effect immediately
prior to the Change in Control of the Company (the "Company Bonus Plan") and in
view of the
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Company's existing and projected financial and business circumstances applicable
at the time. The amount of the bonus (the "Bonus Amount") that the Executive
will be eligible to earn under the Bonus Plan shall be no less than the amount
of the Executive's maximum award provided in such Company Bonus Plan (such bonus
amount is referred to as the "Targeted Bonus"). If the Goals are not achieved
such that the entire Targeted Bonus is not payable, the Bonus Plan shall provide
for a payment of a Bonus Amount equal to a portion of the Targeted Bonus
reasonably related to that portion of the Goals that were achieved. Payment of
the Bonus Amount shall not be affected by any circumstance occurring subsequent
to the end of the Employment Period, including termination of the Executive's
employment.
6. ANNUAL COMPENSATION ADJUSTMENTS. During the Employment Period, the
Board of Directors of the Company (or an appropriate committee or officer
thereof) will consider and review, at least annually, the contributions of the
Executive to the Company, Belden Technologies or their Affiliates and in
accordance with the practice of the Company, Belden Technologies or their
Affiliates prior to the Change in Control of the Company, due consideration
shall be given to the upward adjustment of the Executive's base compensation
rate, at least annually, (i) commensurate with increases generally given to
other executives of the Company, Belden Technologies or their Affiliates of
comparable status and position to the Executive, and (ii) as the scope of the
operations of the Company, Belden Technologies or their Affiliates or the
Executive's duties expand.
7. TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If there is a Covered
Termination for Cause or if the Executive voluntarily terminates his employment
other than for Good Reason (any such terminations to be subject to the
procedures set forth in Section 13), then the Executive shall be entitled to
receive only Accrued Benefits pursuant to Section 9.1.
8. TERMINATION GIVING RISE TO A TERMINATION PAYMENT.
8.1 If there is a Covered Termination by the Executive for Good
Reason, or by the Company other than by reason of (i) death, (ii) disability
pursuant to Section 12, or (iii) Cause (any such terminations to be subject to
the procedures set forth in Section 13), then the Executive shall be entitled to
receive, and the Company shall promptly pay, Accrued Benefits pursuant to
Section 9.1 and, in lieu of further base salary for periods following the
Termination Date, as liquidated damages and additional severance pay the
Termination Payment pursuant to Section 9.2.
8.2 If there is Covered Termination and the Executive is entitled
to Accrued Benefits and the Termination Payment, then the Executive shall be
entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level of service
commensurate with the Executive's status with the Company, Belden Technologies
or their Affiliates immediately prior to the Change in Control of the Company
(or, if higher, immediately prior to the termination of the Executive's
employment), provided by a nationally recognized executive placement firm
selected
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by the Company.
(ii) For two years after the date of Termination, the
Executive shall continue to be covered, at the expense of the Company, by the
same or equivalent life insurance, hospitalization, medical and dental coverage
as was required under this Agreement with respect to the Executive immediately
prior to the date the Notice of Termination is given.
9. PAYMENTS UPON TERMINATION.
9.1 ACCRUED BENEFITS. The Executive's "Accrued Benefits" shall
include the following amounts, payable as described in this Agreement:
(i) all base salary for the time period ending with the
Termination Date;
(ii) reimbursement for any monies advanced in connection
with the Executive's employment for reasonable and necessary expenses incurred
by the Executive on behalf of the Company, Belden Technologies or their
Affiliates for the time period ending with the Termination Date;
(iii) any other cash earned through the Termination Date and
deferred at the election of the Executive or pursuant to any deferred
compensation plan then in effect;
(iv) a lump sum payment of the bonus or incentive
compensation otherwise payable to the Executive with respect to the year in
which termination occurs under all bonus or incentive compensation plans in
which the Executive is a participant; and
(v) all other payments and benefits to which the Executive
(or in the event of the Executive's death, the Executive's surviving spouse or
other beneficiary) may be entitled as compensatory fringe benefits or under the
terms of any benefit plan of the Company, Belden Technologies or their
Affiliates, and severance payments under the Company's severance policies and
practices as in effect immediately prior to the Change in Control of the
Company. Payment of Accrued Benefits shall be made promptly in accordance with
the Company's prevailing practice with respect to Subsections (i) and (ii) or,
with respect to Subsections (iii), (iv) and (v), pursuant to the terms of the
benefit plan or practice establishing such benefits.
9.2 TERMINATION PAYMENT. The Termination Payment shall be an
amount equal to (A) the Executive's annual base salary, as in effect immediately
prior to the Change in Control of the Company, as adjusted upward, from time to
time, pursuant to Section 6, plus (B) the amount of the highest annual bonus
award (determined on an annualized basis for any bonus award paid for a period
of less than one year) paid to the Executive with respect to the two complete
fiscal years preceding the Termination Date (the aggregate amount set forth in
(A) and (B) hereof shall be referred to as "Annual Cash Compensation"), times
(C) a factor of 2.9. The Termination Payment shall be paid in cash and shall not
be reduced by any present value or similar factor, and the
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Executive shall not be required to mitigate the amount of the Termination
Payment by securing other employment or otherwise, nor will such Termination
Payment be reduced by reason of the Executive's securing other employment or for
any other reason. The Termination Payment shall be in addition to any other
severance payments to which the Executive is entitled under the Company's
severance policies and practices as in effect immediately prior to the Change in
Control of the Company.
9.3 TAXES.
(i) Gross-Up. Whether or not the Executive becomes entitled
to the Termination Payment, if any payment or benefit received or to be received
by the Executive in connection with a Change in Control or the termination of
the Executive's employment, including those provided under Section 9.1, (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any Person whose actions result in a Change in
Control or any Person affiliated with the Company or such Person) (all such
payments and benefits, including the Termination Payment, being hereinafter
called "Total Payments") will be subject (in whole or part) to the Excise Tax,
then the Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after deduction of
any Excise Tax on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the
Total Payments. (Excise Tax shall mean any excise tax imposed under Section 4999
of the Code.) For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive's residence
on the Date of Termination (or if there is no Date of Termination, then the date
on which the Gross-Up Payment is calculated for purposes of this Section 9.3),
net of the maximum reduction in federal income tax which could be obtained from
deduction of such state and local taxes.
(ii) Tax Counsel. For purposes of determining whether any of
the Total Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (a) all of the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, unless in the
opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive
and selected by the accounting firm which was, immediately prior to the Change
in Control, the Company's independent auditor (the "Auditor"), such other
payments or benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 280G(b)(4)(A) of the Code, (b) all "excess
parachute payments" within the meaning of section 280G(b)(l) of the Code shall
be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel,
such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of section
280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax, and (c)
the value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section
9.3(iii) below, the Company shall provide the Executive with its
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calculation of the amounts referred to in this Section 9.2(ii) and such
supporting materials as are reasonably necessary for the Executive to evaluate
the Company's calculations. If the Executive disputes the Company's calculations
(in whole or in part), the reasonable opinion of Tax Counsel with respect to the
matter in dispute shall prevail.
(iii) Repayment. In the event that (a) amounts are paid to
the Executive pursuant to subsection (i) of this Section 9.2, and (b) the Excise
Tax is finally determined to be less than the amount taken into account
hereunder in calculating the Gross-Up Payment, the Executive shall repay to the
Company, within five (5) business days following the time that the amount of
such reduction in Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax and federal, state and local income and
employment taxes imposed on the Gross-Up Payment being repaid by the Executive),
to the extent that such repayment results in (i) no portion of the Total
Payments being subject to the Excise Tax and (b) a dollar-for-dollar reduction
in the Executive's taxable income and wages for purposes of federal, state and
local income and employment taxes plus interest on the amount of such repayment
at the rate provided in section 1274(b)(2)(B)of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into account hereunder at
the time of the termination of the Executive's employment (including by reason
of any payment the existence or amount of which cannot be determined at the time
of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment
in respect of such excess and in respect of any portion of the Excise Tax with
respect to which the Company had not previously made a Gross-Up Payment (plus
any interest, penalties or additions payable by the Executive with respect to
such excess and such portion) within five (5) business days following the time
that the amount of such excess is finally determined.
9.4 DATE OF PAYMENTS. The payments provided in Sections 9.2 and
9.3 shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments, and the
limitations on such payments set forth in Sections 9.2 or 9.3 above, cannot be
finally determined on or before such day, the Company shall pay to the Executive
on such day an estimate, as determined in good faith by the Executive or, in the
case of payments under Section 9.3, in accordance with Section 9.3 above, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest on the unpaid
remainder [or on all such payments to the extent the Company fails to make such
payments when due] at the rate provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the amount
of the estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to the Executive,
payable on the fifth (5th) business day after demand by the Company (together
with interest at the rate provided in section 1274(b)(2)(B) of the Code). At the
time that payments are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in
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writing shall be attached to the statement).
10. DEATH.
10.1 Except as provided in Section 10.2, in the event of a
Covered Termination due to the Executive's death, the Executive's estate, heirs
and beneficiaries shall receive all the Executive's Accrued Benefits through the
Termination Date.
10.2 In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled to the
benefits described in Section 10.1 hereof and, subject to the provisions of this
Agreement, to such Termination Payment as the Executive would have been entitled
to had the Executive lived. For purposes of this Subsection 10.2, the
Termination Date shall be the earlier of thirty days following the giving of the
Notice of Termination, subject to extension pursuant to Section 1.14, or one day
prior to the end of the Employment Period.
11. RETIREMENT. If, during the Employment Period, the Executive and
the Company shall execute an agreement providing for the early retirement of the
Executive from the Company, or the Executive shall otherwise give notice that he
is voluntarily choosing to retire early from the Company, the Executive shall
receive Accrued Benefits through the Termination Date. However, if the
Executive's employment is terminated by the Executive for Good Reason or by the
Company other than by reason of death, disability or Cause and the Executive
also, in connection with such termination, elects voluntary early retirement,
the Executive shall also be entitled to receive a Termination Payment.
12. TERMINATION FOR DISABILITY. If, during the Employment Period, as a
result of the Executive's disability due to physical or mental illness or injury
(regardless of whether such illness or injury is job-related), the Executive
shall have been absent from the Executive's duties under this Agreement on a
full-time basis for a period of six consecutive months and, within thirty days
after the Company notifies the Executive in writing that it intends to terminate
the Executive's employment (which notice shall not constitute the Notice of
Termination contemplated below), the Executive shall not have returned to the
performance of the Executive's duties under this Agreement on a full-time basis,
the Company may terminate the Executive's employment for purposes of this
Agreement pursuant to a Notice of Termination given in accordance with Section
13. If the Executive's employment is terminated on account of the Executive's
disability in accordance with this Section, the Executive shall receive Accrued
Benefits in accordance with Section 9.1 hereof and shall remain eligible for all
benefits provided by any long term disability programs of the Company, Belden
Technologies or its Affiliates in effect at the time of such termination.
13. TERMINATION NOTICE AND PROCEDURE. Any Covered Termination by the
Company or the Executive shall be communicated by written Notice of Termination
to the Executive, if such Notice is given by the Company, and to the Company, if
such Notice is given by the Executive, all in accordance with the following
procedures and those set forth in Section 23:
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13.1 If such termination is for disability, Cause or Good Reason,
the Notice of Termination shall indicate in reasonable detail the facts and
circumstances alleged to provide a basis for such termination.
13.2 Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution duly
adopted by a majority of the directors of the Company (or any successor
corporation) then in office.
13.3 If the Notice is given by the Executive for Good Reason, the
Executive may cease performing his duties under this Agreement on or after the
date fifteen days after the delivery of Notice of Termination and shall in any
event cease employment on the Termination Date. If the Notice is given by the
Company, then the Executive may cease performing his duties under this Agreement
on the date of receipt of the Notice of Termination, subject to the Executive's
rights under this Agreement.
13.4 The Executive shall have thirty days, or such longer period
as the Company may determine to be appropriate, to cure any conduct or act, if
curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement pursuant to Subsection 1.4(iii).
13.5 The recipient of any Notice of Termination shall personally
deliver or mail in accordance with Section 23 written notice of any dispute
relating to such Notice of Termination to the party giving such Notice within
fifteen days after receipt thereof. However, if the Executive's conduct or act
alleged to provide grounds for termination by the Company for Cause is curable,
then such period shall be thirty days. After the expiration of such period, the
contents of the Notice of Termination shall become final and not subject to
dispute.
14. FURTHER OBLIGATIONS OF THE EXECUTIVE. The Executive agrees that,
in the event of any Covered Termination where the Executive is entitled to and
receives Accrued Benefits and the Termination Payment, the Executive shall not,
for a period of one year after the Termination Date, without the prior written
approval of the Company's Board of Directors, participate in the management of,
be employed by or own any business enterprise at a location within the United
States that engages in substantial competition with the Company or its
subsidiaries, where such enterprise's revenues from any competitive activities
amount to 40% or more of such enterprise's net revenues and sales for its most
recently completed fiscal year. However, nothing in this Section 14 shall
prohibit the Executive from owning stock or other securities of a competitor
amounting to less than five percent of the outstanding capital stock of such
competitor. The Executive also shall perform his obligations under the "Secrecy
Agreement" and the "Invention Assignment and Confidentiality Agreement" entered
into by the Company and the Executive.
15. EXPENSES AND INTEREST. If, after a Change in Control of the
Company, (i) a dispute arises with respect to the enforcement of the Executive's
rights under this Agreement or (ii) any legal
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or arbitration proceeding shall be brought to enforce or interpret any provision
contained in this Agreement or to recover damages for breach, in either case so
long as the Executive is not acting in bad faith, the Executive shall recover
from the Company any reasonable attorneys' fees and necessary costs and
disbursements incurred as a result of such dispute, legal or arbitration
proceeding ("Expenses"), and prejudgment interest on any money judgment or
arbitration award obtained by the Executive calculated at the rate of interest
announced by Bank of America, St. Louis, Missouri from time to time as its prime
or base lending rate from the date that payments to him should have been made
under this Agreement. Within ten days after the Executive's written request, the
Company shall pay to the Executive, or such other person or entity as the
Executive may designate in writing to the Company, the Executive's reasonable
Expenses in advance of the final disposition or conclusion of any such dispute,
legal or arbitration proceeding.
16. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation during and
after the Employment Period to pay the Executive the amounts and to make the
benefit and other arrangements provided in this Agreement shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against him or anyone else. Except as provided in Section
15 of this Agreement, all amounts payable by the Company hereunder shall be paid
without notice or demand. Each payment made under this Agreement by the Company
shall be final, and the Company will not seek to recover any part of such
payment from the Executive, or from whoever may be entitled to such payment, for
any reason.
17. SUCCESSORS.
17.1 If the Company sells, assigns or transfers all or
substantially all of its business and assets to any Person or if the Company
merges into or consolidates or otherwise combines (where the Company does not
survive such combination) with any Person (any such event, a "Sale of
Business"), then the Company shall assign all of its right, title and interest
in this Agreement as of the date of such event to such Person, and the Company
shall cause such Person, by written agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume and agree to perform from and
after the date of such assignment all of the terms, conditions and provisions
imposed by this Agreement upon the Company. Failure of the Company to obtain
such agreement prior to the effective date of such Sale of Business shall be a
breach of this Agreement constituting "Good Reason" for termination hereunder,
except that for purposes of implementing the foregoing the date upon which such
Sale of Business becomes effective shall be deemed the Termination Date. In case
of such assignment by the Company and of assumption and agreement by such
Person, as used in this Agreement, "Company" shall subsequently mean such Person
which executes and delivers the agreement provided for in this Section 17 or
that otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law, and this Agreement shall inure to the benefit of, and be
enforceable by, such Person. The Executive shall, in his discretion, be entitled
to proceed against any of such Persons, any Person which theretofore was such a
successor to the Company and the Company (as so defined) in any action to
enforce any rights of the Executive under this Agreement. Except as provided in
this Subsection, this Agreement shall not be assignable
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by the Company. This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company.
17.2 This Agreement and all rights of the Executive shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All amounts
payable to the Executive under Sections 7, 8, 9, 10, 11, 12 and 15 if the
Executive had lived shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs and representatives. However, the foregoing shall not
be construed to modify any terms of any benefit plan of the Company, as such
terms are in effect on the date of the Change in Control of the Company, that
expressly govern benefits under such plan in the event of the Executive's death.
18. SEVERABILITY. The provisions of this Agreement shall be regarded
as divisible, and if any provision or any part is declared invalid or
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts and the
applicability thereof shall not be so affected.
19. AMENDMENT. This Agreement may not be amended or modified at any
time except by written instrument executed by the Company and the Executive.
20. WITHHOLDING. The Company shall be entitled to withhold from
amounts to be paid to the Executive under this Agreement any federal, state or
local withholding or other taxes or charges which it is from time to time
required to withhold. However, the amount so withheld shall not exceed the
minimum amount required to be withheld by law. The Company shall be entitled to
rely on an opinion of nationally recognized tax counsel if any question as to
the amount or requirement of any such withholding shall arise.
21. CERTAIN RULES OF CONSTRUCTION. No Party shall be considered as
being responsible for the drafting of this Agreement for the purpose of applying
any rule construing ambiguities against the drafter or otherwise. No draft of
this Agreement shall be taken into account in construing this Agreement. Any
provision of this Agreement which requires an agreement in writing shall be
deemed to require that the writing in question be signed by the Executive and an
authorized representative of the Company. This Agreement supersedes the Change
of Control Employment Agreement previously entered into by the Parties.
22. GOVERNING LAW; RESOLUTION OF DISPUTES. This Agreement and the
rights and obligations under it shall be governed by and construed in accordance
with the laws of the State of Delaware. Any dispute arising out of this
Agreement shall, at the Executive's election, be determined by arbitration under
the rules of the American Arbitration Association then in effect (in which case
both parties shall be bound by the arbitration award) or by litigation. Whether
the dispute is to be settled by arbitration or litigation, the venue for the
arbitration or litigation shall be St. Louis, Missouri or, at the Executive's
election, if the Executive is no longer residing or working in the St. Louis,
Missouri metropolitan area, in the judicial district encompassing the city in
which the Executive resides. However, if the Executive is not then residing in
the United States, the election
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of the Executive with respect to such venue shall be either St. Louis, Missouri
or in the judicial district encompassing that city of the United States among
the thirty cities having the largest population (as determined by the most
recent United States Census data available at the Termination Date) that is
closest to the Executive's residence. The Parties consent to personal
jurisdiction in each trial court in the selected venue having subject matter
jurisdiction regardless of their residence or situs, and each party irrevocably
consents to service of process in the manner provided in Section 23.
23. NOTICE. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided by Section 13.4, shall be deemed given
when actually received by the Executive or actually received by the Company's
Secretary or any officer of the Company other than the Executive. If mailed,
such notices shall be mailed by United States registered or certified mail,
return receipt requested, addressee only, postage prepaid, if to the Company, to
Xxxxxx Inc., Attention: Secretary (or President, if the Executive is the
Secretary), 0000 Xxxxxxx Xxxx., Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000, or if to
the Executive, at the address set forth below the Executive's signature to this
Agreement, or to such other address as the Party to be notified shall have given
to the other Party in writing.
24. NO WAIVER. No waiver by either Party at any time of any breach by
the other Party of, or compliance with, any condition or provision of this
Agreement to be performed by the other Party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
25. HEADINGS. The headings are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
End of Page
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first written above.
XXXXXX INC.
By:
-------------------------------------
Attest:
---------------------------------
EXECUTIVE
/s/ X. Xxxxx Xxxxxxxxxx
-----------------------------------------
X. Xxxxx Xxxxxxxxxx
0000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
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CHANGE OF CONTROL EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 31st day of July, 2001, by Xxxxxx Inc., a
Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxx ("Executive").
R E C I T A L S
The Executive is an officer of the Company and is employed by Xxxxxx
Wire & Cable Company ("BWC"), a wholly-owned subsidiary of the Company, in a key
executive capacity. The Executive's services are valuable to the Company. The
Executive possesses intimate knowledge of the business and affairs of the
Company and has acquired certain confidential information with respect to the
Company.
The Company desires to insure that it will continue to have the benefit
of the Executive's services and to protect its confidential information and
goodwill. The Company recognizes that circumstances may arise in which a change
in control of the Company occurs, through acquisition or otherwise, causing
uncertainty about the Executive's future employment with the Company without
regard to the Executive's competence or past contributions. Such uncertainty may
result in the loss of valuable services of the Executive to the detriment of the
Company and its stockholders.
The Company and the Executive desire that any proposal for a change in
control or acquisition of the Company will be considered by the Executive
objectively and with reference only to the best interests of the Company and its
stockholders. The Executive will be in a better position to consider the
Company's best interests if the Executive is afforded reasonable security, as
provided in this Agreement, against altered conditions of employment which could
result from any such change in control or acquisition.
NOW, the Company and the Executive (collectively the "Parties" or
individually a "Party"), agree as follows:
1. CERTAIN DEFINITIONS.
1.1 ACT. The term "Act" means the Securities Exchange Act of
1934, as amended.
1.2 AFFILIATE AND ASSOCIATE. The terms "Affiliate" and
"Associate" shall have the meanings given them in Rule 12b-2 of the Act.
1.3 BENEFICIAL OWNER. A Person shall be deemed to be the
"Beneficial Owner" of any securities:
(i) that such Person or any other Person's Affiliates
or Associates has the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own,
(A) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase, or
(B) securities issuable upon exercise of
Rights issued pursuant to the terms of the Rights Agreement between the Company
and First Chicago Trust Company of New York (the "Rights Agreement"), dated at
July 6, 1995, as amended from time to time (or any successor to such Rights
Agreement), at any time before the issuance of such securities;
(ii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the Act), including pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding to
vote such security if the agreement, arrangement or understanding:
(A) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations under the Act and
(B) is not also then reportable on a
Schedule 13D under the Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in Subsection 1.3 (ii) above) or disposing of any voting securities of
the Company; provided, however, that nothing in this paragraph (iii) shall cause
a Person engaged in the business as an underwriter of securities to be deemed
the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days (40) after the date of such
acquisition.
1.4 CAUSE. "Cause" for termination by the Company of the
Executive's employment with the Company, BWC or any of their Affiliates after a
Change of Control of the Company shall, for purposes of this Agreement, be
limited to:
(i) the engaging by the Executive in intentional
conduct taken in bad faith which has caused demonstrable and serious financial
injury to the Company, as evidenced by
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a determination in a binding and final judgment, order or decree of a court or
administrative agency of competent jurisdiction, in effect after exhaustion or
lapse of all rights of appeal, in an action, suit or proceeding, whether civil,
criminal, administrative or investigative;
(ii) conviction of a felony (as evidenced by a
binding and final judgment, order or decree of a court of competent
jurisdiction, in effect after exhaustion of all rights of appeal) which
substantially impairs the Executive's ability to perform his duties or
responsibilities; and
(iii) continuing willful and unreasonable refusal by
the Executive to perform the Executive's duties or responsibilities (unless
significantly changed without the Executive's consent).
1.5 CHANGE IN CONTROL OF THE COMPANY. A "Change in Control of
the Company" shall be deemed to have occurred if:
(i) any Person (other than any employee benefit plan
of the Company or any subsidiary of the Company, any entity holding securities
of the Company for or pursuant to the terms of any such plan or any trustee,
administrator or fiduciary of such a plan) is or becomes the Beneficial Owner of
securities of the Company representing at least 30% of the combined voting power
of the Company's then outstanding securities (other than acquisitions directly
from the Company);
(ii) a Section 11(a)(ii) Event shall have occurred
under the Rights Agreement (or a similar event shall have occurred under any
successor to such Rights Agreement) at any time any Rights are issued and
outstanding thereunder;
(iii) one-third or more of the members of the Board
are not Continuing Directors; or
(iv) there shall be consummated any merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of the Company's Common Stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving corporation
immediately after the merger.
1.6 CODE. The term "Code" means the Internal Revenue Code of
1986, as amended.
1.7 CONTINUING DIRECTOR. The term "Continuing Director" means
(i) any member of the Board of Directors of the Company (the "Board") who was a
member of such Board on August 15, 1996, (ii) any successor of a Continuing
Director who is recommended to succeed a Continuing Director by a majority of
the Continuing Directors then on the Board, and (iii) any
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appointee who is recommended by a majority of the Continuing Directors then on
the Board.
