HNI Corporation Change In Control Employment Agreement
Exhibit
10.1
HNI
Corporation
Change
In Control Employment Agreement
THIS
AMENDED AND RESTATED AGREEMENT is made between HNI Corporation, an Iowa
corporation (the "Corporation"), and _______________________________ (the
"Executive"), dated this ______ day of _______________________,
20__.
| 1. |
Purpose.
The Corporation wishes to attract and retain well-qualified executive
and
key personnel. The Corporation and the Executive wish to assure continuity
of management in the event of any actual or threatened Change in
Control
(as defined in Section 3) of the Corporation. The Agreement is entered
into to accomplish these purposes and in consideration for the mutual
covenants herein contained.
|
| 2. |
Operation
of Agreement.
The "effective date of this Agreement" shall be the first date during
the
"Term of the Agreement" (as defined below) on which a Change in Control
occurs. Subject to the final sentence of this Section 2, this Agreement
shall terminate if the Board of Directors of the Corporation (the
"Board")
determines that the Executive is no longer a key executive who should
be
covered by this Agreement and so notifies the Executive; provided,
however, that such a determination shall not be made, and if made
shall
have no effect, (i) within two years after a Change of Control or
(ii)
during any period of time when the Corporation has knowledge that
any
third person has taken steps reasonably calculated to effect a Change
of
Control until, in the opinion of the Board, the third person has
abandoned
or terminated his efforts to effect a Change in Control. The "Term
of the
Agreement" shall mean the period commencing on the date hereof and
ending
on the second anniversary of the date hereof; provided, however,
that
commencing on the date one year after the date hereof, and on each
annual
anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"), unless previously
terminated, the Term of the Agreement shall be automatically extended
so
as to terminate two years from such Renewal Date, unless at least
60 days
prior to the Renewal Date the Corporation shall give notice to the
Executive that the Term of the Agreement shall not be so extended.
Anything in this Agreement to the contrary notwithstanding, if the
Executive's employment with the Corporation is terminated prior to
the
date on which a Change in Control occurs, and it is reasonably
demonstrated that such termination (1) was at the request of a third
party
who has taken steps reasonably calculated to effect a Change in Control
or
(2) otherwise arose in connection with or anticipation of a Change
in
Control, then for all purposes of this Agreement the Executive's
employment shall be deemed to have been terminated during the Protection
Period (as defined herein).
|
| 3. |
Change
in Control.
For the purposes of this Agreement, a "Change in Control" shall
mean:
|
| (a) |
The
acquisition by any individual, entity or group (within the meaning
of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as
amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or
more of either (i) the then outstanding shares of common stock of
the
Corporation (the "Outstanding Corporation Common Stock") or (ii)
the
combined voting power of the then outstanding voting securities of
the
Corporation entitled to vote generally in the election of Directors
(the
"Outstanding Corporation Voting Securities"); provided, however,
that
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|
(1)
for purposes of this subsection (a), the following acquisitions shall
not
constitute a Change of Control: (A) any acquisition directly from
the
Corporation that is approved by a majority of the Incumbent Board
(as
defined below), (B) any acquisition by the Corporation, (C) any
acquisition by any employee benefit plan (or related trust) sponsored
or
maintained by the Corporation or any corporation controlled by the
Corporation or (D) any acquisition by any Person pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c)
of this
Section 3 and (2) a Change in Control will not be deemed to have
occurred
if a Person becomes the beneficial owner of 20% or more of the Outstanding
Corporation Common Stock or the Outstanding Corporation Voting Securities
as a result of a reduction in the number of shares of Outstanding
Corporation Common Stock or Outstanding Corporation Voting Securities
pursuant to a transaction or series of transactions that is approved
by a
majority of the Incumbent Board unless and until such Person thereafter
becomes the beneficial owner of any additional shares of Outstanding
Corporation Common Stock or Outstanding Corporation Voting Securities
representing 1% or more of the then-outstanding Outstanding Corporation
Common Stock or Outstanding Corporation Voting Securities, other
than as a
result of a stock dividend, stock split or similar transaction effected
by
the Corporation in which all holders of Outstanding Corporation Common
Stock or Outstanding Corporation Voting Securities are treated equally;
or
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| (b) |
individuals
who, as of the date hereof, constitute the Board (the "Incumbent
Board")
cease for any reason to constitute at least two-thirds of the Board;
provided, however, that any individual becoming a Director subsequent
to
the date hereof whose election, or nomination for election by the
Corporation's shareholders, or appointment, was approved by a vote
of at
least three-quarters of the Directors then comprising the Incumbent
Board
(either by a specific vote or by approval of the proxy statement
of the
Corporation in which such person is named as a nominee for director
without objection to such nomination) shall be considered as though
such
individual were a member of the Incumbent Board, but excluding, for
this
purpose, any such individual whose initial assumption of office occurs
as
a result of an actual or threatened election contest with respect
to the
election or removal of Directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than
the Board; or
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| (c) |
the
consummation of a reorganization, merger or consolidation or sale
or other
disposition of all or substantially all of the assets of the Corporation
(a "Business Combination"), in each case, unless, following such
Business
Combination, (i) all or substantially all of the individuals and
entities
who were the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities
immediately prior to such Business Combination beneficially own,
directly
or indirectly, more than 50% of, respectively, the then-outstanding
shares
of common stock and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of Directors,
as the case may be, of the entity resulting from such Business Combination
(including, without limitation, an entity which as a result of such
transaction owns the Corporation or all or substantially all of the
Corporation's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding
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Corporation
Common Stock and Outstanding Corporation Voting Securities, as the
case
may be, (ii) no Person (excluding the Corporation, any entity
resulting from such Business Combination or any employee benefit
plan (or
related trust) of the Corporation or such entity resulting from such
Business Combination) beneficially owns, directly or indirectly,
20% or
more of, respectively, the then outstanding shares of common stock
of the
entity resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such entity except
to
the extent that such ownership existed prior to the Business Combination
and (iii) at least a majority of the members of the Board of Directors
of
the entity resulting from such Business Combination were members
of the
Incumbent Board at the time of the execution of the initial agreement,
or
of the action of the Board, providing for such Business Combination;
or
|
| (d) |
approval
by the shareholders of the Corporation of a complete liquidation
or
dissolution of the Corporation, except pursuant to a Business Combination
that complies with clauses (i), (ii) and (iii) of subsection (c)
of this
Section 3.
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| 4. |
Terms
of Employment During Protection Period.
|
| (a) |
The
Corporation hereby agrees to continue the Executive in its employ
and the
Executive, subject to Section 6(c), hereby agrees to remain in the
employ
of the Corporation, for the period commencing on the effective date
of
this Agreement and ending on the earlier to occur of (i) the second
anniversary of such date or (ii) the date this Agreement otherwise
terminates as provided herein (the period commencing on the effective
date
of this Agreement and ending on the earlier to occur of dates specified
in
clauses (i) and (ii) is referred to herein as the "Protection
Period").
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| (b) |
During
the Protection Period the Executive's position (including titles),
authority and responsibilities shall be at least commensurate with
those
held, exercised and assigned during the 90-day period immediately
preceding the effective date of this Agreement. Such services shall
be
performed at the location where the Executive was employed immediately
prior to the effective date of this
Agreement.
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| (c) |
The
Executive agrees that during the Protection Period he shall devote
such
business time during normal business hours exclusively to the business
and
affairs of the Corporation and use his best efforts to perform faithfully
and efficiently the responsibilities assigned to him hereunder, in
each
case, to the extent necessary to discharge the responsibilities assigned
to him hereunder, except for (i) services on corporate, civic or
charitable boards or committees not significantly interfering with
the
performance of such responsibilities and (ii) periods of vacation
and sick
leave to which he is entitled. It is expressly understood and agreed
that
the Executive's continuing to serve on any boards and committees
with
which he shall be connected, as a member or otherwise, at the effective
date of this Agreement shall not be deemed to interfere with the
performance of the Executive's services to the
Corporation.
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| 5. |
Compensation.
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3
| (a) |
Base
Salary.
During the Protection Period, the Executive shall receive a base
salary
("Base Salary") at a monthly rate at least equal to the highest monthly
salary paid to the Executive by the Corporation or any of its affiliated
companies within one year prior to the effective date of this Agreement.