1.8 COVERED TERMINATION. The term "Covered Termination" means
any termination of the Executive's employment where the Termination Date is any
date prior to the end of the Employment Period.
1.9 EMPLOYMENT PERIOD. The term "Employment Period" means a
period beginning on the date of a Change in Control of the Company (as defined
in Section 1.5 above), and ending at 11:59 p.m. St. Louis Time on the earlier of
the third anniversary of such date or the Executive's Normal Retirement Date.
1.10 GOOD REASON. The Executive shall have a "Good Reason" for
termination of employment after a Change in Control of the Company in the event
of:
(i) any breach of this Agreement by the Company,
including specifically any breach by the Company of its agreements contained in
Sections 4 (Duties), 5 (Compensation) or 6 (Annual Compensation Adjustments)
hereof;
(ii) the removal of the Executive from, or any
failure to reelect or reappoint the Executive to, any of the positions held with
the Company, BWC or any of their affiliates on the date of the Change in Control
of the Company or any other positions with the Company, BWC or any of their
affiliates, to which the Executive shall thereafter be elected, appointed or
assigned, except when such removal or failure to reelect or reappoint relates to
the termination by the Company of the Executive's employment for Cause or by
reason of disability pursuant to Section 12;
(iii) a good faith determination by the Executive
that there has been a significant adverse change, without the Executive's
written consent, in the Executive's working conditions or status with the
Company, BWC or any of their affiliates from such working conditions or status
in effect immediately prior to the Change in Control of the Company, including
but not limited to;
(A) a significant change in the nature or
scope of the Executive's authority, powers, functions, duties or
responsibilities, or
(B) a significant reduction in the level of
support services, staff, secretarial and other assistance, office space and
accoutrements; or
(iv) failure by the Company to obtain the Agreement
referred to in Section 17.1 (Successors) below; or
(v) any voluntary termination of employment by the
Executive where the Notice of Termination is delivered within 30 days of the
first anniversary of the Effective Date.
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1.11 NORMAL RETIREMENT DATE. The term "Normal Retirement Date"
means the date Executive attains the age of 70.
1.12 PERSON. The term "Person" shall mean any individual,
firm, partnership, corporation or other entity, including any successor (by
merger or otherwise) of such entity, or a group of any of the foregoing acting
in concert.
1.13 TERMINATION DATE. For purposes of this Agreement, except
as otherwise provided in Section 10.2 (Death) and Section 17.1 (Successors), the
term "Termination Date" means:
(i) if the Executive's employment is terminated by
the Executive's death, the date of death;
(ii) if the Executive's employment is terminated by
reason of voluntary early retirement, as agreed in writing by the Company and
the Executive, the date of such early retirement which is set forth in such
written agreement;
(iii) if the Executive's employment is terminated for
purposes of this Agreement by reason of disability pursuant to Section 12, the
earlier of thirty days after the Notice of Termination is given or one day prior
to the end of the Employment Period;
(iv) if the Executive's employment is terminated by
the Executive voluntarily (other than for Good Reason), the date the Notice of
Termination is given; and
(v) if the Executive's employment is terminated by
the Company (whether or not for Cause), or by the Executive for Good Reason, the
earlier of thirty days after the Notice of Termination is given or one day prior
to the end of the Employment Period. Notwithstanding the foregoing;
(A) If termination is for Cause pursuant to
Section 1.4(iii) of this Agreement and if the Executive has cured the conduct
constituting such Cause as described by the Company in its Notice of Termination
within such thirty day or shorter period, then the Executive's employment under
this Agreement shall continue as if the Company had not delivered its Notice of
Termination.
(B) If the Company shall give a Notice of
Termination for Cause or by reason of disability and the Executive in good faith
notifies the Company that a dispute exists concerning the termination within the
applicable period following receipt of notice, then the Executive may elect to
continue his employment (or, if the Executive ceased performing his duties under
this Agreement at the request of the Company at the time of delivery of Notice
of Termination, resume and continue employment) during such dispute and the
Termination Date shall be determined under this paragraph. If the Executive so
elects and it is thereafter determined that Cause or
-5-
disability (as the case may be ) did exist, the Termination Date shall be the
earliest of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section 22
(Governing Law; Resolution of Disputes), (2) the date of the Executive's death,
or (3) one day prior to the end of the Employment Period. If the Executive so
elects and it is subsequently determined that Cause or disability (as the case
may be ) did not exist, then the employment of the Executive under this
Agreement shall continue after such determination as if the Company had not
delivered its Notice of Termination and there shall be no Termination Date
arising out of such Notice. In either case, this Agreement continues, until the
Termination Date, if any, as if the Company had not delivered the Notice of
Termination except that, if it is finally determined that the Company properly
terminated the Executive for the reason asserted in the Notice of Termination,
the Executive shall in no case be entitled to a Termination Payment (as defined
below) arising out of events occurring after the Company delivered its Notice of
Termination.
(C) If the Executive shall in good faith
give a Notice of Termination for Good Reason and the Company notifies the
Executive that a dispute exists concerning the termination within the applicable
period following receipt of notice, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be determined
under this paragraph. If the Executive so elects and it is subsequently
determined that Good Reason did exist, the Termination Date shall be the
earliest of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section 22
(Governing Law; Resolution of Disputes), (2) the date of the Executive's death
or (3) one day prior to the end of the Employment Period. If the Executive so
elects and it is subsequently determined that Good Reason did not exist, then
the employment of the Executive under this Agreement shall continue after such
determination as if the Executive had not delivered the Notice of Termination
asserting Good Reason and there shall be no Termination Date arising out of such
Notice. In either case, this Agreement continues, until the Termination Date, if
any, as if the Company had not delivered the Notice of Termination except that,
if it is finally determined that Good Reason did exist, the Executive shall in
no case be denied the benefits described in Sections 8 and 9 (including a
Termination Payment) based on events occurring after the Executive delivered his
Notice of Termination.
(D) If an opinion is required to be
delivered pursuant to Section 9.3 hereof and such opinion shall not have been
delivered, the Termination Date shall be the earlier of the date on which such
opinion is delivered or one day prior to the end of the Employment Period.
-6-
(E) Except as provided in Paragraphs (B) and
(C) above, if the party receiving the Notice of Termination notifies the other
Party that a dispute exists concerning the termination within the appropriate
period following receipt of notice and it is finally determined that the reason
asserted in such Notice of Termination did not exist, then (1) if such Notice
was delivered by the Executive, the Executive will be deemed to have voluntarily
terminated his employment and the Termination Date shall be the earlier of the
date thirty days after the Notice of Termination is given or one day prior to
the end of the Employment Period and (2) if delivered by the Company, the
Company will be deemed to have terminated the Executive other than by reason of
death, disability or Cause.
2. TERMINATION PRIOR TO CHANGE IN CONTROL. The Company and the
Executive shall each retain the right to terminate the employment of the
Executive at any time prior to a Change in Control of the Company. If the
Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and all rights and obligations of
the parties under it shall cease.
3. EMPLOYMENT PERIOD. If a Change in Control of the Company occurs when
the Executive is employed by BWC, BWC will continue subsequently to employ the
Executive during the Employment Period, and the Executive will remain in the
employ of BWC, in accordance with and subject to the provisions of this
Agreement.
4. DUTIES. During the Employment Period, the Executive shall, in the
same capacities and positions held by the Executive at the time of the Change in
Control of the Company or in such other capacities and positions as may be
agreed to by the Company and the Executive in writing, devote the Executive's
best efforts and all of the Executive's business time, attention and skill to
the business and affairs of the Company, as such business and affairs now exist
and as they may subsequently be conducted. The services that are to be performed
by the Executive under this Agreement are to be rendered in the same
metropolitan area in which the Executive was employed at the time of such Change
in Control of the Company, or in such other place or places as shall be agreed
upon in writing by the Executive and the Company from time to time. Without the
Executive's consent, the Executive shall not be required to be absent from such
metropolitan area more than 45 days in any fiscal year of the Company.
5. COMPENSATION. During the Employment Period, the Executive shall be
compensated as follows:
5.1 The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies as
may be in effect immediately prior to the Change in Control of the Company, an
annual base salary in cash equivalent of not less than the Executive's annual
base salary as in effect immediately prior to the Change in Control of the
Company (which base salary shall, unless otherwise agreed in writing by the
Executive, include the current receipt by the Executive of any amounts that,
prior to the Change in Control of the Company, the Executive had elected to
defer, whether such compensation is deferred under Section 401(k) of the Code or
otherwise), subject to adjustment as provided below.
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5.2 The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive immediately prior to the Change in
Control of the Company, and shall be reimbursed, at such intervals and in
accordance with such standard policies as may be in effect immediately prior to
the Change in Control of the Company, for any monies advanced in connection with
the Executive's employment for reasonable and necessary expenses incurred by the
Executive on behalf of the Company, BWC or their affiliates, including travel
expenses.
5.3 The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's salary
grade or on any other requirement that excludes persons of comparable status to
the Executive unless such exclusion was in effect for such plan or an equivalent
plan immediately prior to the Change in Control of the Company), in any plan
providing benefits for the Company's salaried employees in general of the
Company, BWC or their Affiliates, including but not limited to the Management
Incentive Plan, the Long-Term Incentive Plan, group life insurance,
hospitalization, medical, dental, savings, profit sharing and stock bonus plans.
However, in no event shall the aggregate level of benefits under such plans in
which the Executive is included be less than the aggregate level of benefits
under plans of the Company, BWC or their Affiliates of the type referred to in
this Section 5.3 in which the Executive was participating immediately prior to
the Change in Control of the Company.
5.4 The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays to
which the Executive was entitled annually immediately prior to the Change in
Control of the Company or such greater amount of paid vacation and number of
paid holidays as may be made available annually to other executives of the
Company, BWC or their Affiliates of comparable status and position to the
Executive.
5.5 The Executive shall be included in all plans providing
additional benefits to executives of the Company, BWC or their Affiliates of
comparable status and position to the Executive, including deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans.
However, in no event shall the aggregate level of benefits under such plans be
less than the aggregate level of benefits under plans of the Company, BWC or
their Affiliates of the type referred to in this Section 5.5 in which the
Executive was participating immediately prior to the Change in Control of the
Company. Moreover, the obligation of the Company, BWC or their Affiliates to
include the Executive in bonus or incentive compensation plans shall be
determined by Section 5.6.
5.6 To assure that the Executive will have an opportunity to
earn incentive compensation after a Change in Control of the Company, the
Executive shall be included in a bonus plan of the Company, BWC or their
Affiliates that shall satisfy the standards described below (such plan, the
"Bonus Plan"). Bonuses under the Bonus Plan shall be payable with respect to
achieving such financial or other goals reasonably related to the business of
the Company as the Company shall establish (the "Goals"), all of which Goals
shall be attainable, prior to the end of the Employment Period, with
approximately the same degree of probability as the goals under the bonus plan
of the
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Company, BWC or their Affiliates as in effect immediately prior to the
Change in Control of the Company (the "Company Bonus Plan") and in view of the
Company's existing and projected financial and business circumstances applicable
at the time. The amount of the bonus (the "Bonus Amount") that the Executive
will be eligible to earn under the Bonus Plan shall be no less than the amount
of the Executive's maximum award provided in such Company Bonus Plan (such bonus
amount is referred to as the "Targeted Bonus"). If the Goals are not achieved
such that the entire Targeted Bonus is not payable, the Bonus Plan shall provide
for a payment of a Bonus Amount equal to a portion of the Targeted Bonus
reasonably related to that portion of the Goals that were achieved. Payment of
the Bonus Amount shall not be affected by any circumstance occurring subsequent
to the end of the Employment Period, including termination of the Executive's
employment.
6. ANNUAL COMPENSATION ADJUSTMENTS. During the Employment Period, the
Board of Directors of the Company (or an appropriate committee or officer
thereof) will consider and review, at least annually, the contributions of the
Executive to the Company, BWC or their Affiliates and in accordance with the
practice of the Company, BWC or their Affiliates prior to the Change in Control
of the Company, due consideration shall be given to the upward adjustment of the
Executive's base compensation rate, at least annually, (i) commensurate with
increases generally given to other executives of the Company, BWC or their
Affiliates of comparable status and position to the Executive, and (ii) as the
scope of the operations of the Company, BWC or their Affiliates or the
Executive's duties expand.
7. TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If there is a Covered
Termination for Cause or if the Executive voluntarily terminates his employment
other than for Good Reason (any such terminations to be subject to the
procedures set forth in Section 13), then the Executive shall be entitled to
receive only Accrued Benefits pursuant to Section 9.1.
8. TERMINATION GIVING RISE TO A TERMINATION PAYMENT.
8.1 If there is a Covered Termination by the Executive for
Good Reason, or by the Company other than by reason of (i) death, (ii)
disability pursuant to Section 12, or (iii) Cause (any such terminations to be
subject to the procedures set forth in Section 13), then the Executive shall be
entitled to receive, and the Company shall promptly pay, Accrued Benefits
pursuant to Section 9.1 and, in lieu of further base salary for periods
following the Termination Date, as liquidated damages and additional severance
pay the Termination Payment pursuant to Section 9.2.
8.2 If there is Covered Termination and the Executive is
entitled to Accrued Benefits and the Termination Payment, then the Executive
shall be entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of
the Company, outplacement services, on an individualized basis at a level of
service commensurate with the Executive's status with the Company, BWC or their
Affiliates immediately prior to the Change in Control of the Company (or, if
higher, immediately prior to the termination of the Executive's
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employment), provided by a nationally recognized executive placement firm
selected by the Company.
(ii) For two years after the date of Termination, the
Executive shall continue to be covered, at the expense of the Company, by the
same or equivalent life insurance, hospitalization, medical and dental coverage
as was required under this Agreement with respect to the Executive immediately
prior to the date the Notice of Termination is given.
9. PAYMENTS UPON TERMINATION.
9.1 ACCRUED BENEFITS. The Executive's "Accrued Benefits" shall
include the following amounts, payable as described in this Agreement:
(i) all base salary for the time period ending with
the Termination Date;
(ii) reimbursement for any monies advanced in
connection with the Executive's employment for reasonable and necessary expenses
incurred by the Executive on behalf of the Company, BWC or their Affiliates for
the time period ending with the Termination Date;
(iii) any other cash earned through the Termination
Date and deferred at the election of the Executive or pursuant to any deferred
compensation plan then in effect;
(iv) a lump sum payment of the bonus or incentive
compensation otherwise payable to the Executive with respect to the year in
which termination occurs under all bonus or incentive compensation plans in
which the Executive is a participant; and
(v) all other payments and benefits to which the
Executive (or in the event of the Executive's death, the Executive's surviving
spouse or other beneficiary) may be entitled as compensatory fringe benefits or
under the terms of any benefit plan of the Company, BWC or their Affiliates, and
severance payments under the Company's severance policies and practices as in
effect immediately prior to the Change in Control of the Company. Payment of
Accrued Benefits shall be made promptly in accordance with the Company's
prevailing practice with respect to Subsections (i) and (ii) or, with respect to
Subsections (iii), (iv) and (v), pursuant to the terms of the benefit plan or
practice establishing such benefits.
9.2 TERMINATION PAYMENT. The Termination Payment shall be an
amount equal to (A) the Executive's annual base salary, as in effect immediately
prior to the Change in Control of the Company, as adjusted upward, from time to
time, pursuant to Section 6, plus (B) the amount of the highest annual bonus
award (determined on an annualized basis for any bonus award paid for a period
of less than one year) paid to the Executive with respect to the two complete
fiscal years preceding the Termination Date (the aggregate amount set forth in
(A) and (B) hereof shall be referred to as "Annual Cash Compensation"), times
(C) a factor of 2. The Termination Payment shall be paid in cash and shall not
be reduced by any present value or similar factor, and the
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Executive shall not be required to mitigate the amount of the Termination
Payment by securing other employment or otherwise, nor will such Termination
Payment be reduced by reason of the Executive's securing other employment or for
any other reason. The Termination Payment shall be in addition to any other
severance payments to which the Executive is entitled under the Company's
severance policies and practices as in effect immediately prior to the Change in
Control of the Company.
9.3 TAXES.
(i) Gross-Up. Whether or not the Executive becomes
entitled to the Termination Payment, if any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's employment, including those provided under
Section 9.1, (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person) (all
such payments and benefits, including the Termination Payment, being hereinafter
called "Total Payments") will be subject (in whole or part) to the Excise Tax,
then the Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after deduction of
any Excise Tax on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the
Total Payments. (Excise Tax shall mean any excise tax imposed under Section 4999
of the Code.) For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive's residence
on the Date of Termination (or if there is no Date of Termination, then the date
on which the Gross-Up Payment is calculated for purposes of this Section 9.3),
net of the maximum reduction in federal income tax which could be obtained from
deduction of such state and local taxes.
(ii) Tax Counsel. For purposes of determining whether
any of the Total Payments will be subject to the Excise Tax and the amount of
such Excise Tax, (a) all of the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, unless in the
opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive
and selected by the accounting firm which was, immediately prior to the Change
in Control, the Company's independent auditor (the "Auditor"), such other
payments or benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 280G(b)(4)(A) of the Code, (b) all "excess
parachute payments" within the meaning of section 280G(b)(l) of the Code shall
be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel,
such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of section
280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax, and (c)
the value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section
9.3(iii) below, the Company shall provide the Executive with its
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calculation of the amounts referred to in this Section 9.2(ii) and such
supporting materials as are reasonably necessary for the Executive to evaluate
the Company's calculations. If the Executive disputes the Company's calculations
(in whole or in part), the reasonable opinion of Tax Counsel with respect to the
matter in dispute shall prevail.
(iii) Repayment. In the event that (a) amounts are
paid to the Executive pursuant to subsection (i) of this Section 9.2, and (b)
the Excise Tax is finally determined to be less than the amount taken into
account hereunder in calculating the Gross-Up Payment, the Executive shall repay
to the Company, within five (5) business days following the time that the amount
of such reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income and employment taxes imposed on the Gross-Up Payment being repaid by the
Executive), to the extent that such repayment results in (i) no portion of the
Total Payments being subject to the Excise Tax and (b) a dollar-for-dollar
reduction in the Executive's taxable income and wages for purposes of federal,
state and local income and employment taxes plus interest on the amount of such
repayment at the rate provided in section 1274(b)(2)(B)of the Code. In the event
that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time of the termination of the Executive's employment
(including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess and in respect of any
portion of the Excise Tax with respect to which the Company had not previously
made a Gross-Up Payment (plus any interest, penalties or additions payable by
the Executive with respect to such excess and such portion) within five (5)
business days following the time that the amount of such excess is finally
determined.
9.4 DATE OF PAYMENTS. The payments provided in Sections 9.2
and 9.3 shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments, and the
limitations on such payments set forth in Sections 9.2 or 9.3 above, cannot be
finally determined on or before such day, the Company shall pay to the Executive
on such day an estimate, as determined in good faith by the Executive or, in the
case of payments under Section 9.3, in accordance with Section 9.3 above, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest on the unpaid
remainder [or on all such payments to the extent the Company fails to make such
payments when due] at the rate provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the amount
of the estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to the Executive,
payable on the fifth (5th) business day after demand by the Company (together
with interest at the rate provided in section 1274(b)(2)(B) of the Code). At the
time that payments are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in
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writing shall be attached to the statement).
10. DEATH.
10.1 Except as provided in Section 10.2, in the event of a
Covered Termination due to the Executive's death, the Executive's estate, heirs
and beneficiaries shall receive all the Executive's Accrued Benefits through the
Termination Date.
10.2 In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled to the
benefits described in Section 10.1 hereof and, subject to the provisions of this
Agreement, to such Termination Payment as the Executive would have been entitled
to had the Executive lived. For purposes of this Subsection 10.2, the
Termination Date shall be the earlier of thirty days following the giving of the
Notice of Termination, subject to extension pursuant to Section 1.14, or one day
prior to the end of the Employment Period.
11. RETIREMENT. If, during the Employment Period, the Executive and the
Company shall execute an agreement providing for the early retirement of the
Executive from the Company, or the Executive shall otherwise give notice that he
is voluntarily choosing to retire early from the Company, the Executive shall
receive Accrued Benefits through the Termination Date. However, if the
Executive's employment is terminated by the Executive for Good Reason or by the
Company other than by reason of death, disability or Cause and the Executive
also, in connection with such termination, elects voluntary early retirement,
the Executive shall also be entitled to receive a Termination Payment.
12. TERMINATION FOR DISABILITY. If, during the Employment Period, as a
result of the Executive's disability due to physical or mental illness or injury
(regardless of whether such illness or injury is job-related), the Executive
shall have been absent from the Executive's duties under this Agreement on a
full-time basis for a period of six consecutive months and, within thirty days
after the Company notifies the Executive in writing that it intends to terminate
the Executive's employment (which notice shall not constitute the Notice of
Termination contemplated below), the Executive shall not have returned to the
performance of the Executive's duties under this Agreement on a full-time basis,
the Company may terminate the Executive's employment for purposes of this
Agreement pursuant to a Notice of Termination given in accordance with Section
13. If the Executive's employment is terminated on account of the Executive's
disability in accordance with this Section, the Executive shall receive Accrued
Benefits in accordance with Section 9.1 hereof and shall remain eligible for all
benefits provided by any long term disability programs of the Company, BWC or
its Affiliates in effect at the time of such termination.
13. TERMINATION NOTICE AND PROCEDURE. Any Covered Termination by the
Company or the Executive shall be communicated by written Notice of Termination
to the Executive, if such Notice is given by the Company, and to the Company, if
such Notice is given by the Executive, all in accordance with the following
procedures and those set forth in Section 23:
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13.1 If such termination is for disability, Cause or Good
Reason, the Notice of Termination shall indicate in reasonable detail the facts
and circumstances alleged to provide a basis for such termination.
13.2 Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution duly
adopted by a majority of the directors of the Company (or any successor
corporation) then in office.
13.3 If the Notice is given by the Executive for Good Reason,
the Executive may cease performing his duties under this Agreement on or after
the date fifteen days after the delivery of Notice of Termination and shall in
any event cease employment on the Termination Date. If the Notice is given by
the Company, then the Executive may cease performing his duties under this
Agreement on the date of receipt of the Notice of Termination, subject to the
Executive's rights under this Agreement.
13.4 The Executive shall have thirty days, or such longer
period as the Company may determine to be appropriate, to cure any conduct or
act, if curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement pursuant to Subsection 1.4(iii).
13.5 The recipient of any Notice of Termination shall
personally deliver or mail in accordance with Section 23 written notice of any
dispute relating to such Notice of Termination to the party giving such Notice
within fifteen days after receipt thereof. However, if the Executive's conduct
or act alleged to provide grounds for termination by the Company for Cause is
curable, then such period shall be thirty days. After the expiration of such
period, the contents of the Notice of Termination shall become final and not
subject to dispute.
14. FURTHER OBLIGATIONS OF THE EXECUTIVE. The Executive agrees that, in
the event of any Covered Termination where the Executive is entitled to and
receives Accrued Benefits and the Termination Payment, the Executive shall not,
for a period of one year after the Termination Date, without the prior written
approval of the Company's Board of Directors, participate in the management of,
be employed by or own any business enterprise at a location within the United
States that engages in substantial competition with the Company or its
subsidiaries, where such enterprise's revenues from any competitive activities
amount to 40% or more of such enterprise's net revenues and sales for its most
recently completed fiscal year. However, nothing in this Section 14 shall
prohibit the Executive from owning stock or other securities of a competitor
amounting to less than five percent of the outstanding capital stock of such
competitor. The Executive also shall perform his obligations under the "Secrecy
Agreement" and the "Invention Assignment and Confidentiality Agreement" entered
into by the Company and the Executive.
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15. EXPENSES AND INTEREST. If, after a Change in Control of the
Company, (i) a dispute arises with respect to the enforcement of the Executive's
rights under this Agreement or (ii) any legal or arbitration proceeding shall be
brought to enforce or interpret any provision contained in this Agreement or to
recover damages for breach, in either case so long as the Executive is not
acting in bad faith, the Executive shall recover from the Company any reasonable
attorneys' fees and necessary costs and disbursements incurred as a result of
such dispute, legal or arbitration proceeding ("Expenses"), and prejudgment
interest on any money judgment or arbitration award obtained by the Executive
calculated at the rate of interest announced by Bank of America, St. Louis,
Missouri from time to time as its prime or base lending rate from the date that
payments to him should have been made under this Agreement. Within ten days
after the Executive's written request, the Company shall pay to the Executive,
or such other person or entity as the Executive may designate in writing to the
Company, the Executive's reasonable Expenses in advance of the final disposition
or conclusion of any such dispute, legal or arbitration proceeding.
16. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation during and
after the Employment Period to pay the Executive the amounts and to make the
benefit and other arrangements provided in this Agreement shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against him or anyone else. Except as provided in Section
15 of this Agreement, all amounts payable by the Company hereunder shall be paid
without notice or demand. Each payment made under this Agreement by the Company
shall be final, and the Company will not seek to recover any part of such
payment from the Executive, or from whoever may be entitled to such payment, for
any reason.
17. SUCCESSORS.
17.1 If the Company sells, assigns or transfers all or
substantially all of its business and assets to any Person or if the Company
merges into or consolidates or otherwise combines (where the Company does not
survive such combination) with any Person (any such event, a "Sale of
Business"), then the Company shall assign all of its right, title and interest
in this Agreement as of the date of such event to such Person, and the Company
shall cause such Person, by written agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume and agree to perform from and
after the date of such assignment all of the terms, conditions and provisions
imposed by this Agreement upon the Company. Failure of the Company to obtain
such agreement prior to the effective date of such Sale of Business shall be a
breach of this Agreement constituting "Good Reason" for termination hereunder,
except that for purposes of implementing the foregoing the date upon which such
Sale of Business becomes effective shall be deemed the Termination Date. In case
of such assignment by the Company and of assumption and agreement by such
Person, as used in this Agreement, "Company" shall subsequently mean such Person
which executes and delivers the agreement provided for in this Section 17 or
that otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law, and this Agreement shall inure to the benefit of, and be
enforceable by, such Person. The Executive shall, in his discretion, be entitled
to proceed against any of such Persons, any Person which theretofore was such a
successor
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to the Company and the Company (as so defined) in any action to enforce any
rights of the Executive under this Agreement. Except as provided in this
Subsection, this Agreement shall not be assignable by the Company. This
Agreement shall not be terminated by the voluntary or involuntary dissolution of
the Company.
17.2 This Agreement and all rights of the Executive shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All amounts
payable to the Executive under Sections 7, 8, 9, 10, 11, 12 and 15 if the
Executive had lived shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs and representatives. However, the foregoing shall not
be construed to modify any terms of any benefit plan of the Company, as such
terms are in effect on the date of the Change in Control of the Company, that
expressly govern benefits under such plan in the event of the Executive's death.
18. SEVERABILITY. The provisions of this Agreement shall be regarded as
divisible, and if any provision or any part is declared invalid or unenforceable
by a court of competent jurisdiction, the validity and enforceability of the
remainder of such provisions or parts and the applicability thereof shall not be
so affected.
19. AMENDMENT. This Agreement may not be amended or modified at any
time except by written instrument executed by the Company and the Executive.
20. WITHHOLDING. The Company shall be entitled to withhold from amounts
to be paid to the Executive under this Agreement any federal, state or local
withholding or other taxes or charges which it is from time to time required to
withhold. However, the amount so withheld shall not exceed the minimum amount
required to be withheld by law. The Company shall be entitled to rely on an
opinion of nationally recognized tax counsel if any question as to the amount or
requirement of any such withholding shall arise.
21. CERTAIN RULES OF CONSTRUCTION. No Party shall be considered as
being responsible for the drafting of this Agreement for the purpose of applying
any rule construing ambiguities against the drafter or otherwise. No draft of
this Agreement shall be taken into account in construing this Agreement. Any
provision of this Agreement which requires an agreement in writing shall be
deemed to require that the writing in question be signed by the Executive and an
authorized representative of the Company. This Agreement supersedes the Change
of Control Employment Agreement previously entered into by the Parties.
22. GOVERNING LAW; RESOLUTION OF DISPUTES. This Agreement and the
rights and obligations under it shall be governed by and construed in accordance
with the laws of the State of Delaware. Any dispute arising out of this
Agreement shall, at the Executive's election, be determined by arbitration under
the rules of the American Arbitration Association then in effect (in which case
both parties shall be bound by the arbitration award) or by litigation. Whether
the dispute is to be settled by arbitration or litigation, the venue for the
arbitration or litigation shall be St. Louis, Missouri or, at the Executive's
election, if the Executive is no longer residing or working in the St.
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Louis, Missouri metropolitan area, in the judicial district encompassing the
city in which the Executive resides. However, if the Executive is not then
residing in the United States, the election of the Executive with respect to
such venue shall be either St. Louis, Missouri or in the judicial district
encompassing that city of the United States among the thirty cities having the
largest population (as determined by the most recent United States Census data
available at the Termination Date) that is closest to the Executive's residence.
The Parties consent to personal jurisdiction in each trial court in the selected
venue having subject matter jurisdiction regardless of their residence or situs,
and each party irrevocably consents to service of process in the manner provided
in Section 23.
23. NOTICE. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided by Section 13.4, shall be deemed given
when actually received by the Executive or actually received by the Company's
Secretary or any officer of the Company other than the Executive. If mailed,
such notices shall be mailed by United States registered or certified mail,
return receipt requested, addressee only, postage prepaid, if to the Company, to
Xxxxxx Inc., Attention: Secretary (or President, if the Executive is the
Secretary), 0000 Xxxxxxx Xxxx., Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000, or if to
the Executive, at the address set forth below the Executive's signature to this
Agreement, or to such other address as the Party to be notified shall have given
to the other Party in writing.
24. NO WAIVER. No waiver by either Party at any time of any breach by
the other Party of, or compliance with, any condition or provision of this
Agreement to be performed by the other Party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
25. HEADINGS. The headings are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
End of Page 17
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first written above.
XXXXXX INC.
By:
------------------------------
Attest:
---------------------------
EXECUTIVE
/s/ Xxxxxxx X. Xxxxx
----------------------------------
Xxxxxxx X. Xxxxx
0000 Xxxx Xxx-X Xxxx
Xxxxxxxx Xxxxxx, XX 00000
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CHANGE OF CONTROL EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 31st day of July, 2001, by Xxxxxx Inc., a
Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxx ("Executive").
R E C I T A L S
The Executive is an officer of the Company and is employed by Xxxxxx
Wire & Cable Company ("BWC"), a wholly-owned subsidiary of the Company, in a key
executive capacity. The Executive's services are valuable to the Company. The
Executive possesses intimate knowledge of the business and affairs of the
Company and has acquired certain confidential information with respect to the
Company.
The Company desires to insure that it will continue to have the benefit
of the Executive's services and to protect its confidential information and
goodwill. The Company recognizes that circumstances may arise in which a change
in control of the Company occurs, through acquisition or otherwise, causing
uncertainty about the Executive's future employment with the Company without
regard to the Executive's competence or past contributions. Such uncertainty may
result in the loss of valuable services of the Executive to the detriment of the
Company and its stockholders.
The Company and the Executive desire that any proposal for a change in
control or acquisition of the Company will be considered by the Executive
objectively and with reference only to the best interests of the Company and its
stockholders. The Executive will be in a better position to consider the
Company's best interests if the Executive is afforded reasonable security, as
provided in this Agreement, against altered conditions of employment which could
result from any such change in control or acquisition.
NOW, the Company and the Executive (collectively the "Parties" or
individually a "Party"), agree as follows:
1. CERTAIN DEFINITIONS.
1.1 ACT. The term "Act" means the Securities Exchange Act of
1934, as amended.
1.2 AFFILIATE AND ASSOCIATE. The terms "Affiliate" and
"Associate" shall have the meanings given them in Rule 12b-2 of the Act.
1.3 BENEFICIAL OWNER. A Person shall be deemed to be the
"Beneficial Owner" of any securities:
(i) that such Person or any other Person's Affiliates
or Associates has the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own,
(A) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase, or
(B) securities issuable upon exercise of
Rights issued pursuant to the terms of the Rights Agreement between the Company
and First Chicago Trust Company of New York (the "Rights Agreement"), dated at
July 6, 1995, as amended from time to time (or any successor to such Rights
Agreement), at any time before the issuance of such securities;
(ii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the Act), including pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding to
vote such security if the agreement, arrangement or understanding:
(A) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations under the Act and
(B) is not also then reportable on a
Schedule 13D under the Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in Subsection 1.3 (ii) above) or disposing of any voting securities of
the Company; provided, however, that nothing in this paragraph (iii) shall cause
a Person engaged in the business as an underwriter of securities to be deemed
the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days (40) after the date of such
acquisition.
1.4 CAUSE. "Cause" for termination by the Company of the
Executive's employment with the Company, BWC or any of their Affiliates after a
Change of Control of the Company shall, for purposes of this Agreement, be
limited to:
(i) the engaging by the Executive in intentional
conduct taken in bad faith which has caused demonstrable and serious financial
injury to the Company, as evidenced by
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a determination in a binding and final judgment, order or decree of a court or
administrative agency of competent jurisdiction, in effect after exhaustion or
lapse of all rights of appeal, in an action, suit or proceeding, whether civil,
criminal, administrative or investigative;
(ii) conviction of a felony (as evidenced by a
binding and final judgment, order or decree of a court of competent
jurisdiction, in effect after exhaustion of all rights of appeal) which
substantially impairs the Executive's ability to perform his duties or
responsibilities; and
(iii) continuing willful and unreasonable refusal by
the Executive to perform the Executive's duties or responsibilities (unless
significantly changed without the Executive's consent).
1.5 CHANGE IN CONTROL OF THE COMPANY. A "Change in Control of
the Company" shall be deemed to have occurred if:
(i) any Person (other than any employee benefit plan
of the Company or any subsidiary of the Company, any entity holding securities
of the Company for or pursuant to the terms of any such plan or any trustee,
administrator or fiduciary of such a plan) is or becomes the Beneficial Owner of
securities of the Company representing at least 30% of the combined voting power
of the Company's then outstanding securities (other than acquisitions directly
from the Company);
(ii) a Section 11(a)(ii) Event shall have occurred
under the Rights Agreement (or a similar event shall have occurred under any
successor to such Rights Agreement) at any time any Rights are issued and
outstanding thereunder;
(iii) one-third or more of the members of the Board
are not Continuing Directors; or
(iv) there shall be consummated any merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of the Company's Common Stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving corporation
immediately after the merger.
1.6 CODE. The term "Code" means the Internal Revenue Code of
1986, as amended.
1.7 CONTINUING DIRECTOR. The term "Continuing Director" means
(i) any member of the Board of Directors of the Company (the "Board") who was a
member of such Board on August 15, 1996, (ii) any successor of a Continuing
Director who is recommended to succeed a Continuing Director by a majority of
the Continuing Directors then on the Board, and (iii) any
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appointee who is recommended by a majority of the Continuing Directors then on
the Board.
1.8 COVERED TERMINATION. The term "Covered Termination" means
any termination of the Executive's employment where the Termination Date is any
date prior to the end of the Employment Period.
1.9 EMPLOYMENT PERIOD. The term "Employment Period" means a
period beginning on the date of a Change in Control of the Company (as defined
in Section 1.5 above), and ending at 11:59 p.m. St. Louis Time on the earlier of
the third anniversary of such date or the Executive's Normal Retirement Date.
1.10 GOOD REASON. The Executive shall have a "Good Reason" for
termination of employment after a Change in Control of the Company in the event
of:
(i) any breach of this Agreement by the Company,
including specifically any breach by the Company of its agreements contained in
Sections 4 (Duties), 5 (Compensation) or 6 (Annual Compensation Adjustments)
hereof;
(ii) the removal of the Executive from, or any
failure to reelect or reappoint the Executive to, any of the positions held with
the Company, BWC or any of their affiliates on the date of the Change in Control
of the Company or any other positions with the Company, BWC or any of their
affiliates, to which the Executive shall thereafter be elected, appointed or
assigned, except when such removal or failure to reelect or reappoint relates to
the termination by the Company of the Executive's employment for Cause or by
reason of disability pursuant to Section 12;
(iii) a good faith determination by the Executive
that there has been a significant adverse change, without the Executive's
written consent, in the Executive's working conditions or status with the
Company, BWC or any of their affiliates from such working conditions or status
in effect immediately prior to the Change in Control of the Company, including
but not limited to;
(A) a significant change in the nature or
scope of the Executive's authority, powers, functions, duties or
responsibilities, or
(B) a significant reduction in the level of
support services, staff, secretarial and other assistance, office space and
accoutrements; or
(iv) failure by the Company to obtain the Agreement
referred to in Section 17.1 (Successors) below; or
(v) any voluntary termination of employment by the
Executive where the Notice of Termination is delivered within 30 days of the
first anniversary of the Effective Date.
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1.11 NORMAL RETIREMENT DATE. The term "Normal Retirement Date"
means the date Executive attains the age of 70.
1.12 PERSON. The term "Person" shall mean any individual,
firm, partnership, corporation or other entity, including any successor (by
merger or otherwise) of such entity, or a group of any of the foregoing acting
in concert.
1.13 TERMINATION DATE. For purposes of this Agreement, except
as otherwise provided in Section 10.2 (Death) and Section 17.1 (Successors), the
term "Termination Date" means:
(i) if the Executive's employment is terminated by
the Executive's death, the date of death;
(ii) if the Executive's employment is terminated by
reason of voluntary early retirement, as agreed in writing by the Company and
the Executive, the date of such early retirement which is set forth in such
written agreement;
(iii) if the Executive's employment is terminated for
purposes of this Agreement by reason of disability pursuant to Section 12, the
earlier of thirty days after the Notice of Termination is given or one day prior
to the end of the Employment Period;
(iv) if the Executive's employment is terminated by
the Executive voluntarily (other than for Good Reason), the date the Notice of
Termination is given; and
(v) if the Executive's employment is terminated by
the Company (whether or not for Cause), or by the Executive for Good Reason, the
earlier of thirty days after the Notice of Termination is given or one day prior
to the end of the Employment Period. Notwithstanding the foregoing;
(A) If termination is for Cause pursuant to
Section 1.4(iii) of this Agreement and if the Executive has cured the conduct
constituting such Cause as described by the Company in its Notice of Termination
within such thirty day or shorter period, then the Executive's employment under
this Agreement shall continue as if the Company had not delivered its Notice of
Termination.
(B) If the Company shall give a Notice of
Termination for Cause or by reason of disability and the Executive in good faith
notifies the Company that a dispute exists concerning the termination within the
applicable period following receipt of notice, then the Executive may elect to
continue his employment (or, if the Executive ceased performing his duties under
this Agreement at the request of the Company at the time of delivery of Notice
of Termination, resume and continue employment) during such dispute and the
Termination Date shall be determined under this paragraph. If the Executive so
elects and it is thereafter determined that Cause or
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disability (as the case may be ) did exist, the Termination Date shall be the
earliest of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section 22
(Governing Law; Resolution of Disputes), (2) the date of the Executive's death,
or (3) one day prior to the end of the Employment Period. If the Executive so
elects and it is subsequently determined that Cause or disability (as the case
may be ) did not exist, then the employment of the Executive under this
Agreement shall continue after such determination as if the Company had not
delivered its Notice of Termination and there shall be no Termination Date
arising out of such Notice. In either case, this Agreement continues, until the
Termination Date, if any, as if the Company had not delivered the Notice of
Termination except that, if it is finally determined that the Company properly
terminated the Executive for the reason asserted in the Notice of Termination,
the Executive shall in no case be entitled to a Termination Payment (as defined
below) arising out of events occurring after the Company delivered its Notice of
Termination.
(C) If the Executive shall in good faith
give a Notice of Termination for Good Reason and the Company notifies the
Executive that a dispute exists concerning the termination within the applicable
period following receipt of notice, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be determined
under this paragraph. If the Executive so elects and it is subsequently
determined that Good Reason did exist, the Termination Date shall be the
earliest of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section 22
(Governing Law; Resolution of Disputes), (2) the date of the Executive's death
or (3) one day prior to the end of the Employment Period. If the Executive so
elects and it is subsequently determined that Good Reason did not exist, then
the employment of the Executive under this Agreement shall continue after such
determination as if the Executive had not delivered the Notice of Termination
asserting Good Reason and there shall be no Termination Date arising out of such
Notice. In either case, this Agreement continues, until the Termination Date, if
any, as if the Company had not delivered the Notice of Termination except that,
if it is finally determined that Good Reason did exist, the Executive shall in
no case be denied the benefits described in Sections 8 and 9 (including a
Termination Payment) based on events occurring after the Executive delivered his
Notice of Termination.
(D) If an opinion is required to be
delivered pursuant to Section 9.3 hereof and such opinion shall not have been
delivered, the Termination Date shall be the earlier of the date on which such
opinion is delivered or one day prior to the end of the Employment Period.
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(E) Except as provided in Paragraphs (B) and
(C) above, if the party receiving the Notice of Termination notifies the other
Party that a dispute exists concerning the termination within the appropriate
period following receipt of notice and it is finally determined that the reason
asserted in such Notice of Termination did not exist, then (1) if such Notice
was delivered by the Executive, the Executive will be deemed to have voluntarily
terminated his employment and the Termination Date shall be the earlier of the
date thirty days after the Notice of Termination is given or one day prior to
the end of the Employment Period and (2) if delivered by the Company, the
Company will be deemed to have terminated the Executive other than by reason of
death, disability or Cause.
2. TERMINATION PRIOR TO CHANGE IN CONTROL. The Company and the
Executive shall each retain the right to terminate the employment of the
Executive at any time prior to a Change in Control of the Company. If the
Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and all rights and obligations of
the parties under it shall cease.
3. EMPLOYMENT PERIOD. If a Change in Control of the Company occurs when
the Executive is employed by BWC, BWC will continue subsequently to employ the
Executive during the Employment Period, and the Executive will remain in the
employ of BWC, in accordance with and subject to the provisions of this
Agreement.
4. DUTIES. During the Employment Period, the Executive shall, in the
same capacities and positions held by the Executive at the time of the Change in
Control of the Company or in such other capacities and positions as may be
agreed to by the Company and the Executive in writing, devote the Executive's
best efforts and all of the Executive's business time, attention and skill to
the business and affairs of the Company, as such business and affairs now exist
and as they may subsequently be conducted. The services that are to be performed
by the Executive under this Agreement are to be rendered in the same
metropolitan area in which the Executive was employed at the time of such Change
in Control of the Company, or in such other place or places as shall be agreed
upon in writing by the Executive and the Company from time to time. Without the
Executive's consent, the Executive shall not be required to be absent from such
metropolitan area more than 45 days in any fiscal year of the Company.
5. COMPENSATION. During the Employment Period, the Executive shall be
compensated as follows:
5.1 The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies as
may be in effect immediately prior to the Change in Control of the Company, an
annual base salary in cash equivalent of not less than the Executive's annual
base salary as in effect immediately prior to the Change in Control of the
Company (which base salary shall, unless otherwise agreed in writing by the
Executive, include the current receipt by the Executive of any amounts that,
prior to the Change in Control of the Company, the Executive had elected to
defer, whether such compensation is deferred under Section 401(k) of the Code or
otherwise), subject to adjustment as provided below.
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5.2 The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive immediately prior to the Change in
Control of the Company, and shall be reimbursed, at such intervals and in
accordance with such standard policies as may be in effect immediately prior to
the Change in Control of the Company, for any monies advanced in connection with
the Executive's employment for reasonable and necessary expenses incurred by the
Executive on behalf of the Company, BWC or their affiliates, including travel
expenses.
5.3 The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's salary
grade or on any other requirement that excludes persons of comparable status to
the Executive unless such exclusion was in effect for such plan or an equivalent
plan immediately prior to the Change in Control of the Company), in any plan
providing benefits for the Company's salaried employees in general of the
Company, BWC or their Affiliates, including but not limited to the Management
Incentive Plan, the Long-Term Incentive Plan, group life insurance,
hospitalization, medical, dental, savings, profit sharing and stock bonus plans.
However, in no event shall the aggregate level of benefits under such plans in
which the Executive is included be less than the aggregate level of benefits
under plans of the Company, BWC or their Affiliates of the type referred to in
this Section 5.3 in which the Executive was participating immediately prior to
the Change in Control of the Company.
5.4 The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays to
which the Executive was entitled annually immediately prior to the Change in
Control of the Company or such greater amount of paid vacation and number of
paid holidays as may be made available annually to other executives of the
Company, BWC or their Affiliates of comparable status and position to the
Executive.
5.5 The Executive shall be included in all plans providing
additional benefits to executives of the Company, BWC or their Affiliates of
comparable status and position to the Executive, including deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans.
However, in no event shall the aggregate level of benefits under such plans be
less than the aggregate level of benefits under plans of the Company, BWC or
their Affiliates of the type referred to in this Section 5.5 in which the
Executive was participating immediately prior to the Change in Control of the
Company. Moreover, the obligation of the Company, BWC or their Affiliates to
include the Executive in bonus or incentive compensation plans shall be
determined by Section 5.6.
5.6 To assure that the Executive will have an opportunity to
earn incentive compensation after a Change in Control of the Company, the
Executive shall be included in a bonus plan of the Company, BWC or their
Affiliates that shall satisfy the standards described below (such plan, the
"Bonus Plan"). Bonuses under the Bonus Plan shall be payable with respect to
achieving such financial or other goals reasonably related to the business of
the Company as the Company shall establish (the "Goals"), all of which Goals
shall be attainable, prior to the end of the Employment Period, with
approximately the same degree of probability as the goals under the bonus plan
of the
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Company, BWC or their Affiliates as in effect immediately prior to the
Change in Control of the Company (the "Company Bonus Plan") and in view of the
Company's existing and projected financial and business circumstances applicable
at the time. The amount of the bonus (the "Bonus Amount") that the Executive
will be eligible to earn under the Bonus Plan shall be no less than the amount
of the Executive's maximum award provided in such Company Bonus Plan (such bonus
amount is referred to as the "Targeted Bonus"). If the Goals are not achieved
such that the entire Targeted Bonus is not payable, the Bonus Plan shall provide
for a payment of a Bonus Amount equal to a portion of the Targeted Bonus
reasonably related to that portion of the Goals that were achieved. Payment of
the Bonus Amount shall not be affected by any circumstance occurring subsequent
to the end of the Employment Period, including termination of the Executive's
employment.
6. ANNUAL COMPENSATION ADJUSTMENTS. During the Employment Period, the
Board of Directors of the Company (or an appropriate committee or officer
thereof) will consider and review, at least annually, the contributions of the
Executive to the Company, BWC or their Affiliates and in accordance with the
practice of the Company, BWC or their Affiliates prior to the Change in Control
of the Company, due consideration shall be given to the upward adjustment of the
Executive's base compensation rate, at least annually, (i) commensurate with
increases generally given to other executives of the Company, BWC or their
Affiliates of comparable status and position to the Executive, and (ii) as the
scope of the operations of the Company, BWC or their Affiliates or the
Executive's duties expand.
7. TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If there is a Covered
Termination for Cause or if the Executive voluntarily terminates his employment
other than for Good Reason (any such terminations to be subject to the
procedures set forth in Section 13), then the Executive shall be entitled to
receive only Accrued Benefits pursuant to Section 9.1.
8. TERMINATION GIVING RISE TO A TERMINATION PAYMENT.
8.1 If there is a Covered Termination by the Executive for
Good Reason, or by the Company other than by reason of (i) death, (ii)
disability pursuant to Section 12, or (iii) Cause (any such terminations to be
subject to the procedures set forth in Section 13), then the Executive shall be
entitled to receive, and the Company shall promptly pay, Accrued Benefits
pursuant to Section 9.1 and, in lieu of further base salary for periods
following the Termination Date, as liquidated damages and additional severance
pay the Termination Payment pursuant to Section 9.2.
8.2 If there is Covered Termination and the Executive is
entitled to Accrued Benefits and the Termination Payment, then the Executive
shall be entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of
the Company, outplacement services, on an individualized basis at a level of
service commensurate with the Executive's status with the Company, BWC or their
Affiliates immediately prior to the Change in Control of the Company (or, if
higher, immediately prior to the termination of the Executive's
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employment), provided by a nationally recognized executive placement firm
selected by the Company.