During the Protection Period, the Base Salary shall be reviewed at
least
once each year and shall be increased at any time and from time to
time by
action of the Board or any committee thereof or any individual having
authority to take such action in accordance with the Corporation's
regular
practices. Any increase in the Base Salary shall not serve to limit
or
reduce any other obligation of the Corporation hereunder, and after
any
such increase the Base Salary shall not be reduced. As used in this
Agreement, the term "affiliated companies" means any company controlling,
controlled by, or under common control with the
Corporation.
|
| (b) |
Annual
Bonus.
In addition to Base Salary, the Executive shall be awarded for each
completed fiscal year during the Protection Period an annual bonus
("Annual Bonus") (either pursuant to the Executive Bonus Plan or
any other annual bonus or annual incentive plan or program of the
Corporation or otherwise) in cash equal to (i) the
higher of: (A) the Annual Bonus actually payable to the Executive
for such
completed fiscal year, or (B) the highest Annual Bonus actually paid
or
payable to the Executive in respect of any of the full fiscal years
completed during the three fiscal years immediately prior to the
effective
date of this Agreement minus (ii) in the case of any fiscal year
in which
a Change in Control occurs, any prorated amount previously paid to
Executive in respect of the Annual Bonus for such fiscal year (the
"Initial Prorated Bonus Payment"). Each such Annual Bonus shall be
payable
on the last day of February of the year next following the year for
which
the Annual Bonus is awarded.
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| (c) |
Incentive,
Savings and Retirement Plans.
In addition to the Base Salary and Annual Bonus payable as hereinabove
provided, the Executive shall be entitled to participate during the
Protection Period in all applicable incentive, savings, pension,
supplemental executive retirement and other retirement plans and
programs,
deferred compensation plans, stock option plans and other equity
and
long-term incentive plans including, where applicable, the Executive
Long-Term Performance Plan, the Salary Deferral Plan and the HNI
Corporation Profit-Sharing Retirement Plan, on a basis providing
him with
the opportunity to receive compensation without duplication of the
Annual
Bonus and benefits equal to those provided by the Corporation and
its
affiliated companies for the Executive under such plans and programs
as in
effect at any time during the 90-day period immediately preceding
the
effective date of this Agreement or, if more favorable to the Executive,
as in effect at any time thereafter with respect to executives with
comparable responsibilities.
|
| (d) |
Benefit
Plans.
During the Protection Period, the Executive and his spouse, dependents
and
beneficiaries, as the case may be, shall be entitled to receive employee
benefits (including, without limitation, all amounts which he or
his
spouse is or would have been entitled to receive as benefits under
all
medical, dental, disability, group life, accidental death and travel
accident insurance plans and programs of the Corporation and its
affiliated companies) as in effect at any time during the
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4
|
90-day
period immediately preceding the effective date of the Agreement,
or if
more favorable to the Executive, as in effect at any time thereafter
with
respect to executives with comparable
responsibilities.
|
| (e) |
Expenses.
During the Protection Period, the Executive shall be entitled to
receive
prompt reimbursement for all reasonable expenses incurred by the
Executive
in accordance with the policies and procedures of the Corporation
as in
effect during the 90-day period immediately preceding the effective
date
of this Agreement or, if more favorable to the Executive, as in effect
at
any time thereafter with respect to executives with comparable
responsibilities.
|
| (f) |
Vacation
and Fringe Benefits.
During the Protection Period, the Executive shall be entitled to
paid
vacation and fringe benefits in accordance with the policies of the
Corporation as in effect during the 90-day period immediately preceding
the effective date of this Agreement or, if more favorable to the
Executive, as in effect at any time thereafter with respect to executives
with comparable responsibilities.
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| 6. |
Certain
Terms Relating to Termination.
|
| (a) |
Disability.