(ii) For two years after the date of Termination, the
Executive shall continue to be covered, at the expense of the Company, by the
same or equivalent life insurance, hospitalization, medical and dental coverage
as was required under this Agreement with respect to the Executive immediately
prior to the date the Notice of Termination is given.
9. PAYMENTS UPON TERMINATION.
9.1 ACCRUED BENEFITS. The Executive's "Accrued Benefits" shall
include the following amounts, payable as described in this Agreement:
(i) all base salary for the time period ending with
the Termination Date;
(ii) reimbursement for any monies advanced in
connection with the Executive's employment for reasonable and necessary expenses
incurred by the Executive on behalf of the Company, BWC or their Affiliates for
the time period ending with the Termination Date;
(iii) any other cash earned through the Termination
Date and deferred at the election of the Executive or pursuant to any deferred
compensation plan then in effect;
(iv) a lump sum payment of the bonus or incentive
compensation otherwise payable to the Executive with respect to the year in
which termination occurs under all bonus or incentive compensation plans in
which the Executive is a participant; and
(v) all other payments and benefits to which the
Executive (or in the event of the Executive's death, the Executive's surviving
spouse or other beneficiary) may be entitled as compensatory fringe benefits or
under the terms of any benefit plan of the Company, BWC or their Affiliates, and
severance payments under the Company's severance policies and practices as in
effect immediately prior to the Change in Control of the Company. Payment of
Accrued Benefits shall be made promptly in accordance with the Company's
prevailing practice with respect to Subsections (i) and (ii) or, with respect to
Subsections (iii), (iv) and (v), pursuant to the terms of the benefit plan or
practice establishing such benefits.
9.2 TERMINATION PAYMENT. The Termination Payment shall be an
amount equal to (A) the Executive's annual base salary, as in effect immediately
prior to the Change in Control of the Company, as adjusted upward, from time to
time, pursuant to Section 6, plus (B) the amount of the highest annual bonus
award (determined on an annualized basis for any bonus award paid for a period
of less than one year) paid to the Executive with respect to the two complete
fiscal years preceding the Termination Date (the aggregate amount set forth in
(A) and (B) hereof shall be referred to as "Annual Cash Compensation"), times
(C) a factor of 2. The Termination Payment shall be paid in cash and shall not
be reduced by any present value or similar factor, and the
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Executive shall not be required to mitigate the amount of the Termination
Payment by securing other employment or otherwise, nor will such Termination
Payment be reduced by reason of the Executive's securing other employment or for
any other reason. The Termination Payment shall be in addition to any other
severance payments to which the Executive is entitled under the Company's
severance policies and practices as in effect immediately prior to the Change in
Control of the Company.
9.3 TAXES.
(i) Gross-Up. Whether or not the Executive becomes
entitled to the Termination Payment, if any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's employment, including those provided under
Section 9.1, (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person) (all
such payments and benefits, including the Termination Payment, being hereinafter
called "Total Payments") will be subject (in whole or part) to the Excise Tax,
then the Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after deduction of
any Excise Tax on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the
Total Payments. (Excise Tax shall mean any excise tax imposed under Section 4999
of the Code.) For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive's residence
on the Date of Termination (or if there is no Date of Termination, then the date
on which the Gross-Up Payment is calculated for purposes of this Section 9.3),
net of the maximum reduction in federal income tax which could be obtained from
deduction of such state and local taxes.
(ii) Tax Counsel. For purposes of determining whether
any of the Total Payments will be subject to the Excise Tax and the amount of
such Excise Tax, (a) all of the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, unless in the
opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive
and selected by the accounting firm which was, immediately prior to the Change
in Control, the Company's independent auditor (the "Auditor"), such other
payments or benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 280G(b)(4)(A) of the Code, (b) all "excess
parachute payments" within the meaning of section 280G(b)(l) of the Code shall
be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel,
such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of section
280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax, and (c)
the value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section
9.3(iii) below, the Company shall provide the Executive with its
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calculation of the amounts referred to in this Section 9.2(ii) and such
supporting materials as are reasonably necessary for the Executive to evaluate
the Company's calculations. If the Executive disputes the Company's calculations
(in whole or in part), the reasonable opinion of Tax Counsel with respect to the
matter in dispute shall prevail.
(iii) Repayment. In the event that (a) amounts are
paid to the Executive pursuant to subsection (i) of this Section 9.2, and (b)
the Excise Tax is finally determined to be less than the amount taken into
account hereunder in calculating the Gross-Up Payment, the Executive shall repay
to the Company, within five (5) business days following the time that the amount
of such reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income and employment taxes imposed on the Gross-Up Payment being repaid by the
Executive), to the extent that such repayment results in (i) no portion of the
Total Payments being subject to the Excise Tax and (b) a dollar-for-dollar
reduction in the Executive's taxable income and wages for purposes of federal,
state and local income and employment taxes plus interest on the amount of such
repayment at the rate provided in section 1274(b)(2)(B)of the Code. In the event
that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time of the termination of the Executive's employment
(including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess and in respect of any
portion of the Excise Tax with respect to which the Company had not previously
made a Gross-Up Payment (plus any interest, penalties or additions payable by
the Executive with respect to such excess and such portion) within five (5)
business days following the time that the amount of such excess is finally
determined.
9.4 DATE OF PAYMENTS. The payments provided in Sections 9.2
and 9.3 shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments, and the
limitations on such payments set forth in Sections 9.2 or 9.3 above, cannot be
finally determined on or before such day, the Company shall pay to the Executive
on such day an estimate, as determined in good faith by the Executive or, in the
case of payments under Section 9.3, in accordance with Section 9.3 above, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest on the unpaid
remainder [or on all such payments to the extent the Company fails to make such
payments when due] at the rate provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the amount
of the estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to the Executive,
payable on the fifth (5th) business day after demand by the Company (together
with interest at the rate provided in section 1274(b)(2)(B) of the Code). At the
time that payments are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in
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writing shall be attached to the statement).
10. DEATH.
10.1 Except as provided in Section 10.2, in the event of a
Covered Termination due to the Executive's death, the Executive's estate, heirs
and beneficiaries shall receive all the Executive's Accrued Benefits through the
Termination Date.
10.2 In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled to the
benefits described in Section 10.1 hereof and, subject to the provisions of this
Agreement, to such Termination Payment as the Executive would have been entitled
to had the Executive lived. For purposes of this Subsection 10.2, the
Termination Date shall be the earlier of thirty days following the giving of the
Notice of Termination, subject to extension pursuant to Section 1.14, or one day
prior to the end of the Employment Period.
11. RETIREMENT. If, during the Employment Period, the Executive and the
Company shall execute an agreement providing for the early retirement of the
Executive from the Company, or the Executive shall otherwise give notice that he
is voluntarily choosing to retire early from the Company, the Executive shall
receive Accrued Benefits through the Termination Date. However, if the
Executive's employment is terminated by the Executive for Good Reason or by the
Company other than by reason of death, disability or Cause and the Executive
also, in connection with such termination, elects voluntary early retirement,
the Executive shall also be entitled to receive a Termination Payment.
12. TERMINATION FOR DISABILITY. If, during the Employment Period, as a
result of the Executive's disability due to physical or mental illness or injury
(regardless of whether such illness or injury is job-related), the Executive
shall have been absent from the Executive's duties under this Agreement on a
full-time basis for a period of six consecutive months and, within thirty days
after the Company notifies the Executive in writing that it intends to terminate
the Executive's employment (which notice shall not constitute the Notice of
Termination contemplated below), the Executive shall not have returned to the
performance of the Executive's duties under this Agreement on a full-time basis,
the Company may terminate the Executive's employment for purposes of this
Agreement pursuant to a Notice of Termination given in accordance with Section
13. If the Executive's employment is terminated on account of the Executive's
disability in accordance with this Section, the Executive shall receive Accrued
Benefits in accordance with Section 9.1 hereof and shall remain eligible for all
benefits provided by any long term disability programs of the Company, BWC or
its Affiliates in effect at the time of such termination.
13. TERMINATION NOTICE AND PROCEDURE. Any Covered Termination by the
Company or the Executive shall be communicated by written Notice of Termination
to the Executive, if such Notice is given by the Company, and to the Company, if
such Notice is given by the Executive, all in accordance with the following
procedures and those set forth in Section 23:
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13.1 If such termination is for disability, Cause or Good
Reason, the Notice of Termination shall indicate in reasonable detail the facts
and circumstances alleged to provide a basis for such termination.
13.2 Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution duly
adopted by a majority of the directors of the Company (or any successor
corporation) then in office.
13.3 If the Notice is given by the Executive for Good Reason,
the Executive may cease performing his duties under this Agreement on or after
the date fifteen days after the delivery of Notice of Termination and shall in
any event cease employment on the Termination Date. If the Notice is given by
the Company, then the Executive may cease performing his duties under this
Agreement on the date of receipt of the Notice of Termination, subject to the
Executive's rights under this Agreement.
13.4 The Executive shall have thirty days, or such longer
period as the Company may determine to be appropriate, to cure any conduct or
act, if curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement pursuant to Subsection 1.4(iii).
13.5 The recipient of any Notice of Termination shall
personally deliver or mail in accordance with Section 23 written notice of any
dispute relating to such Notice of Termination to the party giving such Notice
within fifteen days after receipt thereof. However, if the Executive's conduct
or act alleged to provide grounds for termination by the Company for Cause is
curable, then such period shall be thirty days. After the expiration of such
period, the contents of the Notice of Termination shall become final and not
subject to dispute.
14. FURTHER OBLIGATIONS OF THE EXECUTIVE. The Executive agrees that, in
the event of any Covered Termination where the Executive is entitled to and
receives Accrued Benefits and the Termination Payment, the Executive shall not,
for a period of one year after the Termination Date, without the prior written
approval of the Company's Board of Directors, participate in the management of,
be employed by or own any business enterprise at a location within the United
States that engages in substantial competition with the Company or its
subsidiaries, where such enterprise's revenues from any competitive activities
amount to 40% or more of such enterprise's net revenues and sales for its most
recently completed fiscal year. However, nothing in this Section 14 shall
prohibit the Executive from owning stock or other securities of a competitor
amounting to less than five percent of the outstanding capital stock of such
competitor. The Executive also shall perform his obligations under the "Secrecy
Agreement" and the "Invention Assignment and Confidentiality Agreement" entered
into by the Company and the Executive.
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15. EXPENSES AND INTEREST. If, after a Change in Control of the
Company, (i) a dispute arises with respect to the enforcement of the Executive's
rights under this Agreement or (ii) any legal or arbitration proceeding shall be
brought to enforce or interpret any provision contained in this Agreement or to
recover damages for breach, in either case so long as the Executive is not
acting in bad faith, the Executive shall recover from the Company any reasonable
attorneys' fees and necessary costs and disbursements incurred as a result of
such dispute, legal or arbitration proceeding ("Expenses"), and prejudgment
interest on any money judgment or arbitration award obtained by the Executive
calculated at the rate of interest announced by Bank of America, St. Louis,
Missouri from time to time as its prime or base lending rate from the date that
payments to him should have been made under this Agreement. Within ten days
after the Executive's written request, the Company shall pay to the Executive,
or such other person or entity as the Executive may designate in writing to the
Company, the Executive's reasonable Expenses in advance of the final disposition
or conclusion of any such dispute, legal or arbitration proceeding.
16. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation during and
after the Employment Period to pay the Executive the amounts and to make the
benefit and other arrangements provided in this Agreement shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against him or anyone else. Except as provided in Section
15 of this Agreement, all amounts payable by the Company hereunder shall be paid
without notice or demand. Each payment made under this Agreement by the Company
shall be final, and the Company will not seek to recover any part of such
payment from the Executive, or from whoever may be entitled to such payment, for
any reason.
17. SUCCESSORS.
17.1 If the Company sells, assigns or transfers all or
substantially all of its business and assets to any Person or if the Company
merges into or consolidates or otherwise combines (where the Company does not
survive such combination) with any Person (any such event, a "Sale of
Business"), then the Company shall assign all of its right, title and interest
in this Agreement as of the date of such event to such Person, and the Company
shall cause such Person, by written agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume and agree to perform from and
after the date of such assignment all of the terms, conditions and provisions
imposed by this Agreement upon the Company. Failure of the Company to obtain
such agreement prior to the effective date of such Sale of Business shall be a
breach of this Agreement constituting "Good Reason" for termination hereunder,
except that for purposes of implementing the foregoing the date upon which such
Sale of Business becomes effective shall be deemed the Termination Date. In case
of such assignment by the Company and of assumption and agreement by such
Person, as used in this Agreement, "Company" shall subsequently mean such Person
which executes and delivers the agreement provided for in this Section 17 or
that otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law, and this Agreement shall inure to the benefit of, and be
enforceable by, such Person. The Executive shall, in his discretion, be entitled
to proceed against any of such Persons, any Person which theretofore was such a
successor
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to the Company and the Company (as so defined) in any action to enforce any
rights of the Executive under this Agreement. Except as provided in this
Subsection, this Agreement shall not be assignable by the Company. This
Agreement shall not be terminated by the voluntary or involuntary dissolution of
the Company.
17.2 This Agreement and all rights of the Executive shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All amounts
payable to the Executive under Sections 7, 8, 9, 10, 11, 12 and 15 if the
Executive had lived shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs and representatives. However, the foregoing shall not
be construed to modify any terms of any benefit plan of the Company, as such
terms are in effect on the date of the Change in Control of the Company, that
expressly govern benefits under such plan in the event of the Executive's death.
18. SEVERABILITY. The provisions of this Agreement shall be regarded as
divisible, and if any provision or any part is declared invalid or unenforceable
by a court of competent jurisdiction, the validity and enforceability of the
remainder of such provisions or parts and the applicability thereof shall not be
so affected.
19. AMENDMENT. This Agreement may not be amended or modified at any
time except by written instrument executed by the Company and the Executive.
20. WITHHOLDING. The Company shall be entitled to withhold from amounts
to be paid to the Executive under this Agreement any federal, state or local
withholding or other taxes or charges which it is from time to time required to
withhold. However, the amount so withheld shall not exceed the minimum amount
required to be withheld by law. The Company shall be entitled to rely on an
opinion of nationally recognized tax counsel if any question as to the amount or
requirement of any such withholding shall arise.
21. CERTAIN RULES OF CONSTRUCTION. No Party shall be considered as
being responsible for the drafting of this Agreement for the purpose of applying
any rule construing ambiguities against the drafter or otherwise. No draft of
this Agreement shall be taken into account in construing this Agreement. Any
provision of this Agreement which requires an agreement in writing shall be
deemed to require that the writing in question be signed by the Executive and an
authorized representative of the Company. This Agreement supersedes the Change
of Control Employment Agreement previously entered into by the Parties.
22. GOVERNING LAW; RESOLUTION OF DISPUTES. This Agreement and the
rights and obligations under it shall be governed by and construed in accordance
with the laws of the State of Delaware. Any dispute arising out of this
Agreement shall, at the Executive's election, be determined by arbitration under
the rules of the American Arbitration Association then in effect (in which case
both parties shall be bound by the arbitration award) or by litigation. Whether
the dispute is to be settled by arbitration or litigation, the venue for the
arbitration or litigation shall be St. Louis, Missouri or, at the Executive's
election, if the Executive is no longer residing or working in the St.
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Louis, Missouri metropolitan area, in the judicial district encompassing the
city in which the Executive resides. However, if the Executive is not then
residing in the United States, the election of the Executive with respect to
such venue shall be either St. Louis, Missouri or in the judicial district
encompassing that city of the United States among the thirty cities having the
largest population (as determined by the most recent United States Census data
available at the Termination Date) that is closest to the Executive's residence.
The Parties consent to personal jurisdiction in each trial court in the selected
venue having subject matter jurisdiction regardless of their residence or situs,
and each party irrevocably consents to service of process in the manner provided
in Section 23.
23. NOTICE. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided by Section 13.4, shall be deemed given
when actually received by the Executive or actually received by the Company's
Secretary or any officer of the Company other than the Executive. If mailed,
such notices shall be mailed by United States registered or certified mail,
return receipt requested, addressee only, postage prepaid, if to the Company, to
Xxxxxx Inc., Attention: Secretary (or President, if the Executive is the
Secretary), 0000 Xxxxxxx Xxxx., Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000, or if to
the Executive, at the address set forth below the Executive's signature to this
Agreement, or to such other address as the Party to be notified shall have given
to the other Party in writing.
24. NO WAIVER. No waiver by either Party at any time of any breach by
the other Party of, or compliance with, any condition or provision of this
Agreement to be performed by the other Party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
25. HEADINGS. The headings are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
End of Page 17
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first written above.
XXXXXX INC.
By:
------------------------------
Attest:
---------------------------
EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
0000 Xxxx Xxxx Xx.
Xxxxxxxx, XX 00000
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CHANGE OF CONTROL EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 31st day of July, 2001, by Xxxxxx Inc., a
Delaware corporation (the "Company"), and Xxxx Xxxxxxxxxx ("Executive").
R E C I T A L S
The Executive is an officer of the Company and is employed by Xxxxxx
Wire & Cable Company ("BWC"), a wholly-owned subsidiary of the Company, in a key
executive capacity. The Executive's services are valuable to the Company. The
Executive possesses intimate knowledge of the business and affairs of the
Company and has acquired certain confidential information with respect to the
Company.
The Company desires to insure that it will continue to have the benefit
of the Executive's services and to protect its confidential information and
goodwill. The Company recognizes that circumstances may arise in which a change
in control of the Company occurs, through acquisition or otherwise, causing
uncertainty about the Executive's future employment with the Company without
regard to the Executive's competence or past contributions. Such uncertainty may
result in the loss of valuable services of the Executive to the detriment of the
Company and its stockholders.
The Company and the Executive desire that any proposal for a change in
control or acquisition of the Company will be considered by the Executive
objectively and with reference only to the best interests of the Company and its
stockholders. The Executive will be in a better position to consider the
Company's best interests if the Executive is afforded reasonable security, as
provided in this Agreement, against altered conditions of employment which could
result from any such change in control or acquisition.
NOW, the Company and the Executive (collectively the "Parties" or
individually a "Party"), agree as follows:
1. CERTAIN DEFINITIONS.
1.1 ACT. The term "Act" means the Securities Exchange Act of
1934, as amended.
1.2 AFFILIATE AND ASSOCIATE. The terms "Affiliate" and
"Associate" shall have the meanings given them in Rule 12b-2 of the Act.
1.3 BENEFICIAL OWNER. A Person shall be deemed to be the
"Beneficial Owner" of any securities:
(i) that such Person or any other Person's Affiliates
or Associates has the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own,
(A) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase, or
(B) securities issuable upon exercise of
Rights issued pursuant to the terms of the Rights Agreement between the Company
and First Chicago Trust Company of New York (the "Rights Agreement"), dated at
July 6, 1995, as amended from time to time (or any successor to such Rights
Agreement), at any time before the issuance of such securities;
(ii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the Act), including pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding to
vote such security if the agreement, arrangement or understanding:
(A) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations under the Act and
(B) is not also then reportable on a
Schedule 13D under the Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in Subsection 1.3 (ii) above) or disposing of any voting securities of
the Company; provided, however, that nothing in this paragraph (iii) shall cause
a Person engaged in the business as an underwriter of securities to be deemed
the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days (40) after the date of such
acquisition.
1.4 CAUSE. "Cause" for termination by the Company of the
Executive's employment with the Company, BWC or any of their Affiliates after a
Change of Control of the Company shall, for purposes of this Agreement, be
limited to:
(i) the engaging by the Executive in intentional
conduct taken in bad faith which has caused demonstrable and serious financial
injury to the Company, as evidenced by
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a determination in a binding and final judgment, order or decree of a court or
administrative agency of competent jurisdiction, in effect after exhaustion or
lapse of all rights of appeal, in an action, suit or proceeding, whether civil,
criminal, administrative or investigative;
(ii) conviction of a felony (as evidenced by a
binding and final judgment, order or decree of a court of competent
jurisdiction, in effect after exhaustion of all rights of appeal) which
substantially impairs the Executive's ability to perform his duties or
responsibilities; and
(iii) continuing willful and unreasonable refusal by
the Executive to perform the Executive's duties or responsibilities (unless
significantly changed without the Executive's consent).
1.5 CHANGE IN CONTROL OF THE COMPANY. A "Change in Control of
the Company" shall be deemed to have occurred if:
(i) any Person (other than any employee benefit plan
of the Company or any subsidiary of the Company, any entity holding securities
of the Company for or pursuant to the terms of any such plan or any trustee,
administrator or fiduciary of such a plan) is or becomes the Beneficial Owner of
securities of the Company representing at least 30% of the combined voting power
of the Company's then outstanding securities (other than acquisitions directly
from the Company);
(ii) a Section 11(a)(ii) Event shall have occurred
under the Rights Agreement (or a similar event shall have occurred under any
successor to such Rights Agreement) at any time any Rights are issued and
outstanding thereunder;
(iii) one-third or more of the members of the Board
are not Continuing Directors; or
(iv) there shall be consummated any merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of the Company's Common Stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving corporation
immediately after the merger.
1.6 CODE. The term "Code" means the Internal Revenue Code of
1986, as amended.
1.7 CONTINUING DIRECTOR. The term "Continuing Director" means
(i) any member of the Board of Directors of the Company (the "Board") who was a
member of such Board on August 15, 1996, (ii) any successor of a Continuing
Director who is recommended to succeed a Continuing Director by a majority of
the Continuing Directors then on the Board, and (iii) any
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appointee who is recommended by a majority of the Continuing Directors then on
the Board.
1.8 COVERED TERMINATION. The term "Covered Termination" means
any termination of the Executive's employment where the Termination Date is any
date prior to the end of the Employment Period.
1.9 EMPLOYMENT PERIOD. The term "Employment Period" means a
period beginning on the date of a Change in Control of the Company (as defined
in Section 1.5 above), and ending at 11:59 p.m. St. Louis Time on the earlier of
the third anniversary of such date or the Executive's Normal Retirement Date.
1.10 GOOD REASON. The Executive shall have a "Good Reason" for
termination of employment after a Change in Control of the Company in the event
of:
(i) any breach of this Agreement by the Company,
including specifically any breach by the Company of its agreements contained in
Sections 4 (Duties), 5 (Compensation) or 6 (Annual Compensation Adjustments)
hereof;
(ii) the removal of the Executive from, or any
failure to reelect or reappoint the Executive to, any of the positions held with
the Company, BWC or any of their affiliates on the date of the Change in Control
of the Company or any other positions with the Company, BWC or any of their
affiliates, to which the Executive shall thereafter be elected, appointed or
assigned, except when such removal or failure to reelect or reappoint relates to
the termination by the Company of the Executive's employment for Cause or by
reason of disability pursuant to Section 12;
(iii) a good faith determination by the Executive
that there has been a significant adverse change, without the Executive's
written consent, in the Executive's working conditions or status with the
Company, BWC or any of their affiliates from such working conditions or status
in effect immediately prior to the Change in Control of the Company, including
but not limited to;
(A) a significant change in the nature or
scope of the Executive's authority, powers, functions, duties or
responsibilities, or
(B) a significant reduction in the level of
support services, staff, secretarial and other assistance, office space and
accoutrements; or
(iv) failure by the Company to obtain the Agreement
referred to in Section 17.1 (Successors) below; or
(v) any voluntary termination of employment by the
Executive where the Notice of Termination is delivered within 30 days of the
first anniversary of the Effective Date.
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1.11 NORMAL RETIREMENT DATE. The term "Normal Retirement Date"
means the date Executive attains the age of 70.
1.12 PERSON. The term "Person" shall mean any individual,
firm, partnership, corporation or other entity, including any successor (by
merger or otherwise) of such entity, or a group of any of the foregoing acting
in concert.
1.13 TERMINATION DATE. For purposes of this Agreement, except
as otherwise provided in Section 10.2 (Death) and Section 17.1 (Successors), the
term "Termination Date" means:
(i) if the Executive's employment is terminated by
the Executive's death, the date of death;
(ii) if the Executive's employment is terminated by
reason of voluntary early retirement, as agreed in writing by the Company and
the Executive, the date of such early retirement which is set forth in such
written agreement;
(iii) if the Executive's employment is terminated for
purposes of this Agreement by reason of disability pursuant to Section 12, the
earlier of thirty days after the Notice of Termination is given or one day prior
to the end of the Employment Period;
(iv) if the Executive's employment is terminated by
the Executive voluntarily (other than for Good Reason), the date the Notice of
Termination is given; and
(v) if the Executive's employment is terminated by
the Company (whether or not for Cause), or by the Executive for Good Reason, the
earlier of thirty days after the Notice of Termination is given or one day prior
to the end of the Employment Period. Notwithstanding the foregoing;
(A) If termination is for Cause pursuant to
Section 1.4(iii) of this Agreement and if the Executive has cured the conduct
constituting such Cause as described by the Company in its Notice of Termination
within such thirty day or shorter period, then the Executive's employment under
this Agreement shall continue as if the Company had not delivered its Notice of
Termination.
(B) If the Company shall give a Notice of
Termination for Cause or by reason of disability and the Executive in good faith
notifies the Company that a dispute exists concerning the termination within the
applicable period following receipt of notice, then the Executive may elect to
continue his employment (or, if the Executive ceased performing his duties under
this Agreement at the request of the Company at the time of delivery of Notice
of Termination, resume and continue employment) during such dispute and the
Termination Date shall be determined under this paragraph. If the Executive so
elects and it is thereafter determined that Cause or
-5-
disability (as the case may be ) did exist, the Termination Date shall be the
earliest of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section 22
(Governing Law; Resolution of Disputes), (2) the date of the Executive's death,
or (3) one day prior to the end of the Employment Period. If the Executive so
elects and it is subsequently determined that Cause or disability (as the case
may be ) did not exist, then the employment of the Executive under this
Agreement shall continue after such determination as if the Company had not
delivered its Notice of Termination and there shall be no Termination Date
arising out of such Notice. In either case, this Agreement continues, until the
Termination Date, if any, as if the Company had not delivered the Notice of
Termination except that, if it is finally determined that the Company properly
terminated the Executive for the reason asserted in the Notice of Termination,
the Executive shall in no case be entitled to a Termination Payment (as defined
below) arising out of events occurring after the Company delivered its Notice of
Termination.
(C) If the Executive shall in good faith
give a Notice of Termination for Good Reason and the Company notifies the
Executive that a dispute exists concerning the termination within the applicable
period following receipt of notice, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be determined
under this paragraph. If the Executive so elects and it is subsequently
determined that Good Reason did exist, the Termination Date shall be the
earliest of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section 22
(Governing Law; Resolution of Disputes), (2) the date of the Executive's death
or (3) one day prior to the end of the Employment Period. If the Executive so
elects and it is subsequently determined that Good Reason did not exist, then
the employment of the Executive under this Agreement shall continue after such
determination as if the Executive had not delivered the Notice of Termination
asserting Good Reason and there shall be no Termination Date arising out of such
Notice. In either case, this Agreement continues, until the Termination Date, if
any, as if the Company had not delivered the Notice of Termination except that,
if it is finally determined that Good Reason did exist, the Executive shall in
no case be denied the benefits described in Sections 8 and 9 (including a
Termination Payment) based on events occurring after the Executive delivered his
Notice of Termination.
(D) If an opinion is required to be
delivered pursuant to Section 9.3 hereof and such opinion shall not have been
delivered, the Termination Date shall be the earlier of the date on which such
opinion is delivered or one day prior to the end of the Employment Period.
-6-
(E) Except as provided in Paragraphs (B) and
(C) above, if the party receiving the Notice of Termination notifies the other
Party that a dispute exists concerning the termination within the appropriate
period following receipt of notice and it is finally determined that the reason
asserted in such Notice of Termination did not exist, then (1) if such Notice
was delivered by the Executive, the Executive will be deemed to have voluntarily
terminated his employment and the Termination Date shall be the earlier of the
date thirty days after the Notice of Termination is given or one day prior to
the end of the Employment Period and (2) if delivered by the Company, the
Company will be deemed to have terminated the Executive other than by reason of
death, disability or Cause.
2. TERMINATION PRIOR TO CHANGE IN CONTROL. The Company and the
Executive shall each retain the right to terminate the employment of the
Executive at any time prior to a Change in Control of the Company. If the
Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and all rights and obligations of
the parties under it shall cease.
3. EMPLOYMENT PERIOD. If a Change in Control of the Company occurs when
the Executive is employed by BWC, BWC will continue subsequently to employ the
Executive during the Employment Period, and the Executive will remain in the
employ of BWC, in accordance with and subject to the provisions of this
Agreement.
4. DUTIES. During the Employment Period, the Executive shall, in the
same capacities and positions held by the Executive at the time of the Change in
Control of the Company or in such other capacities and positions as may be
agreed to by the Company and the Executive in writing, devote the Executive's
best efforts and all of the Executive's business time, attention and skill to
the business and affairs of the Company, as such business and affairs now exist
and as they may subsequently be conducted. The services that are to be performed
by the Executive under this Agreement are to be rendered in the same
metropolitan area in which the Executive was employed at the time of such Change
in Control of the Company, or in such other place or places as shall be agreed
upon in writing by the Executive and the Company from time to time. Without the
Executive's consent, the Executive shall not be required to be absent from such
metropolitan area more than 45 days in any fiscal year of the Company.
5. COMPENSATION. During the Employment Period, the Executive shall be
compensated as follows:
5.1 The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies as
may be in effect immediately prior to the Change in Control of the Company, an
annual base salary in cash equivalent of not less than the Executive's annual
base salary as in effect immediately prior to the Change in Control of the
Company (which base salary shall, unless otherwise agreed in writing by the
Executive, include the current receipt by the Executive of any amounts that,
prior to the Change in Control of the Company, the Executive had elected to
defer, whether such compensation is deferred under Section 401(k) of the Code or
otherwise), subject to adjustment as provided below.
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5.2 The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive immediately prior to the Change in
Control of the Company, and shall be reimbursed, at such intervals and in
accordance with such standard policies as may be in effect immediately prior to
the Change in Control of the Company, for any monies advanced in connection with
the Executive's employment for reasonable and necessary expenses incurred by the
Executive on behalf of the Company, BWC or their affiliates, including travel
expenses.
5.3 The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's salary
grade or on any other requirement that excludes persons of comparable status to
the Executive unless such exclusion was in effect for such plan or an equivalent
plan immediately prior to the Change in Control of the Company), in any plan
providing benefits for the Company's salaried employees in general of the
Company, BWC or their Affiliates, including but not limited to the Management
Incentive Plan, the Long-Term Incentive Plan, group life insurance,
hospitalization, medical, dental, savings, profit sharing and stock bonus plans.
However, in no event shall the aggregate level of benefits under such plans in
which the Executive is included be less than the aggregate level of benefits
under plans of the Company, BWC or their Affiliates of the type referred to in
this Section 5.3 in which the Executive was participating immediately prior to
the Change in Control of the Company.
5.4 The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays to
which the Executive was entitled annually immediately prior to the Change in
Control of the Company or such greater amount of paid vacation and number of
paid holidays as may be made available annually to other executives of the
Company, BWC or their Affiliates of comparable status and position to the
Executive.
5.5 The Executive shall be included in all plans providing
additional benefits to executives of the Company, BWC or their Affiliates of
comparable status and position to the Executive, including deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans.
However, in no event shall the aggregate level of benefits under such plans be
less than the aggregate level of benefits under plans of the Company, BWC or
their Affiliates of the type referred to in this Section 5.5 in which the
Executive was participating immediately prior to the Change in Control of the
Company. Moreover, the obligation of the Company, BWC or their Affiliates to
include the Executive in bonus or incentive compensation plans shall be
determined by Section 5.6.
5.6 To assure that the Executive will have an opportunity to
earn incentive compensation after a Change in Control of the Company, the
Executive shall be included in a bonus plan of the Company, BWC or their
Affiliates that shall satisfy the standards described below (such plan, the
"Bonus Plan"). Bonuses under the Bonus Plan shall be payable with respect to
achieving such financial or other goals reasonably related to the business of
the Company as the Company shall establish (the "Goals"), all of which Goals
shall be attainable, prior to the end of the Employment Period, with
approximately the same degree of probability as the goals under the bonus plan
of the
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Company, BWC or their Affiliates as in effect immediately prior to the
Change in Control of the Company (the "Company Bonus Plan") and in view of the
Company's existing and projected financial and business circumstances applicable
at the time. The amount of the bonus (the "Bonus Amount") that the Executive
will be eligible to earn under the Bonus Plan shall be no less than the amount
of the Executive's maximum award provided in such Company Bonus Plan (such bonus
amount is referred to as the "Targeted Bonus"). If the Goals are not achieved
such that the entire Targeted Bonus is not payable, the Bonus Plan shall provide
for a payment of a Bonus Amount equal to a portion of the Targeted Bonus
reasonably related to that portion of the Goals that were achieved. Payment of
the Bonus Amount shall not be affected by any circumstance occurring subsequent
to the end of the Employment Period, including termination of the Executive's
employment.
6. ANNUAL COMPENSATION ADJUSTMENTS. During the Employment Period, the
Board of Directors of the Company (or an appropriate committee or officer
thereof) will consider and review, at least annually, the contributions of the
Executive to the Company, BWC or their Affiliates and in accordance with the
practice of the Company, BWC or their Affiliates prior to the Change in Control
of the Company, due consideration shall be given to the upward adjustment of the
Executive's base compensation rate, at least annually, (i) commensurate with
increases generally given to other executives of the Company, BWC or their
Affiliates of comparable status and position to the Executive, and (ii) as the
scope of the operations of the Company, BWC or their Affiliates or the
Executive's duties expand.
7. TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If there is a Covered
Termination for Cause or if the Executive voluntarily terminates his employment
other than for Good Reason (any such terminations to be subject to the
procedures set forth in Section 13), then the Executive shall be entitled to
receive only Accrued Benefits pursuant to Section 9.1.
8. TERMINATION GIVING RISE TO A TERMINATION PAYMENT.
8.1 If there is a Covered Termination by the Executive for
Good Reason, or by the Company other than by reason of (i) death, (ii)
disability pursuant to Section 12, or (iii) Cause (any such terminations to be
subject to the procedures set forth in Section 13), then the Executive shall be
entitled to receive, and the Company shall promptly pay, Accrued Benefits
pursuant to Section 9.1 and, in lieu of further base salary for periods
following the Termination Date, as liquidated damages and additional severance
pay the Termination Payment pursuant to Section 9.2.
8.2 If there is Covered Termination and the Executive is
entitled to Accrued Benefits and the Termination Payment, then the Executive
shall be entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of
the Company, outplacement services, on an individualized basis at a level of
service commensurate with the Executive's status with the Company, BWC or their
Affiliates immediately prior to the Change in Control of the Company (or, if
higher, immediately prior to the termination of the Executive's
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employment), provided by a nationally recognized executive placement firm
selected by the Company.
(ii) For two years after the date of Termination, the
Executive shall continue to be covered, at the expense of the Company, by the
same or equivalent life insurance, hospitalization, medical and dental coverage
as was required under this Agreement with respect to the Executive immediately
prior to the date the Notice of Termination is given.
9. PAYMENTS UPON TERMINATION.
9.1 ACCRUED BENEFITS. The Executive's "Accrued Benefits" shall
include the following amounts, payable as described in this Agreement:
(i) all base salary for the time period ending with
the Termination Date;
(ii) reimbursement for any monies advanced in
connection with the Executive's employment for reasonable and necessary expenses
incurred by the Executive on behalf of the Company, BWC or their Affiliates for
the time period ending with the Termination Date;
(iii) any other cash earned through the Termination
Date and deferred at the election of the Executive or pursuant to any deferred
compensation plan then in effect;
(iv) a lump sum payment of the bonus or incentive
compensation otherwise payable to the Executive with respect to the year in
which termination occurs under all bonus or incentive compensation plans in
which the Executive is a participant; and
(v) all other payments and benefits to which the
Executive (or in the event of the Executive's death, the Executive's surviving
spouse or other beneficiary) may be entitled as compensatory fringe benefits or
under the terms of any benefit plan of the Company, BWC or their Affiliates, and
severance payments under the Company's severance policies and practices as in
effect immediately prior to the Change in Control of the Company. Payment of
Accrued Benefits shall be made promptly in accordance with the Company's
prevailing practice with respect to Subsections (i) and (ii) or, with respect to
Subsections (iii), (iv) and (v), pursuant to the terms of the benefit plan or
practice establishing such benefits.
9.2 TERMINATION PAYMENT. The Termination Payment shall be an
amount equal to (A) the Executive's annual base salary, as in effect immediately
prior to the Change in Control of the Company, as adjusted upward, from time to
time, pursuant to Section 6, plus (B) the amount of the highest annual bonus
award (determined on an annualized basis for any bonus award paid for a period
of less than one year) paid to the Executive with respect to the two complete
fiscal years preceding the Termination Date (the aggregate amount set forth in
(A) and (B) hereof shall be referred to as "Annual Cash Compensation"), times
(C) a factor of 2. The Termination Payment shall be paid in cash and shall not
be reduced by any present value or similar factor, and the
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Executive shall not be required to mitigate the amount of the Termination
Payment by securing other employment or otherwise, nor will such Termination
Payment be reduced by reason of the Executive's securing other employment or for
any other reason. The Termination Payment shall be in addition to any other
severance payments to which the Executive is entitled under the Company's
severance policies and practices as in effect immediately prior to the Change in
Control of the Company.
9.3 TAXES.
(i) Gross-Up. Whether or not the Executive becomes
entitled to the Termination Payment, if any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's employment, including those provided under
Section 9.1, (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person) (all
such payments and benefits, including the Termination Payment, being hereinafter
called "Total Payments") will be subject (in whole or part) to the Excise Tax,
then the Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after deduction of
any Excise Tax on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the
Total Payments. (Excise Tax shall mean any excise tax imposed under Section 4999
of the Code.) For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive's residence
on the Date of Termination (or if there is no Date of Termination, then the date
on which the Gross-Up Payment is calculated for purposes of this Section 9.3),
net of the maximum reduction in federal income tax which could be obtained from
deduction of such state and local taxes.
(ii) Tax Counsel. For purposes of determining whether
any of the Total Payments will be subject to the Excise Tax and the amount of
such Excise Tax, (a) all of the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, unless in the
opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive
and selected by the accounting firm which was, immediately prior to the Change
in Control, the Company's independent auditor (the "Auditor"), such other
payments or benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 280G(b)(4)(A) of the Code, (b) all "excess
parachute payments" within the meaning of section 280G(b)(l) of the Code shall
be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel,
such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of section
280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax, and (c)
the value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section
9.3(iii) below, the Company shall provide the Executive with its
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calculation of the amounts referred to in this Section 9.2(ii) and such
supporting materials as are reasonably necessary for the Executive to evaluate
the Company's calculations. If the Executive disputes the Company's calculations
(in whole or in part), the reasonable opinion of Tax Counsel with respect to the
matter in dispute shall prevail.
(iii) Repayment. In the event that (a) amounts are
paid to the Executive pursuant to subsection (i) of this Section 9.2, and (b)
the Excise Tax is finally determined to be less than the amount taken into
account hereunder in calculating the Gross-Up Payment, the Executive shall repay
to the Company, within five (5) business days following the time that the amount
of such reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income and employment taxes imposed on the Gross-Up Payment being repaid by the
Executive), to the extent that such repayment results in (i) no portion of the
Total Payments being subject to the Excise Tax and (b) a dollar-for-dollar
reduction in the Executive's taxable income and wages for purposes of federal,
state and local income and employment taxes plus interest on the amount of such
repayment at the rate provided in section 1274(b)(2)(B)of the Code. In the event
that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time of the termination of the Executive's employment
(including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess and in respect of any
portion of the Excise Tax with respect to which the Company had not previously
made a Gross-Up Payment (plus any interest, penalties or additions payable by
the Executive with respect to such excess and such portion) within five (5)
business days following the time that the amount of such excess is finally
determined.
9.4 DATE OF PAYMENTS. The payments provided in Sections 9.2
and 9.3 shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments, and the
limitations on such payments set forth in Sections 9.2 or 9.3 above, cannot be
finally determined on or before such day, the Company shall pay to the Executive
on such day an estimate, as determined in good faith by the Executive or, in the
case of payments under Section 9.3, in accordance with Section 9.3 above, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest on the unpaid
remainder [or on all such payments to the extent the Company fails to make such
payments when due] at the rate provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the amount
of the estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to the Executive,
payable on the fifth (5th) business day after demand by the Company (together
with interest at the rate provided in section 1274(b)(2)(B) of the Code). At the
time that payments are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in
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writing shall be attached to the statement).
10. DEATH.
10.1 Except as provided in Section 10.2, in the event of a
Covered Termination due to the Executive's death, the Executive's estate, heirs
and beneficiaries shall receive all the Executive's Accrued Benefits through the
Termination Date.
10.2 In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled to the
benefits described in Section 10.1 hereof and, subject to the provisions of this
Agreement, to such Termination Payment as the Executive would have been entitled
to had the Executive lived. For purposes of this Subsection 10.2, the
Termination Date shall be the earlier of thirty days following the giving of the
Notice of Termination, subject to extension pursuant to Section 1.14, or one day
prior to the end of the Employment Period.
11. RETIREMENT. If, during the Employment Period, the Executive and the
Company shall execute an agreement providing for the early retirement of the
Executive from the Company, or the Executive shall otherwise give notice that he
is voluntarily choosing to retire early from the Company, the Executive shall
receive Accrued Benefits through the Termination Date. However, if the
Executive's employment is terminated by the Executive for Good Reason or by the
Company other than by reason of death, disability or Cause and the Executive
also, in connection with such termination, elects voluntary early retirement,
the Executive shall also be entitled to receive a Termination Payment.
12. TERMINATION FOR DISABILITY. If, during the Employment Period, as a
result of the Executive's disability due to physical or mental illness or injury
(regardless of whether such illness or injury is job-related), the Executive
shall have been absent from the Executive's duties under this Agreement on a
full-time basis for a period of six consecutive months and, within thirty days
after the Company notifies the Executive in writing that it intends to terminate
the Executive's employment (which notice shall not constitute the Notice of
Termination contemplated below), the Executive shall not have returned to the
performance of the Executive's duties under this Agreement on a full-time basis,
the Company may terminate the Executive's employment for purposes of this
Agreement pursuant to a Notice of Termination given in accordance with Section
13. If the Executive's employment is terminated on account of the Executive's
disability in accordance with this Section, the Executive shall receive Accrued
Benefits in accordance with Section 9.1 hereof and shall remain eligible for all
benefits provided by any long term disability programs of the Company, BWC or
its Affiliates in effect at the time of such termination.
13. TERMINATION NOTICE AND PROCEDURE. Any Covered Termination by the
Company or the Executive shall be communicated by written Notice of Termination
to the Executive, if such Notice is given by the Company, and to the Company, if
such Notice is given by the Executive, all in accordance with the following
procedures and those set forth in Section 23:
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13.1 If such termination is for disability, Cause or Good
Reason, the Notice of Termination shall indicate in reasonable detail the facts
and circumstances alleged to provide a basis for such termination.
13.2 Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution duly
adopted by a majority of the directors of the Company (or any successor
corporation) then in office.
13.3 If the Notice is given by the Executive for Good Reason,
the Executive may cease performing his duties under this Agreement on or after
the date fifteen days after the delivery of Notice of Termination and shall in
any event cease employment on the Termination Date. If the Notice is given by
the Company, then the Executive may cease performing his duties under this
Agreement on the date of receipt of the Notice of Termination, subject to the
Executive's rights under this Agreement.
13.4 The Executive shall have thirty days, or such longer
period as the Company may determine to be appropriate, to cure any conduct or
act, if curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement pursuant to Subsection 1.4(iii).
13.5 The recipient of any Notice of Termination shall
personally deliver or mail in accordance with Section 23 written notice of any
dispute relating to such Notice of Termination to the party giving such Notice
within fifteen days after receipt thereof. However, if the Executive's conduct
or act alleged to provide grounds for termination by the Company for Cause is
curable, then such period shall be thirty days. After the expiration of such
period, the contents of the Notice of Termination shall become final and not
subject to dispute.
14. FURTHER OBLIGATIONS OF THE EXECUTIVE. The Executive agrees that, in
the event of any Covered Termination where the Executive is entitled to and
receives Accrued Benefits and the Termination Payment, the Executive shall not,
for a period of one year after the Termination Date, without the prior written
approval of the Company's Board of Directors, participate in the management of,
be employed by or own any business enterprise at a location within the United
States that engages in substantial competition with the Company or its
subsidiaries, where such enterprise's revenues from any competitive activities
amount to 40% or more of such enterprise's net revenues and sales for its most
recently completed fiscal year. However, nothing in this Section 14 shall
prohibit the Executive from owning stock or other securities of a competitor
amounting to less than five percent of the outstanding capital stock of such
competitor. The Executive also shall perform his obligations under the "Secrecy
Agreement" and the "Invention Assignment and Confidentiality Agreement" entered
into by the Company and the Executive.
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15. EXPENSES AND INTEREST. If, after a Change in Control of the
Company, (i) a dispute arises with respect to the enforcement of the Executive's
rights under this Agreement or (ii) any legal or arbitration proceeding shall be
brought to enforce or interpret any provision contained in this Agreement or to
recover damages for breach, in either case so long as the Executive is not
acting in bad faith, the Executive shall recover from the Company any reasonable
attorneys' fees and necessary costs and disbursements incurred as a result of
such dispute, legal or arbitration proceeding ("Expenses"), and prejudgment
interest on any money judgment or arbitration award obtained by the Executive
calculated at the rate of interest announced by Bank of America, St. Louis,
Missouri from time to time as its prime or base lending rate from the date that
payments to him should have been made under this Agreement. Within ten days
after the Executive's written request, the Company shall pay to the Executive,
or such other person or entity as the Executive may designate in writing to the
Company, the Executive's reasonable Expenses in advance of the final disposition
or conclusion of any such dispute, legal or arbitration proceeding.
16. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation during and
after the Employment Period to pay the Executive the amounts and to make the
benefit and other arrangements provided in this Agreement shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against him or anyone else. Except as provided in Section
15 of this Agreement, all amounts payable by the Company hereunder shall be paid
without notice or demand. Each payment made under this Agreement by the Company
shall be final, and the Company will not seek to recover any part of such
payment from the Executive, or from whoever may be entitled to such payment, for
any reason.
17. SUCCESSORS.
17.1 If the Company sells, assigns or transfers all or
substantially all of its business and assets to any Person or if the Company
merges into or consolidates or otherwise combines (where the Company does not
survive such combination) with any Person (any such event, a "Sale of
Business"), then the Company shall assign all of its right, title and interest
in this Agreement as of the date of such event to such Person, and the Company
shall cause such Person, by written agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume and agree to perform from and
after the date of such assignment all of the terms, conditions and provisions
imposed by this Agreement upon the Company. Failure of the Company to obtain
such agreement prior to the effective date of such Sale of Business shall be a
breach of this Agreement constituting "Good Reason" for termination hereunder,
except that for purposes of implementing the foregoing the date upon which such
Sale of Business becomes effective shall be deemed the Termination Date. In case
of such assignment by the Company and of assumption and agreement by such
Person, as used in this Agreement, "Company" shall subsequently mean such Person
which executes and delivers the agreement provided for in this Section 17 or
that otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law, and this Agreement shall inure to the benefit of, and be
enforceable by, such Person. The Executive shall, in his discretion, be entitled
to proceed against any of such Persons, any Person which theretofore was such a
successor
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to the Company and the Company (as so defined) in any action to enforce any
rights of the Executive under this Agreement. Except as provided in this
Subsection, this Agreement shall not be assignable by the Company. This
Agreement shall not be terminated by the voluntary or involuntary dissolution of
the Company.
17.2 This Agreement and all rights of the Executive shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All amounts
payable to the Executive under Sections 7, 8, 9, 10, 11, 12 and 15 if the
Executive had lived shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs and representatives. However, the foregoing shall not
be construed to modify any terms of any benefit plan of the Company, as such
terms are in effect on the date of the Change in Control of the Company, that
expressly govern benefits under such plan in the event of the Executive's death.
18. SEVERABILITY. The provisions of this Agreement shall be regarded as
divisible, and if any provision or any part is declared invalid or unenforceable
by a court of competent jurisdiction, the validity and enforceability of the
remainder of such provisions or parts and the applicability thereof shall not be
so affected.
19. AMENDMENT. This Agreement may not be amended or modified at any
time except by written instrument executed by the Company and the Executive.
20. WITHHOLDING. The Company shall be entitled to withhold from amounts
to be paid to the Executive under this Agreement any federal, state or local
withholding or other taxes or charges which it is from time to time required to
withhold. However, the amount so withheld shall not exceed the minimum amount
required to be withheld by law. The Company shall be entitled to rely on an
opinion of nationally recognized tax counsel if any question as to the amount or
requirement of any such withholding shall arise.
21. CERTAIN RULES OF CONSTRUCTION. No Party shall be considered as
being responsible for the drafting of this Agreement for the purpose of applying
any rule construing ambiguities against the drafter or otherwise. No draft of
this Agreement shall be taken into account in construing this Agreement. Any
provision of this Agreement which requires an agreement in writing shall be
deemed to require that the writing in question be signed by the Executive and an
authorized representative of the Company. This Agreement supersedes the Change
of Control Employment Agreement previously entered into by the Parties.
22. GOVERNING LAW; RESOLUTION OF DISPUTES. This Agreement and the
rights and obligations under it shall be governed by and construed in accordance
with the laws of the State of Delaware. Any dispute arising out of this
Agreement shall, at the Executive's election, be determined by arbitration under
the rules of the American Arbitration Association then in effect (in which case
both parties shall be bound by the arbitration award) or by litigation. Whether
the dispute is to be settled by arbitration or litigation, the venue for the
arbitration or litigation shall be St. Louis, Missouri or, at the Executive's
election, if the Executive is no longer residing or working in the St.
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Louis, Missouri metropolitan area, in the judicial district encompassing the
city in which the Executive resides. However, if the Executive is not then
residing in the United States, the election of the Executive with respect to
such venue shall be either St. Louis, Missouri or in the judicial district
encompassing that city of the United States among the thirty cities having the
largest population (as determined by the most recent United States Census data
available at the Termination Date) that is closest to the Executive's residence.
The Parties consent to personal jurisdiction in each trial court in the selected
venue having subject matter jurisdiction regardless of their residence or situs,
and each party irrevocably consents to service of process in the manner provided
in Section 23.
23. NOTICE. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided by Section 13.4, shall be deemed given
when actually received by the Executive or actually received by the Company's
Secretary or any officer of the Company other than the Executive. If mailed,
such notices shall be mailed by United States registered or certified mail,
return receipt requested, addressee only, postage prepaid, if to the Company, to
Xxxxxx Inc., Attention: Secretary (or President, if the Executive is the
Secretary), 0000 Xxxxxxx Xxxx., Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000, or if to
the Executive, at the address set forth below the Executive's signature to this
Agreement, or to such other address as the Party to be notified shall have given
to the other Party in writing.
24. NO WAIVER. No waiver by either Party at any time of any breach by
the other Party of, or compliance with, any condition or provision of this
Agreement to be performed by the other Party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
25. HEADINGS. The headings are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
End of Page 17
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first written above.
XXXXXX INC.
By:
------------------------------
Attest:
---------------------------
EXECUTIVE
/s/ Xxxx Xxxxxxxxxx
----------------------------------
Xxxx Xxxxxxxxxx
000 Xxxxx Xxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
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CHANGE OF CONTROL EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 31st day of July, 2001, by Xxxxxx Inc., a
Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxx ("Executive").
R E C I T A L S
The Executive is an officer of the Company and is employed by Xxxxxx
Wire & Cable Company ("BWC"), a wholly-owned subsidiary of the Company, in a key
executive capacity. The Executive's services are valuable to the Company. The
Executive possesses intimate knowledge of the business and affairs of the
Company and has acquired certain confidential information with respect to the
Company.
The Company desires to insure that it will continue to have the benefit
of the Executive's services and to protect its confidential information and
goodwill. The Company recognizes that circumstances may arise in which a change
in control of the Company occurs, through acquisition or otherwise, causing
uncertainty about the Executive's future employment with the Company without
regard to the Executive's competence or past contributions. Such uncertainty may
result in the loss of valuable services of the Executive to the detriment of the
Company and its stockholders.
The Company and the Executive desire that any proposal for a change in
control or acquisition of the Company will be considered by the Executive
objectively and with reference only to the best interests of the Company and its
stockholders. The Executive will be in a better position to consider the
Company's best interests if the Executive is afforded reasonable security, as
provided in this Agreement, against altered conditions of employment which could
result from any such change in control or acquisition.
NOW, the Company and the Executive (collectively the "Parties" or
individually a "Party"), agree as follows:
1. CERTAIN DEFINITIONS.
1.1 ACT. The term "Act" means the Securities Exchange Act of
1934, as amended.
1.2 AFFILIATE AND ASSOCIATE. The terms "Affiliate" and
"Associate" shall have the meanings given them in Rule 12b-2 of the Act.
1.3 BENEFICIAL OWNER. A Person shall be deemed to be the
"Beneficial Owner" of any securities:
(i) that such Person or any other Person's Affiliates
or Associates has the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own,
(A) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase, or
(B) securities issuable upon exercise of
Rights issued pursuant to the terms of the Rights Agreement between the Company
and First Chicago Trust Company of New York (the "Rights Agreement"), dated at
July 6, 1995, as amended from time to time (or any successor to such Rights
Agreement), at any time before the issuance of such securities;
(ii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the Act), including pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding to
vote such security if the agreement, arrangement or understanding:
(A) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations under the Act and
(B) is not also then reportable on a
Schedule 13D under the Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in Subsection 1.3 (ii) above) or disposing of any voting securities of
the Company; provided, however, that nothing in this paragraph (iii) shall cause
a Person engaged in the business as an underwriter of securities to be deemed
the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days (40) after the date of such
acquisition.
1.4 CAUSE. "Cause" for termination by the Company of the
Executive's employment with the Company, BWC or any of their Affiliates after a
Change of Control of the Company shall, for purposes of this Agreement, be
limited to:
(i) the engaging by the Executive in intentional
conduct taken in bad faith which has caused demonstrable and serious financial
injury to the Company, as evidenced by
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a determination in a binding and final judgment, order or decree of a court or
administrative agency of competent jurisdiction, in effect after exhaustion or
lapse of all rights of appeal, in an action, suit or proceeding, whether civil,
criminal, administrative or investigative;
(ii) conviction of a felony (as evidenced by a
binding and final judgment, order or decree of a court of competent
jurisdiction, in effect after exhaustion of all rights of appeal) which
substantially impairs the Executive's ability to perform his duties or
responsibilities; and
(iii) continuing willful and unreasonable refusal by
the Executive to perform the Executive's duties or responsibilities (unless
significantly changed without the Executive's consent).
1.5 CHANGE IN CONTROL OF THE COMPANY. A "Change in Control of
the Company" shall be deemed to have occurred if:
(i) any Person (other than any employee benefit plan
of the Company or any subsidiary of the Company, any entity holding securities
of the Company for or pursuant to the terms of any such plan or any trustee,
administrator or fiduciary of such a plan) is or becomes the Beneficial Owner of
securities of the Company representing at least 30% of the combined voting power
of the Company's then outstanding securities (other than acquisitions directly
from the Company);
(ii) a Section 11(a)(ii) Event shall have occurred
under the Rights Agreement (or a similar event shall have occurred under any
successor to such Rights Agreement) at any time any Rights are issued and
outstanding thereunder;
(iii) one-third or more of the members of the Board
are not Continuing Directors; or
(iv) there shall be consummated any merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of the Company's Common Stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving corporation
immediately after the merger.
1.6 CODE. The term "Code" means the Internal Revenue Code of
1986, as amended.
1.7 CONTINUING DIRECTOR. The term "Continuing Director" means
(i) any member of the Board of Directors of the Company (the "Board") who was a
member of such Board on August 15, 1996, (ii) any successor of a Continuing
Director who is recommended to succeed a Continuing Director by a majority of
the Continuing Directors then on the Board, and (iii) any
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appointee who is recommended by a majority of the Continuing Directors then on
the Board.
1.8 COVERED TERMINATION. The term "Covered Termination" means
any termination of the Executive's employment where the Termination Date is any
date prior to the end of the Employment Period.
1.9 EMPLOYMENT PERIOD. The term "Employment Period" means a
period beginning on the date of a Change in Control of the Company (as defined
in Section 1.5 above), and ending at 11:59 p.m. St. Louis Time on the earlier of
the third anniversary of such date or the Executive's Normal Retirement Date.
1.10 GOOD REASON. The Executive shall have a "Good Reason" for
termination of employment after a Change in Control of the Company in the event
of:
(i) any breach of this Agreement by the Company,
including specifically any breach by the Company of its agreements contained in
Sections 4 (Duties), 5 (Compensation) or 6 (Annual Compensation Adjustments)
hereof;
(ii) the removal of the Executive from, or any
failure to reelect or reappoint the Executive to, any of the positions held with
the Company, BWC or any of their affiliates on the date of the Change in Control
of the Company or any other positions with the Company, BWC or any of their
affiliates, to which the Executive shall thereafter be elected, appointed or
assigned, except when such removal or failure to reelect or reappoint relates to
the termination by the Company of the Executive's employment for Cause or by
reason of disability pursuant to Section 12;
(iii) a good faith determination by the Executive
that there has been a significant adverse change, without the Executive's
written consent, in the Executive's working conditions or status with the
Company, BWC or any of their affiliates from such working conditions or status
in effect immediately prior to the Change in Control of the Company, including
but not limited to;
(A) a significant change in the nature or
scope of the Executive's authority, powers, functions, duties or
responsibilities, or
(B) a significant reduction in the level of
support services, staff, secretarial and other assistance, office space and
accoutrements; or
(iv) failure by the Company to obtain the Agreement
referred to in Section 17.1 (Successors) below; or
(v) any voluntary termination of employment by the
Executive where the Notice of Termination is delivered within 30 days of the
first anniversary of the Effective Date.
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1.11 NORMAL RETIREMENT DATE. The term "Normal Retirement Date"
means the date Executive attains the age of 70.
1.12 PERSON. The term "Person" shall mean any individual,
firm, partnership, corporation or other entity, including any successor (by
merger or otherwise) of such entity, or a group of any of the foregoing acting
in concert.
1.13 TERMINATION DATE. For purposes of this Agreement, except
as otherwise provided in Section 10.2 (Death) and Section 17.1 (Successors), the
term "Termination Date" means:
(i) if the Executive's employment is terminated by
the Executive's death, the date of death;
(ii) if the Executive's employment is terminated by
reason of voluntary early retirement, as agreed in writing by the Company and
the Executive, the date of such early retirement which is set forth in such
written agreement;
(iii) if the Executive's employment is terminated for
purposes of this Agreement by reason of disability pursuant to Section 12, the
earlier of thirty days after the Notice of Termination is given or one day prior
to the end of the Employment Period;
(iv) if the Executive's employment is terminated by
the Executive voluntarily (other than for Good Reason), the date the Notice of
Termination is given; and
(v) if the Executive's employment is terminated by
the Company (whether or not for Cause), or by the Executive for Good Reason, the
earlier of thirty days after the Notice of Termination is given or one day prior
to the end of the Employment Period. Notwithstanding the foregoing;
(A) If termination is for Cause pursuant to
Section 1.4(iii) of this Agreement and if the Executive has cured the conduct
constituting such Cause as described by the Company in its Notice of Termination
within such thirty day or shorter period, then the Executive's employment under
this Agreement shall continue as if the Company had not delivered its Notice of
Termination.
(B) If the Company shall give a Notice of
Termination for Cause or by reason of disability and the Executive in good faith
notifies the Company that a dispute exists concerning the termination within the
applicable period following receipt of notice, then the Executive may elect to
continue his employment (or, if the Executive ceased performing his duties under
this Agreement at the request of the Company at the time of delivery of Notice
of Termination, resume and continue employment) during such dispute and the
Termination Date shall be determined under this paragraph. If the Executive so
elects and it is thereafter determined that Cause or
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disability (as the case may be ) did exist, the Termination Date shall be the
earliest of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section 22
(Governing Law; Resolution of Disputes), (2) the date of the Executive's death,
or (3) one day prior to the end of the Employment Period. If the Executive so
elects and it is subsequently determined that Cause or disability (as the case
may be ) did not exist, then the employment of the Executive under this
Agreement shall continue after such determination as if the Company had not
delivered its Notice of Termination and there shall be no Termination Date
arising out of such Notice. In either case, this Agreement continues, until the
Termination Date, if any, as if the Company had not delivered the Notice of
Termination except that, if it is finally determined that the Company properly
terminated the Executive for the reason asserted in the Notice of Termination,
the Executive shall in no case be entitled to a Termination Payment (as defined
below) arising out of events occurring after the Company delivered its Notice of
Termination.
(C) If the Executive shall in good faith
give a Notice of Termination for Good Reason and the Company notifies the
Executive that a dispute exists concerning the termination within the applicable
period following receipt of notice, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be determined
under this paragraph. If the Executive so elects and it is subsequently
determined that Good Reason did exist, the Termination Date shall be the
earliest of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section 22
(Governing Law; Resolution of Disputes), (2) the date of the Executive's death
or (3) one day prior to the end of the Employment Period. If the Executive so
elects and it is subsequently determined that Good Reason did not exist, then
the employment of the Executive under this Agreement shall continue after such
determination as if the Executive had not delivered the Notice of Termination
asserting Good Reason and there shall be no Termination Date arising out of such
Notice. In either case, this Agreement continues, until the Termination Date, if
any, as if the Company had not delivered the Notice of Termination except that,
if it is finally determined that Good Reason did exist, the Executive shall in
no case be denied the benefits described in Sections 8 and 9 (including a
Termination Payment) based on events occurring after the Executive delivered his
Notice of Termination.
(D) If an opinion is required to be
delivered pursuant to Section 9.3 hereof and such opinion shall not have been
delivered, the Termination Date shall be the earlier of the date on which such
opinion is delivered or one day prior to the end of the Employment Period.
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(E) Except as provided in Paragraphs (B) and
(C) above, if the party receiving the Notice of Termination notifies the other
Party that a dispute exists concerning the termination within the appropriate
period following receipt of notice and it is finally determined that the reason
asserted in such Notice of Termination did not exist, then (1) if such Notice
was delivered by the Executive, the Executive will be deemed to have voluntarily
terminated his employment and the Termination Date shall be the earlier of the
date thirty days after the Notice of Termination is given or one day prior to
the end of the Employment Period and (2) if delivered by the Company, the
Company will be deemed to have terminated the Executive other than by reason of
death, disability or Cause.
2. TERMINATION PRIOR TO CHANGE IN CONTROL. The Company and the
Executive shall each retain the right to terminate the employment of the
Executive at any time prior to a Change in Control of the Company. If the
Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and all rights and obligations of
the parties under it shall cease.
3. EMPLOYMENT PERIOD. If a Change in Control of the Company occurs when
the Executive is employed by BWC, BWC will continue subsequently to employ the
Executive during the Employment Period, and the Executive will remain in the
employ of BWC, in accordance with and subject to the provisions of this
Agreement.
4. DUTIES. During the Employment Period, the Executive shall, in the
same capacities and positions held by the Executive at the time of the Change in
Control of the Company or in such other capacities and positions as may be
agreed to by the Company and the Executive in writing, devote the Executive's
best efforts and all of the Executive's business time, attention and skill to
the business and affairs of the Company, as such business and affairs now exist
and as they may subsequently be conducted. The services that are to be performed
by the Executive under this Agreement are to be rendered in the same
metropolitan area in which the Executive was employed at the time of such Change
in Control of the Company, or in such other place or places as shall be agreed
upon in writing by the Executive and the Company from time to time. Without the
Executive's consent, the Executive shall not be required to be absent from such
metropolitan area more than 45 days in any fiscal year of the Company.
5. COMPENSATION. During the Employment Period, the Executive shall be
compensated as follows:
5.1 The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies as
may be in effect immediately prior to the Change in Control of the Company, an
annual base salary in cash equivalent of not less than the Executive's annual
base salary as in effect immediately prior to the Change in Control of the
Company (which base salary shall, unless otherwise agreed in writing by the
Executive, include the current receipt by the Executive of any amounts that,
prior to the Change in Control of the Company, the Executive had elected to
defer, whether such compensation is deferred under Section 401(k) of the Code or
otherwise), subject to adjustment as provided below.
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5.2 The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive immediately prior to the Change in
Control of the Company, and shall be reimbursed, at such intervals and in
accordance with such standard policies as may be in effect immediately prior to
the Change in Control of the Company, for any monies advanced in connection with
the Executive's employment for reasonable and necessary expenses incurred by the
Executive on behalf of the Company, BWC or their affiliates, including travel
expenses.
5.3 The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's salary
grade or on any other requirement that excludes persons of comparable status to
the Executive unless such exclusion was in effect for such plan or an equivalent
plan immediately prior to the Change in Control of the Company), in any plan
providing benefits for the Company's salaried employees in general of the
Company, BWC or their Affiliates, including but not limited to the Management
Incentive Plan, the Long-Term Incentive Plan, group life insurance,
hospitalization, medical, dental, savings, profit sharing and stock bonus plans.
However, in no event shall the aggregate level of benefits under such plans in
which the Executive is included be less than the aggregate level of benefits
under plans of the Company, BWC or their Affiliates of the type referred to in
this Section 5.3 in which the Executive was participating immediately prior to
the Change in Control of the Company.
5.4 The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays to
which the Executive was entitled annually immediately prior to the Change in
Control of the Company or such greater amount of paid vacation and number of
paid holidays as may be made available annually to other executives of the
Company, BWC or their Affiliates of comparable status and position to the
Executive.
5.5 The Executive shall be included in all plans providing
additional benefits to executives of the Company, BWC or their Affiliates of
comparable status and position to the Executive, including deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans.
However, in no event shall the aggregate level of benefits under such plans be
less than the aggregate level of benefits under plans of the Company, BWC or
their Affiliates of the type referred to in this Section 5.5 in which the
Executive was participating immediately prior to the Change in Control of the
Company. Moreover, the obligation of the Company, BWC or their Affiliates to
include the Executive in bonus or incentive compensation plans shall be
determined by Section 5.6.
5.6 To assure that the Executive will have an opportunity to
earn incentive compensation after a Change in Control of the Company, the
Executive shall be included in a bonus plan of the Company, BWC or their
Affiliates that shall satisfy the standards described below (such plan, the
"Bonus Plan"). Bonuses under the Bonus Plan shall be payable with respect to
achieving such financial or other goals reasonably related to the business of
the Company as the Company shall establish (the "Goals"), all of which Goals
shall be attainable, prior to the end of the Employment Period, with
approximately the same degree of probability as the goals under the bonus plan
of the
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Company, BWC or their Affiliates as in effect immediately prior to the
Change in Control of the Company (the "Company Bonus Plan") and in view of the
Company's existing and projected financial and business circumstances applicable
at the time. The amount of the bonus (the "Bonus Amount") that the Executive
will be eligible to earn under the Bonus Plan shall be no less than the amount
of the Executive's maximum award provided in such Company Bonus Plan (such bonus
amount is referred to as the "Targeted Bonus"). If the Goals are not achieved
such that the entire Targeted Bonus is not payable, the Bonus Plan shall provide
for a payment of a Bonus Amount equal to a portion of the Targeted Bonus
reasonably related to that portion of the Goals that were achieved. Payment of
the Bonus Amount shall not be affected by any circumstance occurring subsequent
to the end of the Employment Period, including termination of the Executive's
employment.
6. ANNUAL COMPENSATION ADJUSTMENTS. During the Employment Period, the
Board of Directors of the Company (or an appropriate committee or officer
thereof) will consider and review, at least annually, the contributions of the
Executive to the Company, BWC or their Affiliates and in accordance with the
practice of the Company, BWC or their Affiliates prior to the Change in Control
of the Company, due consideration shall be given to the upward adjustment of the
Executive's base compensation rate, at least annually, (i) commensurate with
increases generally given to other executives of the Company, BWC or their
Affiliates of comparable status and position to the Executive, and (ii) as the
scope of the operations of the Company, BWC or their Affiliates or the
Executive's duties expand.
7. TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If there is a Covered
Termination for Cause or if the Executive voluntarily terminates his employment
other than for Good Reason (any such terminations to be subject to the
procedures set forth in Section 13), then the Executive shall be entitled to
receive only Accrued Benefits pursuant to Section 9.1.
8. TERMINATION GIVING RISE TO A TERMINATION PAYMENT.
8.1 If there is a Covered Termination by the Executive for
Good Reason, or by the Company other than by reason of (i) death, (ii)
disability pursuant to Section 12, or (iii) Cause (any such terminations to be
subject to the procedures set forth in Section 13), then the Executive shall be
entitled to receive, and the Company shall promptly pay, Accrued Benefits
pursuant to Section 9.1 and, in lieu of further base salary for periods
following the Termination Date, as liquidated damages and additional severance
pay the Termination Payment pursuant to Section 9.2.
8.2 If there is Covered Termination and the Executive is
entitled to Accrued Benefits and the Termination Payment, then the Executive
shall be entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of
the Company, outplacement services, on an individualized basis at a level of
service commensurate with the Executive's status with the Company, BWC or their
Affiliates immediately prior to the Change in Control of the Company (or, if
higher, immediately prior to the termination of the Executive's
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employment), provided by a nationally recognized executive placement firm
selected by the Company.
(ii) For two years after the date of Termination, the
Executive shall continue to be covered, at the expense of the Company, by the
same or equivalent life insurance, hospitalization, medical and dental coverage
as was required under this Agreement with respect to the Executive immediately
prior to the date the Notice of Termination is given.
9. PAYMENTS UPON TERMINATION.
9.1 ACCRUED BENEFITS. The Executive's "Accrued Benefits" shall
include the following amounts, payable as described in this Agreement:
(i) all base salary for the time period ending with
the Termination Date;
(ii) reimbursement for any monies advanced in
connection with the Executive's employment for reasonable and necessary expenses
incurred by the Executive on behalf of the Company, BWC or their Affiliates for
the time period ending with the Termination Date;
(iii) any other cash earned through the Termination
Date and deferred at the election of the Executive or pursuant to any deferred
compensation plan then in effect;
(iv) a lump sum payment of the bonus or incentive
compensation otherwise payable to the Executive with respect to the year in
which termination occurs under all bonus or incentive compensation plans in
which the Executive is a participant; and
(v) all other payments and benefits to which the
Executive (or in the event of the Executive's death, the Executive's surviving
spouse or other beneficiary) may be entitled as compensatory fringe benefits or
under the terms of any benefit plan of the Company, BWC or their Affiliates, and
severance payments under the Company's severance policies and practices as in
effect immediately prior to the Change in Control of the Company. Payment of
Accrued Benefits shall be made promptly in accordance with the Company's
prevailing practice with respect to Subsections (i) and (ii) or, with respect to
Subsections (iii), (iv) and (v), pursuant to the terms of the benefit plan or
practice establishing such benefits.
9.2 TERMINATION PAYMENT. The Termination Payment shall be an
amount equal to (A) the Executive's annual base salary, as in effect immediately
prior to the Change in Control of the Company, as adjusted upward, from time to
time, pursuant to Section 6, plus (B) the amount of the highest annual bonus
award (determined on an annualized basis for any bonus award paid for a period
of less than one year) paid to the Executive with respect to the two complete
fiscal years preceding the Termination Date (the aggregate amount set forth in
(A) and (B) hereof shall be referred to as "Annual Cash Compensation"), times
(C) a factor of 2. The Termination Payment shall be paid in cash and shall not
be reduced by any present value or similar factor, and the
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Executive shall not be required to mitigate the amount of the Termination
Payment by securing other employment or otherwise, nor will such Termination
Payment be reduced by reason of the Executive's securing other employment or for
any other reason. The Termination Payment shall be in addition to any other
severance payments to which the Executive is entitled under the Company's
severance policies and practices as in effect immediately prior to the Change in
Control of the Company.
9.3 TAXES.
(i) Gross-Up. Whether or not the Executive becomes
entitled to the Termination Payment, if any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's employment, including those provided under
Section 9.1, (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person) (all
such payments and benefits, including the Termination Payment, being hereinafter
called "Total Payments") will be subject (in whole or part) to the Excise Tax,
then the Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after deduction of
any Excise Tax on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the
Total Payments. (Excise Tax shall mean any excise tax imposed under Section 4999
of the Code.) For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive's residence
on the Date of Termination (or if there is no Date of Termination, then the date
on which the Gross-Up Payment is calculated for purposes of this Section 9.3),
net of the maximum reduction in federal income tax which could be obtained from
deduction of such state and local taxes.
(ii) Tax Counsel. For purposes of determining whether
any of the Total Payments will be subject to the Excise Tax and the amount of
such Excise Tax, (a) all of the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, unless in the
opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive
and selected by the accounting firm which was, immediately prior to the Change
in Control, the Company's independent auditor (the "Auditor"), such other
payments or benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 280G(b)(4)(A) of the Code, (b) all "excess
parachute payments" within the meaning of section 280G(b)(l) of the Code shall
be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel,
such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of section
280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax, and (c)
the value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section
9.3(iii) below, the Company shall provide the Executive with its
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calculation of the amounts referred to in this Section 9.2(ii) and such
supporting materials as are reasonably necessary for the Executive to evaluate
the Company's calculations. If the Executive disputes the Company's calculations
(in whole or in part), the reasonable opinion of Tax Counsel with respect to the
matter in dispute shall prevail.
(iii) Repayment. In the event that (a) amounts are
paid to the Executive pursuant to subsection (i) of this Section 9.2, and (b)
the Excise Tax is finally determined to be less than the amount taken into
account hereunder in calculating the Gross-Up Payment, the Executive shall repay
to the Company, within five (5) business days following the time that the amount
of such reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income and employment taxes imposed on the Gross-Up Payment being repaid by the
Executive), to the extent that such repayment results in (i) no portion of the
Total Payments being subject to the Excise Tax and (b) a dollar-for-dollar
reduction in the Executive's taxable income and wages for purposes of federal,
state and local income and employment taxes plus interest on the amount of such
repayment at the rate provided in section 1274(b)(2)(B)of the Code. In the event
that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time of the termination of the Executive's employment
(including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess and in respect of any
portion of the Excise Tax with respect to which the Company had not previously
made a Gross-Up Payment (plus any interest, penalties or additions payable by
the Executive with respect to such excess and such portion) within five (5)
business days following the time that the amount of such excess is finally
determined.
9.4 DATE OF PAYMENTS. The payments provided in Sections 9.2
and 9.3 shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments, and the
limitations on such payments set forth in Sections 9.2 or 9.3 above, cannot be
finally determined on or before such day, the Company shall pay to the Executive
on such day an estimate, as determined in good faith by the Executive or, in the
case of payments under Section 9.3, in accordance with Section 9.3 above, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest on the unpaid
remainder [or on all such payments to the extent the Company fails to make such
payments when due] at the rate provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the amount
of the estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to the Executive,
payable on the fifth (5th) business day after demand by the Company (together
with interest at the rate provided in section 1274(b)(2)(B) of the Code). At the
time that payments are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in
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writing shall be attached to the statement).
10. DEATH.
10.1 Except as provided in Section 10.2, in the event of a
Covered Termination due to the Executive's death, the Executive's estate, heirs
and beneficiaries shall receive all the Executive's Accrued Benefits through the
Termination Date.
10.2 In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled to the
benefits described in Section 10.1 hereof and, subject to the provisions of this
Agreement, to such Termination Payment as the Executive would have been entitled
to had the Executive lived. For purposes of this Subsection 10.2, the
Termination Date shall be the earlier of thirty days following the giving of the
Notice of Termination, subject to extension pursuant to Section 1.14, or one day
prior to the end of the Employment Period.
11. RETIREMENT. If, during the Employment Period, the Executive and the
Company shall execute an agreement providing for the early retirement of the
Executive from the Company, or the Executive shall otherwise give notice that he
is voluntarily choosing to retire early from the Company, the Executive shall
receive Accrued Benefits through the Termination Date. However, if the
Executive's employment is terminated by the Executive for Good Reason or by the
Company other than by reason of death, disability or Cause and the Executive
also, in connection with such termination, elects voluntary early retirement,
the Executive shall also be entitled to receive a Termination Payment.
12. TERMINATION FOR DISABILITY. If, during the Employment Period, as a
result of the Executive's disability due to physical or mental illness or injury
(regardless of whether such illness or injury is job-related), the Executive
shall have been absent from the Executive's duties under this Agreement on a
full-time basis for a period of six consecutive months and, within thirty days
after the Company notifies the Executive in writing that it intends to terminate
the Executive's employment (which notice shall not constitute the Notice of
Termination contemplated below), the Executive shall not have returned to the
performance of the Executive's duties under this Agreement on a full-time basis,
the Company may terminate the Executive's employment for purposes of this
Agreement pursuant to a Notice of Termination given in accordance with Section
13. If the Executive's employment is terminated on account of the Executive's
disability in accordance with this Section, the Executive shall receive Accrued
Benefits in accordance with Section 9.1 hereof and shall remain eligible for all
benefits provided by any long term disability programs of the Company, BWC or
its Affiliates in effect at the time of such termination.
13. TERMINATION NOTICE AND PROCEDURE. Any Covered Termination by the
Company or the Executive shall be communicated by written Notice of Termination
to the Executive, if such Notice is given by the Company, and to the Company, if
such Notice is given by the Executive, all in accordance with the following
procedures and those set forth in Section 23:
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13.1 If such termination is for disability, Cause or Good
Reason, the Notice of Termination shall indicate in reasonable detail the facts
and circumstances alleged to provide a basis for such termination.
13.2 Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution duly
adopted by a majority of the directors of the Company (or any successor
corporation) then in office.
13.3 If the Notice is given by the Executive for Good Reason,
the Executive may cease performing his duties under this Agreement on or after
the date fifteen days after the delivery of Notice of Termination and shall in
any event cease employment on the Termination Date. If the Notice is given by
the Company, then the Executive may cease performing his duties under this
Agreement on the date of receipt of the Notice of Termination, subject to the
Executive's rights under this Agreement.
13.4 The Executive shall have thirty days, or such longer
period as the Company may determine to be appropriate, to cure any conduct or
act, if curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement pursuant to Subsection 1.4(iii).
13.5 The recipient of any Notice of Termination shall
personally deliver or mail in accordance with Section 23 written notice of any
dispute relating to such Notice of Termination to the party giving such Notice
within fifteen days after receipt thereof. However, if the Executive's conduct
or act alleged to provide grounds for termination by the Company for Cause is
curable, then such period shall be thirty days. After the expiration of such
period, the contents of the Notice of Termination shall become final and not
subject to dispute.
14. FURTHER OBLIGATIONS OF THE EXECUTIVE. The Executive agrees that, in
the event of any Covered Termination where the Executive is entitled to and
receives Accrued Benefits and the Termination Payment, the Executive shall not,
for a period of one year after the Termination Date, without the prior written
approval of the Company's Board of Directors, participate in the management of,
be employed by or own any business enterprise at a location within the United
States that engages in substantial competition with the Company or its
subsidiaries, where such enterprise's revenues from any competitive activities
amount to 40% or more of such enterprise's net revenues and sales for its most
recently completed fiscal year. However, nothing in this Section 14 shall
prohibit the Executive from owning stock or other securities of a competitor
amounting to less than five percent of the outstanding capital stock of such
competitor. The Executive also shall perform his obligations under the "Secrecy
Agreement" and the "Invention Assignment and Confidentiality Agreement" entered
into by the Company and the Executive.
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15. EXPENSES AND INTEREST. If, after a Change in Control of the
Company, (i) a dispute arises with respect to the enforcement of the Executive's
rights under this Agreement or (ii) any legal or arbitration proceeding shall be
brought to enforce or interpret any provision contained in this Agreement or to
recover damages for breach, in either case so long as the Executive is not
acting in bad faith, the Executive shall recover from the Company any reasonable
attorneys' fees and necessary costs and disbursements incurred as a result of
such dispute, legal or arbitration proceeding ("Expenses"), and prejudgment
interest on any money judgment or arbitration award obtained by the Executive
calculated at the rate of interest announced by Bank of America, St. Louis,
Missouri from time to time as its prime or base lending rate from the date that
payments to him should have been made under this Agreement. Within ten days
after the Executive's written request, the Company shall pay to the Executive,
or such other person or entity as the Executive may designate in writing to the
Company, the Executive's reasonable Expenses in advance of the final disposition
or conclusion of any such dispute, legal or arbitration proceeding.
16. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation during and
after the Employment Period to pay the Executive the amounts and to make the
benefit and other arrangements provided in this Agreement shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against him or anyone else. Except as provided in Section
15 of this Agreement, all amounts payable by the Company hereunder shall be paid
without notice or demand. Each payment made under this Agreement by the Company
shall be final, and the Company will not seek to recover any part of such
payment from the Executive, or from whoever may be entitled to such payment, for
any reason.
17. SUCCESSORS.
17.1 If the Company sells, assigns or transfers all or
substantially all of its business and assets to any Person or if the Company
merges into or consolidates or otherwise combines (where the Company does not
survive such combination) with any Person (any such event, a "Sale of
Business"), then the Company shall assign all of its right, title and interest
in this Agreement as of the date of such event to such Person, and the Company
shall cause such Person, by written agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume and agree to perform from and
after the date of such assignment all of the terms, conditions and provisions
imposed by this Agreement upon the Company. Failure of the Company to obtain
such agreement prior to the effective date of such Sale of Business shall be a
breach of this Agreement constituting "Good Reason" for termination hereunder,
except that for purposes of implementing the foregoing the date upon which such
Sale of Business becomes effective shall be deemed the Termination Date. In case
of such assignment by the Company and of assumption and agreement by such
Person, as used in this Agreement, "Company" shall subsequently mean such Person
which executes and delivers the agreement provided for in this Section 17 or
that otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law, and this Agreement shall inure to the benefit of, and be
enforceable by, such Person. The Executive shall, in his discretion, be entitled
to proceed against any of such Persons, any Person which theretofore was such a
successor
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to the Company and the Company (as so defined) in any action to enforce any
rights of the Executive under this Agreement. Except as provided in this
Subsection, this Agreement shall not be assignable by the Company. This
Agreement shall not be terminated by the voluntary or involuntary dissolution of
the Company.
17.2 This Agreement and all rights of the Executive shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All amounts
payable to the Executive under Sections 7, 8, 9, 10, 11, 12 and 15 if the
Executive had lived shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs and representatives. However, the foregoing shall not
be construed to modify any terms of any benefit plan of the Company, as such
terms are in effect on the date of the Change in Control of the Company, that
expressly govern benefits under such plan in the event of the Executive's death.
18. SEVERABILITY. The provisions of this Agreement shall be regarded as
divisible, and if any provision or any part is declared invalid or unenforceable
by a court of competent jurisdiction, the validity and enforceability of the
remainder of such provisions or parts and the applicability thereof shall not be
so affected.
19. AMENDMENT. This Agreement may not be amended or modified at any
time except by written instrument executed by the Company and the Executive.
20. WITHHOLDING. The Company shall be entitled to withhold from amounts
to be paid to the Executive under this Agreement any federal, state or local
withholding or other taxes or charges which it is from time to time required to
withhold. However, the amount so withheld shall not exceed the minimum amount
required to be withheld by law. The Company shall be entitled to rely on an
opinion of nationally recognized tax counsel if any question as to the amount or
requirement of any such withholding shall arise.
21. CERTAIN RULES OF CONSTRUCTION. No Party shall be considered as
being responsible for the drafting of this Agreement for the purpose of applying
any rule construing ambiguities against the drafter or otherwise. No draft of
this Agreement shall be taken into account in construing this Agreement. Any
provision of this Agreement which requires an agreement in writing shall be
deemed to require that the writing in question be signed by the Executive and an
authorized representative of the Company. This Agreement supersedes the Change
of Control Employment Agreement previously entered into by the Parties.
22. GOVERNING LAW; RESOLUTION OF DISPUTES. This Agreement and the
rights and obligations under it shall be governed by and construed in accordance
with the laws of the State of Delaware. Any dispute arising out of this
Agreement shall, at the Executive's election, be determined by arbitration under
the rules of the American Arbitration Association then in effect (in which case
both parties shall be bound by the arbitration award) or by litigation. Whether
the dispute is to be settled by arbitration or litigation, the venue for the
arbitration or litigation shall be St. Louis, Missouri or, at the Executive's
election, if the Executive is no longer residing or working in the St.
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Louis, Missouri metropolitan area, in the judicial district encompassing the
city in which the Executive resides. However, if the Executive is not then
residing in the United States, the election of the Executive with respect to
such venue shall be either St. Louis, Missouri or in the judicial district
encompassing that city of the United States among the thirty cities having the
largest population (as determined by the most recent United States Census data
available at the Termination Date) that is closest to the Executive's residence.
The Parties consent to personal jurisdiction in each trial court in the selected
venue having subject matter jurisdiction regardless of their residence or situs,
and each party irrevocably consents to service of process in the manner provided
in Section 23.
23. NOTICE. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided by Section 13.4, shall be deemed given
when actually received by the Executive or actually received by the Company's
Secretary or any officer of the Company other than the Executive. If mailed,
such notices shall be mailed by United States registered or certified mail,
return receipt requested, addressee only, postage prepaid, if to the Company, to
Xxxxxx Inc., Attention: Secretary (or President, if the Executive is the
Secretary), 0000 Xxxxxxx Xxxx., Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000, or if to
the Executive, at the address set forth below the Executive's signature to this
Agreement, or to such other address as the Party to be notified shall have given
to the other Party in writing.
24. NO WAIVER. No waiver by either Party at any time of any breach by
the other Party of, or compliance with, any condition or provision of this
Agreement to be performed by the other Party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
25. HEADINGS. The headings are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
End of Page 17
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first written above.
XXXXXX INC.
By:
------------------------------
Attest:
---------------------------
EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
000 Xxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
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CHANGE OF CONTROL EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 31st day of July, 2001, by Xxxxxx Inc., a
Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxxxxx ("Executive").
R E C I T A L S
The Executive is an officer of the Company and is employed by Belden
Wire & Cable Company ("BWC"), a wholly-owned subsidiary of the Company, in a key
executive capacity. The Executive's services are valuable to the Company. The
Executive possesses intimate knowledge of the business and affairs of the
Company and has acquired certain confidential information with respect to the
Company.
The Company desires to insure that it will continue to have the benefit
of the Executive's services and to protect its confidential information and
goodwill. The Company recognizes that circumstances may arise in which a change
in control of the Company occurs, through acquisition or otherwise, causing
uncertainty about the Executive's future employment with the Company without
regard to the Executive's competence or past contributions. Such uncertainty may
result in the loss of valuable services of the Executive to the detriment of the
Company and its stockholders.
The Company and the Executive desire that any proposal for a change in
control or acquisition of the Company will be considered by the Executive
objectively and with reference only to the best interests of the Company and its
stockholders. The Executive will be in a better position to consider the
Company's best interests if the Executive is afforded reasonable security, as
provided in this Agreement, against altered conditions of employment which could
result from any such change in control or acquisition.
NOW, the Company and the Executive (collectively the "Parties" or
individually a "Party"), agree as follows:
1. CERTAIN DEFINITIONS.
1.1 ACT. The term "Act" means the Securities Exchange Act of
1934, as amended.
1.2 AFFILIATE AND ASSOCIATE. The terms "Affiliate" and
"Associate" shall have the meanings given them in Rule 12b-2 of the Act.
1.3 BENEFICIAL OWNER. A Person shall be deemed to be the
"Beneficial Owner" of any securities:
(i) that such Person or any other Person's Affiliates
or Associates has the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own,
(A) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase, or
(B) securities issuable upon exercise of
Rights issued pursuant to the terms of the Rights Agreement between the Company
and First Chicago Trust Company of New York (the "Rights Agreement"), dated at
July 6, 1995, as amended from time to time (or any successor to such Rights
Agreement), at any time before the issuance of such securities;
(ii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the Act), including pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding to
vote such security if the agreement, arrangement or understanding:
(A) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations under the Act and
(B) is not also then reportable on a
Schedule 13D under the Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in Subsection 1.3 (ii) above) or disposing of any voting securities of
the Company; provided, however, that nothing in this paragraph (iii) shall cause
a Person engaged in the business as an underwriter of securities to be deemed
the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days (40) after the date of such
acquisition.
1.4 CAUSE. "Cause" for termination by the Company of the
Executive's employment with the Company, BWC or any of their Affiliates after a
Change of Control of the Company shall, for purposes of this Agreement, be
limited to:
(i) the engaging by the Executive in intentional
conduct taken in bad faith which has caused demonstrable and serious financial
injury to the Company, as evidenced by
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a determination in a binding and final judgment, order or decree of a court or
administrative agency of competent jurisdiction, in effect after exhaustion or
lapse of all rights of appeal, in an action, suit or proceeding, whether civil,
criminal, administrative or investigative;
(ii) conviction of a felony (as evidenced by a
binding and final judgment, order or decree of a court of competent
jurisdiction, in effect after exhaustion of all rights of appeal) which
substantially impairs the Executive's ability to perform his duties or
responsibilities; and
(iii) continuing willful and unreasonable refusal by
the Executive to perform the Executive's duties or responsibilities (unless
significantly changed without the Executive's consent).
1.5 CHANGE IN CONTROL OF THE COMPANY. A "Change in Control of
the Company" shall be deemed to have occurred if:
(i) any Person (other than any employee benefit plan
of the Company or any subsidiary of the Company, any entity holding securities
of the Company for or pursuant to the terms of any such plan or any trustee,
administrator or fiduciary of such a plan) is or becomes the Beneficial Owner of
securities of the Company representing at least 30% of the combined voting power
of the Company's then outstanding securities (other than acquisitions directly
from the Company);
(ii) a Section 11(a)(ii) Event shall have occurred
under the Rights Agreement (or a similar event shall have occurred under any
successor to such Rights Agreement) at any time any Rights are issued and
outstanding thereunder;
(iii) one-third or more of the members of the Board
are not Continuing Directors; or
(iv) there shall be consummated any merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of the Company's Common Stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving corporation
immediately after the merger.
1.6 CODE. The term "Code" means the Internal Revenue Code of
1986, as amended.
1.7 CONTINUING DIRECTOR. The term "Continuing Director" means
(i) any member of the Board of Directors of the Company (the "Board") who was a
member of such Board on August 15, 1996, (ii) any successor of a Continuing
Director who is recommended to succeed a Continuing Director by a majority of
the Continuing Directors then on the Board, and (iii) any
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appointee who is recommended by a majority of the Continuing Directors then on
the Board.
1.8 COVERED TERMINATION. The term "Covered Termination" means
any termination of the Executive's employment where the Termination Date is any
date prior to the end of the Employment Period.
1.9 EMPLOYMENT PERIOD. The term "Employment Period" means a
period beginning on the date of a Change in Control of the Company (as defined
in Section 1.5 above), and ending at 11:59 p.m. St. Louis Time on the earlier of
the third anniversary of such date or the Executive's Normal Retirement Date.
1.10 GOOD REASON. The Executive shall have a "Good Reason" for
termination of employment after a Change in Control of the Company in the event
of:
(i) any breach of this Agreement by the Company,
including specifically any breach by the Company of its agreements contained in
Sections 4 (Duties), 5 (Compensation) or 6 (Annual Compensation Adjustments)
hereof;
(ii) the removal of the Executive from, or any
failure to reelect or reappoint the Executive to, any of the positions held with
the Company, BWC or any of their affiliates on the date of the Change in Control
of the Company or any other positions with the Company, BWC or any of their
affiliates, to which the Executive shall thereafter be elected, appointed or
assigned, except when such removal or failure to reelect or reappoint relates to
the termination by the Company of the Executive's employment for Cause or by
reason of disability pursuant to Section 12;
(iii) a good faith determination by the Executive
that there has been a significant adverse change, without the Executive's
written consent, in the Executive's working conditions or status with the
Company, BWC or any of their affiliates from such working conditions or status
in effect immediately prior to the Change in Control of the Company, including
but not limited to;
(A) a significant change in the nature or
scope of the Executive's authority, powers, functions, duties or
responsibilities, or
(B) a significant reduction in the level of
support services, staff, secretarial and other assistance, office space and
accoutrements; or
(iv) failure by the Company to obtain the Agreement
referred to in Section 17.1 (Successors) below; or
(v) any voluntary termination of employment by the
Executive where the Notice of Termination is delivered within 30 days of the
first anniversary of the Effective Date.
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1.11 NORMAL RETIREMENT DATE. The term "Normal Retirement Date"
means the date Executive attains the age of 70.
1.12 PERSON. The term "Person" shall mean any individual,
firm, partnership, corporation or other entity, including any successor (by
merger or otherwise) of such entity, or a group of any of the foregoing acting
in concert.
1.13 TERMINATION DATE. For purposes of this Agreement, except
as otherwise provided in Section 10.2 (Death) and Section 17.1 (Successors), the
term "Termination Date" means:
(i) if the Executive's employment is terminated by
the Executive's death, the date of death;
(ii) if the Executive's employment is terminated by
reason of voluntary early retirement, as agreed in writing by the Company and
the Executive, the date of such early retirement which is set forth in such
written agreement;
(iii) if the Executive's employment is terminated for
purposes of this Agreement by reason of disability pursuant to Section 12, the
earlier of thirty days after the Notice of Termination is given or one day prior
to the end of the Employment Period;
(iv) if the Executive's employment is terminated by
the Executive voluntarily (other than for Good Reason), the date the Notice of
Termination is given; and
(v) if the Executive's employment is terminated by
the Company (whether or not for Cause), or by the Executive for Good Reason, the
earlier of thirty days after the Notice of Termination is given or one day prior
to the end of the Employment Period. Notwithstanding the foregoing;
(A) If termination is for Cause pursuant to
Section 1.4(iii) of this Agreement and if the Executive has cured the conduct
constituting such Cause as described by the Company in its Notice of Termination
within such thirty day or shorter period, then the Executive's employment under
this Agreement shall continue as if the Company had not delivered its Notice of
Termination.
(B) If the Company shall give a Notice of
Termination for Cause or by reason of disability and the Executive in good faith
notifies the Company that a dispute exists concerning the termination within the
applicable period following receipt of notice, then the Executive may elect to
continue his employment (or, if the Executive ceased performing his duties under
this Agreement at the request of the Company at the time of delivery of Notice
of Termination, resume and continue employment) during such dispute and the
Termination Date shall be determined under this paragraph. If the Executive so
elects and it is thereafter determined that Cause or
-5-
disability (as the case may be ) did exist, the Termination Date shall be the
earliest of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section 22
(Governing Law; Resolution of Disputes), (2) the date of the Executive's death,
or (3) one day prior to the end of the Employment Period. If the Executive so
elects and it is subsequently determined that Cause or disability (as the case
may be ) did not exist, then the employment of the Executive under this
Agreement shall continue after such determination as if the Company had not
delivered its Notice of Termination and there shall be no Termination Date
arising out of such Notice. In either case, this Agreement continues, until the
Termination Date, if any, as if the Company had not delivered the Notice of
Termination except that, if it is finally determined that the Company properly
terminated the Executive for the reason asserted in the Notice of Termination,
the Executive shall in no case be entitled to a Termination Payment (as defined
below) arising out of events occurring after the Company delivered its Notice of
Termination.
(C) If the Executive shall in good faith
give a Notice of Termination for Good Reason and the Company notifies the
Executive that a dispute exists concerning the termination within the applicable
period following receipt of notice, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be determined
under this paragraph. If the Executive so elects and it is subsequently
determined that Good Reason did exist, the Termination Date shall be the
earliest of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section 22
(Governing Law; Resolution of Disputes), (2) the date of the Executive's death
or (3) one day prior to the end of the Employment Period. If the Executive so
elects and it is subsequently determined that Good Reason did not exist, then
the employment of the Executive under this Agreement shall continue after such
determination as if the Executive had not delivered the Notice of Termination
asserting Good Reason and there shall be no Termination Date arising out of such
Notice. In either case, this Agreement continues, until the Termination Date, if
any, as if the Company had not delivered the Notice of Termination except that,
if it is finally determined that Good Reason did exist, the Executive shall in
no case be denied the benefits described in Sections 8 and 9 (including a
Termination Payment) based on events occurring after the Executive delivered his
Notice of Termination.
(D) If an opinion is required to be
delivered pursuant to Section 9.3 hereof and such opinion shall not have been
delivered, the Termination Date shall be the earlier of the date on which such
opinion is delivered or one day prior to the end of the Employment Period.
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(E) Except as provided in Paragraphs (B) and
(C) above, if the party receiving the Notice of Termination notifies the other
Party that a dispute exists concerning the termination within the appropriate
period following receipt of notice and it is finally determined that the reason
asserted in such Notice of Termination did not exist, then (1) if such Notice
was delivered by the Executive, the Executive will be deemed to have voluntarily
terminated his employment and the Termination Date shall be the earlier of the
date thirty days after the Notice of Termination is given or one day prior to
the end of the Employment Period and (2) if delivered by the Company, the
Company will be deemed to have terminated the Executive other than by reason of
death, disability or Cause.
2. TERMINATION PRIOR TO CHANGE IN CONTROL. The Company and the
Executive shall each retain the right to terminate the employment of the
Executive at any time prior to a Change in Control of the Company. If the
Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and all rights and obligations of
the parties under it shall cease.
3. EMPLOYMENT PERIOD. If a Change in Control of the Company occurs when
the Executive is employed by BWC, BWC will continue subsequently to employ the
Executive during the Employment Period, and the Executive will remain in the
employ of BWC, in accordance with and subject to the provisions of this
Agreement.
4. DUTIES. During the Employment Period, the Executive shall, in the
same capacities and positions held by the Executive at the time of the Change in
Control of the Company or in such other capacities and positions as may be
agreed to by the Company and the Executive in writing, devote the Executive's
best efforts and all of the Executive's business time, attention and skill to
the business and affairs of the Company, as such business and affairs now exist
and as they may subsequently be conducted. The services that are to be performed
by the Executive under this Agreement are to be rendered in the same
metropolitan area in which the Executive was employed at the time of such Change
in Control of the Company, or in such other place or places as shall be agreed
upon in writing by the Executive and the Company from time to time. Without the
Executive's consent, the Executive shall not be required to be absent from such
metropolitan area more than 45 days in any fiscal year of the Company.
5. COMPENSATION. During the Employment Period, the Executive shall be
compensated as follows:
5.1 The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies as
may be in effect immediately prior to the Change in Control of the Company, an
annual base salary in cash equivalent of not less than the Executive's annual
base salary as in effect immediately prior to the Change in Control of the
Company (which base salary shall, unless otherwise agreed in writing by the
Executive, include the current receipt by the Executive of any amounts that,
prior to the Change in Control of the Company, the Executive had elected to
defer, whether such compensation is deferred under Section 401(k) of the Code or
otherwise), subject to adjustment as provided below.
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5.2 The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive immediately prior to the Change in
Control of the Company, and shall be reimbursed, at such intervals and in
accordance with such standard policies as may be in effect immediately prior to
the Change in Control of the Company, for any monies advanced in connection with
the Executive's employment for reasonable and necessary expenses incurred by the
Executive on behalf of the Company, BWC or their affiliates, including travel
expenses.
5.3 The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's salary
grade or on any other requirement that excludes persons of comparable status to
the Executive unless such exclusion was in effect for such plan or an equivalent
plan immediately prior to the Change in Control of the Company), in any plan
providing benefits for the Company's salaried employees in general of the
Company, BWC or their Affiliates, including but not limited to the Management
Incentive Plan, the Long-Term Incentive Plan, group life insurance,
hospitalization, medical, dental, savings, profit sharing and stock bonus plans.
However, in no event shall the aggregate level of benefits under such plans in
which the Executive is included be less than the aggregate level of benefits
under plans of the Company, BWC or their Affiliates of the type referred to in
this Section 5.3 in which the Executive was participating immediately prior to
the Change in Control of the Company.
5.4 The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays to
which the Executive was entitled annually immediately prior to the Change in
Control of the Company or such greater amount of paid vacation and number of
paid holidays as may be made available annually to other executives of the
Company, BWC or their Affiliates of comparable status and position to the
Executive.
5.5 The Executive shall be included in all plans providing
additional benefits to executives of the Company, BWC or their Affiliates of
comparable status and position to the Executive, including deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans.
However, in no event shall the aggregate level of benefits under such plans be
less than the aggregate level of benefits under plans of the Company, BWC or
their Affiliates of the type referred to in this Section 5.5 in which the
Executive was participating immediately prior to the Change in Control of the
Company. Moreover, the obligation of the Company, BWC or their Affiliates to
include the Executive in bonus or incentive compensation plans shall be
determined by Section 5.6.
5.6 To assure that the Executive will have an opportunity to
earn incentive compensation after a Change in Control of the Company, the
Executive shall be included in a bonus plan of the Company, BWC or their
Affiliates that shall satisfy the standards described below (such plan, the
"Bonus Plan"). Bonuses under the Bonus Plan shall be payable with respect to
achieving such financial or other goals reasonably related to the business of
the Company as the Company shall establish (the "Goals"), all of which Goals
shall be attainable, prior to the end of the Employment Period, with
approximately the same degree of probability as the goals under the bonus plan
of the
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Company, BWC or their Affiliates as in effect immediately prior to the
Change in Control of the Company (the "Company Bonus Plan") and in view of the
Company's existing and projected financial and business circumstances applicable
at the time. The amount of the bonus (the "Bonus Amount") that the Executive
will be eligible to earn under the Bonus Plan shall be no less than the amount
of the Executive's maximum award provided in such Company Bonus Plan (such bonus
amount is referred to as the "Targeted Bonus"). If the Goals are not achieved
such that the entire Targeted Bonus is not payable, the Bonus Plan shall provide
for a payment of a Bonus Amount equal to a portion of the Targeted Bonus
reasonably related to that portion of the Goals that were achieved. Payment of
the Bonus Amount shall not be affected by any circumstance occurring subsequent
to the end of the Employment Period, including termination of the Executive's
employment.
6. ANNUAL COMPENSATION ADJUSTMENTS. During the Employment Period, the
Board of Directors of the Company (or an appropriate committee or officer
thereof) will consider and review, at least annually, the contributions of the
Executive to the Company, BWC or their Affiliates and in accordance with the
practice of the Company, BWC or their Affiliates prior to the Change in Control
of the Company, due consideration shall be given to the upward adjustment of the
Executive's base compensation rate, at least annually, (i) commensurate with
increases generally given to other executives of the Company, BWC or their
Affiliates of comparable status and position to the Executive, and (ii) as the
scope of the operations of the Company, BWC or their Affiliates or the
Executive's duties expand.
7. TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If there is a Covered
Termination for Cause or if the Executive voluntarily terminates his employment
other than for Good Reason (any such terminations to be subject to the
procedures set forth in Section 13), then the Executive shall be entitled to
receive only Accrued Benefits pursuant to Section 9.1.
8. TERMINATION GIVING RISE TO A TERMINATION PAYMENT.
8.1 If there is a Covered Termination by the Executive for
Good Reason, or by the Company other than by reason of (i) death, (ii)
disability pursuant to Section 12, or (iii) Cause (any such terminations to be
subject to the procedures set forth in Section 13), then the Executive shall be
entitled to receive, and the Company shall promptly pay, Accrued Benefits
pursuant to Section 9.1 and, in lieu of further base salary for periods
following the Termination Date, as liquidated damages and additional severance
pay the Termination Payment pursuant to Section 9.2.
8.2 If there is Covered Termination and the Executive is
entitled to Accrued Benefits and the Termination Payment, then the Executive
shall be entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of
the Company, outplacement services, on an individualized basis at a level of
service commensurate with the Executive's status with the Company, BWC or their
Affiliates immediately prior to the Change in Control of the Company (or, if
higher, immediately prior to the termination of the Executive's
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employment), provided by a nationally recognized executive placement firm
selected by the Company.
(ii) For two years after the date of Termination, the
Executive shall continue to be covered, at the expense of the Company, by the
same or equivalent life insurance, hospitalization, medical and dental coverage
as was required under this Agreement with respect to the Executive immediately
prior to the date the Notice of Termination is given.
9. PAYMENTS UPON TERMINATION.
9.1 ACCRUED BENEFITS. The Executive's "Accrued Benefits" shall
include the following amounts, payable as described in this Agreement:
(i) all base salary for the time period ending with
the Termination Date;
(ii) reimbursement for any monies advanced in
connection with the Executive's employment for reasonable and necessary expenses
incurred by the Executive on behalf of the Company, BWC or their Affiliates for
the time period ending with the Termination Date;
(iii) any other cash earned through the Termination
Date and deferred at the election of the Executive or pursuant to any deferred
compensation plan then in effect;
(iv) a lump sum payment of the bonus or incentive
compensation otherwise payable to the Executive with respect to the year in
which termination occurs under all bonus or incentive compensation plans in
which the Executive is a participant; and
(v) all other payments and benefits to which the
Executive (or in the event of the Executive's death, the Executive's surviving
spouse or other beneficiary) may be entitled as compensatory fringe benefits or
under the terms of any benefit plan of the Company, BWC or their Affiliates, and
severance payments under the Company's severance policies and practices as in
effect immediately prior to the Change in Control of the Company. Payment of
Accrued Benefits shall be made promptly in accordance with the Company's
prevailing practice with respect to Subsections (i) and (ii) or, with respect to
Subsections (iii), (iv) and (v), pursuant to the terms of the benefit plan or
practice establishing such benefits.
9.2 TERMINATION PAYMENT. The Termination Payment shall be an
amount equal to (A) the Executive's annual base salary, as in effect immediately
prior to the Change in Control of the Company, as adjusted upward, from time to
time, pursuant to Section 6, plus (B) the amount of the highest annual bonus
award (determined on an annualized basis for any bonus award paid for a period
of less than one year) paid to the Executive with respect to the two complete
fiscal years preceding the Termination Date (the aggregate amount set forth in
(A) and (B) hereof shall be referred to as "Annual Cash Compensation"), times
(C) a factor of 2. The Termination Payment shall be paid in cash and shall not
be reduced by any present value or similar factor, and the
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Executive shall not be required to mitigate the amount of the Termination
Payment by securing other employment or otherwise, nor will such Termination
Payment be reduced by reason of the Executive's securing other employment or for
any other reason. The Termination Payment shall be in addition to any other
severance payments to which the Executive is entitled under the Company's
severance policies and practices as in effect immediately prior to the Change in
Control of the Company.
9.3 TAXES.
(i) Gross-Up. Whether or not the Executive becomes
entitled to the Termination Payment, if any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's employment, including those provided under
Section 9.1, (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person) (all
such payments and benefits, including the Termination Payment, being hereinafter
called "Total Payments") will be subject (in whole or part) to the Excise Tax,
then the Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after deduction of
any Excise Tax on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the
Total Payments. (Excise Tax shall mean any excise tax imposed under Section 4999
of the Code.) For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive's residence
on the Date of Termination (or if there is no Date of Termination, then the date
on which the Gross-Up Payment is calculated for purposes of this Section 9.3),
net of the maximum reduction in federal income tax which could be obtained from
deduction of such state and local taxes.
(ii) Tax Counsel. For purposes of determining whether
any of the Total Payments will be subject to the Excise Tax and the amount of
such Excise Tax, (a) all of the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, unless in the
opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive
and selected by the accounting firm which was, immediately prior to the Change
in Control, the Company's independent auditor (the "Auditor"), such other
payments or benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 280G(b)(4)(A) of the Code, (b) all "excess
parachute payments" within the meaning of section 280G(b)(l) of the Code shall
be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel,
such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of section
280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax, and (c)
the value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section
9.3(iii) below, the Company shall provide the Executive with its
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calculation of the amounts referred to in this Section 9.2(ii) and such
supporting materials as are reasonably necessary for the Executive to evaluate
the Company's calculations. If the Executive disputes the Company's calculations
(in whole or in part), the reasonable opinion of Tax Counsel with respect to the
matter in dispute shall prevail.
(iii) Repayment. In the event that (a) amounts are
paid to the Executive pursuant to subsection (i) of this Section 9.2, and (b)
the Excise Tax is finally determined to be less than the amount taken into
account hereunder in calculating the Gross-Up Payment, the Executive shall repay
to the Company, within five (5) business days following the time that the amount
of such reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income and employment taxes imposed on the Gross-Up Payment being repaid by the
Executive), to the extent that such repayment results in (i) no portion of the
Total Payments being subject to the Excise Tax and (b) a dollar-for-dollar
reduction in the Executive's taxable income and wages for purposes of federal,
state and local income and employment taxes plus interest on the amount of such
repayment at the rate provided in section 1274(b)(2)(B)of the Code. In the event
that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time of the termination of the Executive's employment
(including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess and in respect of any
portion of the Excise Tax with respect to which the Company had not previously
made a Gross-Up Payment (plus any interest, penalties or additions payable by
the Executive with respect to such excess and such portion) within five (5)
business days following the time that the amount of such excess is finally
determined.
9.4 DATE OF PAYMENTS. The payments provided in Sections 9.2
and 9.3 shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments, and the
limitations on such payments set forth in Sections 9.2 or 9.3 above, cannot be
finally determined on or before such day, the Company shall pay to the Executive
on such day an estimate, as determined in good faith by the Executive or, in the
case of payments under Section 9.3, in accordance with Section 9.3 above, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest on the unpaid
remainder [or on all such payments to the extent the Company fails to make such
payments when due] at the rate provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the amount
of the estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to the Executive,
payable on the fifth (5th) business day after demand by the Company (together
with interest at the rate provided in section 1274(b)(2)(B) of the Code). At the
time that payments are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in
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writing shall be attached to the statement).
10. DEATH.
10.1 Except as provided in Section 10.2, in the event of a
Covered Termination due to the Executive's death, the Executive's estate, heirs
and beneficiaries shall receive all the Executive's Accrued Benefits through the
Termination Date.
10.2 In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled to the
benefits described in Section 10.1 hereof and, subject to the provisions of this
Agreement, to such Termination Payment as the Executive would have been entitled
to had the Executive lived. For purposes of this Subsection 10.2, the
Termination Date shall be the earlier of thirty days following the giving of the
Notice of Termination, subject to extension pursuant to Section 1.14, or one day
prior to the end of the Employment Period.
11. RETIREMENT. If, during the Employment Period, the Executive and the
Company shall execute an agreement providing for the early retirement of the
Executive from the Company, or the Executive shall otherwise give notice that he
is voluntarily choosing to retire early from the Company, the Executive shall
receive Accrued Benefits through the Termination Date. However, if the
Executive's employment is terminated by the Executive for Good Reason or by the
Company other than by reason of death, disability or Cause and the Executive
also, in connection with such termination, elects voluntary early retirement,
the Executive shall also be entitled to receive a Termination Payment.
12. TERMINATION FOR DISABILITY. If, during the Employment Period, as a
result of the Executive's disability due to physical or mental illness or injury
(regardless of whether such illness or injury is job-related), the Executive
shall have been absent from the Executive's duties under this Agreement on a
full-time basis for a period of six consecutive months and, within thirty days
after the Company notifies the Executive in writing that it intends to terminate
the Executive's employment (which notice shall not constitute the Notice of
Termination contemplated below), the Executive shall not have returned to the
performance of the Executive's duties under this Agreement on a full-time basis,
the Company may terminate the Executive's employment for purposes of this
Agreement pursuant to a Notice of Termination given in accordance with Section
13. If the Executive's employment is terminated on account of the Executive's
disability in accordance with this Section, the Executive shall receive Accrued
Benefits in accordance with Section 9.1 hereof and shall remain eligible for all
benefits provided by any long term disability programs of the Company, BWC or
its Affiliates in effect at the time of such termination.
13. TERMINATION NOTICE AND PROCEDURE. Any Covered Termination by the
Company or the Executive shall be communicated by written Notice of Termination
to the Executive, if such Notice is given by the Company, and to the Company, if
such Notice is given by the Executive, all in accordance with the following
procedures and those set forth in Section 23:
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13.1 If such termination is for disability, Cause or Good
Reason, the Notice of Termination shall indicate in reasonable detail the facts
and circumstances alleged to provide a basis for such termination.
13.2 Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution duly
adopted by a majority of the directors of the Company (or any successor
corporation) then in office.
13.3 If the Notice is given by the Executive for Good Reason,
the Executive may cease performing his duties under this Agreement on or after
the date fifteen days after the delivery of Notice of Termination and shall in
any event cease employment on the Termination Date. If the Notice is given by
the Company, then the Executive may cease performing his duties under this
Agreement on the date of receipt of the Notice of Termination, subject to the
Executive's rights under this Agreement.
13.4 The Executive shall have thirty days, or such longer
period as the Company may determine to be appropriate, to cure any conduct or
act, if curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement pursuant to Subsection 1.4(iii).
13.5 The recipient of any Notice of Termination shall
personally deliver or mail in accordance with Section 23 written notice of any
dispute relating to such Notice of Termination to the party giving such Notice
within fifteen days after receipt thereof. However, if the Executive's conduct
or act alleged to provide grounds for termination by the Company for Cause is
curable, then such period shall be thirty days. After the expiration of such
period, the contents of the Notice of Termination shall become final and not
subject to dispute.
14. FURTHER OBLIGATIONS OF THE EXECUTIVE. The Executive agrees that, in
the event of any Covered Termination where the Executive is entitled to and
receives Accrued Benefits and the Termination Payment, the Executive shall not,
for a period of one year after the Termination Date, without the prior written
approval of the Company's Board of Directors, participate in the management of,
be employed by or own any business enterprise at a location within the United
States that engages in substantial competition with the Company or its
subsidiaries, where such enterprise's revenues from any competitive activities
amount to 40% or more of such enterprise's net revenues and sales for its most
recently completed fiscal year. However, nothing in this Section 14 shall
prohibit the Executive from owning stock or other securities of a competitor
amounting to less than five percent of the outstanding capital stock of such
competitor. The Executive also shall perform his obligations under the "Secrecy
Agreement" and the "Invention Assignment and Confidentiality Agreement" entered
into by the Company and the Executive.
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15. EXPENSES AND INTEREST. If, after a Change in Control of the
Company, (i) a dispute arises with respect to the enforcement of the Executive's
rights under this Agreement or (ii) any legal or arbitration proceeding shall be
brought to enforce or interpret any provision contained in this Agreement or to
recover damages for breach, in either case so long as the Executive is not
acting in bad faith, the Executive shall recover from the Company any reasonable
attorneys' fees and necessary costs and disbursements incurred as a result of
such dispute, legal or arbitration proceeding ("Expenses"), and prejudgment
interest on any money judgment or arbitration award obtained by the Executive
calculated at the rate of interest announced by Bank of America, St. Louis,
Missouri from time to time as its prime or base lending rate from the date that
payments to him should have been made under this Agreement. Within ten days
after the Executive's written request, the Company shall pay to the Executive,
or such other person or entity as the Executive may designate in writing to the
Company, the Executive's reasonable Expenses in advance of the final disposition
or conclusion of any such dispute, legal or arbitration proceeding.
16. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation during and
after the Employment Period to pay the Executive the amounts and to make the
benefit and other arrangements provided in this Agreement shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against him or anyone else. Except as provided in Section
15 of this Agreement, all amounts payable by the Company hereunder shall be paid
without notice or demand. Each payment made under this Agreement by the Company
shall be final, and the Company will not seek to recover any part of such
payment from the Executive, or from whoever may be entitled to such payment, for
any reason.
17. SUCCESSORS.
17.1 If the Company sells, assigns or transfers all or
substantially all of its business and assets to any Person or if the Company
merges into or consolidates or otherwise combines (where the Company does not
survive such combination) with any Person (any such event, a "Sale of
Business"), then the Company shall assign all of its right, title and interest
in this Agreement as of the date of such event to such Person, and the Company
shall cause such Person, by written agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume and agree to perform from and
after the date of such assignment all of the terms, conditions and provisions
imposed by this Agreement upon the Company. Failure of the Company to obtain
such agreement prior to the effective date of such Sale of Business shall be a
breach of this Agreement constituting "Good Reason" for termination hereunder,
except that for purposes of implementing the foregoing the date upon which such
Sale of Business becomes effective shall be deemed the Termination Date. In case
of such assignment by the Company and of assumption and agreement by such
Person, as used in this Agreement, "Company" shall subsequently mean such Person
which executes and delivers the agreement provided for in this Section 17 or
that otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law, and this Agreement shall inure to the benefit of, and be
enforceable by, such Person. The Executive shall, in his discretion, be entitled
to proceed against any of such Persons, any Person which theretofore was such a
successor
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to the Company and the Company (as so defined) in any action to enforce any
rights of the Executive under this Agreement. Except as provided in this
Subsection, this Agreement shall not be assignable by the Company. This
Agreement shall not be terminated by the voluntary or involuntary dissolution of
the Company.
17.2 This Agreement and all rights of the Executive shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All amounts
payable to the Executive under Sections 7, 8, 9, 10, 11, 12 and 15 if the
Executive had lived shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs and representatives. However, the foregoing shall not
be construed to modify any terms of any benefit plan of the Company, as such
terms are in effect on the date of the Change in Control of the Company, that
expressly govern benefits under such plan in the event of the Executive's death.
18. SEVERABILITY. The provisions of this Agreement shall be regarded as
divisible, and if any provision or any part is declared invalid or unenforceable
by a court of competent jurisdiction, the validity and enforceability of the
remainder of such provisions or parts and the applicability thereof shall not be
so affected.
19. AMENDMENT. This Agreement may not be amended or modified at any
time except by written instrument executed by the Company and the Executive.
20. WITHHOLDING. The Company shall be entitled to withhold from amounts
to be paid to the Executive under this Agreement any federal, state or local
withholding or other taxes or charges which it is from time to time required to
withhold. However, the amount so withheld shall not exceed the minimum amount
required to be withheld by law. The Company shall be entitled to rely on an
opinion of nationally recognized tax counsel if any question as to the amount or
requirement of any such withholding shall arise.
21. CERTAIN RULES OF CONSTRUCTION. No Party shall be considered as
being responsible for the drafting of this Agreement for the purpose of applying
any rule construing ambiguities against the drafter or otherwise. No draft of
this Agreement shall be taken into account in construing this Agreement. Any
provision of this Agreement which requires an agreement in writing shall be
deemed to require that the writing in question be signed by the Executive and an
authorized representative of the Company. This Agreement supersedes the Change
of Control Employment Agreement previously entered into by the Parties.
22. GOVERNING LAW; RESOLUTION OF DISPUTES. This Agreement and the
rights and obligations under it shall be governed by and construed in accordance
with the laws of the State of Delaware. Any dispute arising out of this
Agreement shall, at the Executive's election, be determined by arbitration under
the rules of the American Arbitration Association then in effect (in which case
both parties shall be bound by the arbitration award) or by litigation. Whether
the dispute is to be settled by arbitration or litigation, the venue for the
arbitration or litigation shall be St. Louis, Missouri or, at the Executive's
election, if the Executive is no longer residing or working in the St.
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Louis, Missouri metropolitan area, in the judicial district encompassing the
city in which the Executive resides. However, if the Executive is not then
residing in the United States, the election of the Executive with respect to
such venue shall be either St. Louis, Missouri or in the judicial district
encompassing that city of the United States among the thirty cities having the
largest population (as determined by the most recent United States Census data
available at the Termination Date) that is closest to the Executive's residence.
The Parties consent to personal jurisdiction in each trial court in the selected
venue having subject matter jurisdiction regardless of their residence or situs,
and each party irrevocably consents to service of process in the manner provided
in Section 23.
23. NOTICE. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided by Section 13.4, shall be deemed given
when actually received by the Executive or actually received by the Company's
Secretary or any officer of the Company other than the Executive. If mailed,
such notices shall be mailed by United States registered or certified mail,
return receipt requested, addressee only, postage prepaid, if to the Company, to
Xxxxxx Inc., Attention: Secretary (or President, if the Executive is the
Secretary), 0000 Xxxxxxx Xxxx., Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000, or if to
the Executive, at the address set forth below the Executive's signature to this
Agreement, or to such other address as the Party to be notified shall have given
to the other Party in writing.
24. NO WAIVER. No waiver by either Party at any time of any breach by
the other Party of, or compliance with, any condition or provision of this
Agreement to be performed by the other Party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
25. HEADINGS. The headings are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
End of Page 17
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first written above.
XXXXXX INC.
By:
------------------------------
Attest:
---------------------------
EXECUTIVE
/s/ Xxxxx X. Xxxxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxxxx
0 Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
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