The Corporation may terminate the Executive's employment during the
Protection Period, after having established the Executive's Disability,
by
giving to the Executive written notice of its intention to terminate
his
employment, and his employment with the Corporation shall terminate
effective on the 90th day after receipt of such notice (the "Disability
Effective Date") if within 90 days after such receipt the Executive
shall
fail to return to full-time performance of his duties (and if the
Executive's Disability has been established pursuant to the definition
of
"Disability" set forth below). For purposes of this Agreement,
"Disability" means disability (i) which after the expiration of more
than 26 weeks after its commencement is determined to be total and
permanent by a physician selected by the Corporation or its insurers
and
acceptable to the Executive or his legal representative (such agreement
to
acceptability not to be withheld unreasonably, and (ii) where the
Executive actually begins to receive disability benefits pursuant
to the
long-term disability plan in effect for, or applicable to, the Executive
immediately prior to the effective date of this
Agreement.
|
| (b) |
Cause.
During the Protection Period, the Corporation may terminate the
Executive's employment for Cause. For purposes of this Agreement,
"Cause"
means (i) an act or acts of dishonesty on the Executive's part which
are
intended to result in his substantial personal enrichment at the
expense
of the Corporation or (ii) repeated violations by the Executive of
his
obligations under Section 4 of this Agreement which are demonstrably
willful and deliberate on the Executive's part and which resulted
in
material injury to the Corporation.
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For
purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered to constitute "Cause" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that the Executive's action or omission was in the best interests of the
Corporation. Any act, or failure to act, based upon authority given pursuant
to
a resolution duly adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the
5
Corporation
or based upon the advice of counsel for the Corporation shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith
and
in the best interests of the Corporation. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall
have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding
that,
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
| (c) |
Good
Reason.
Notwithstanding anything to the contrary contained herein, during
the
Protection Period, the Executive may terminate his employment for
Good
Reason. For purposes of this Agreement, "Good Reason"
means:
|
| (i) |
without
the express written consent of the Executive, (A) the assignment
to the
Executive of any duties inconsistent in any substantial respect with
the
Executive's position, authority or responsibilities as contemplated
by
Section 4(b) of this Agreement, or (B) any other substantial adverse
change in such position (including titles), authority or responsibilities,
including, without limitation the removal or failure to elect or
maintain
the Executive as a director of the Corporation if the Executive shall
have
been a director of the Corporation immediately prior to the effective
date
of this Agreement, but excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which
is
remedied by the Corporation promptly after receipt of notice thereof
given
by the Executive;
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| (ii) |
any
failure by the Corporation to comply with any of the provisions of
this
Agreement, including Section 5 hereof, other than an isolated,
insubstantial and inadvertent failure not taken in bad faith and
which is
remedied by the Corporation promptly after receipt of notice thereof
given
by the Executive;
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| (iii) |
the
Corporation requiring the Executive to have his principal place of
work
changed to any location that is in excess of 50 miles from the location
thereof immediately prior to the effective date of this Agreement,
except
for travel reasonably required in the performance of the Executive's
responsibilities;
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| (iv) |
a
purported termination by the Corporation of the Executive's employment
otherwise than as permitted by this Agreement, it being understood
that
any such purported termination shall not be effective for any purpose
of
this Agreement;
|
| (v) |
any
failure by the Corporation to obtain the assumption and agreement
to
perform this Agreement by a successor as contemplated by Section
17;
or
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| (vi) |
any
good faith determination by the Executive that the Change in Control
has
resulted in a change of circumstances rendering the Executive
substantially unable to carry out authorities or responsibilities
attached
to his position held prior to the Change in
Control.
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6
| (d) |
Notice
of Termination.
Any termination by the Corporation for Cause or by the Executive
for Good
Reason shall be communicated by Notice of Termination to the other
party
hereto given in accordance with Section 13. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(i)
indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
under the provision so indicated and (iii) if the termination date is
other than the date of receipt of such notice, specifies the termination
date of this Agreement (which date shall be not more than 15 days
after
the giving of such notice).
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| (e) |
Date
of Termination.
"Date of Termination" means the date of receipt of the Notice of
Termination or the date specified therein, as the case may be; provided,
however, that (i) if the Executive's employment is terminated by
the
Corporation other than for Cause or Disability, the Date of Termination
shall be the date on which the Corporation notifies the Executive
of such
termination, (ii) if the Executive terminates his employment without
Good
Reason, the Date of Termination shall be the date on which the Executive
ceases performing services for the Corporation, and (iii) if the
Executive's employment is terminated by reason of death or Disability,
the
Date of Termination shall be the date of death of the Executive or
the
Disability Effective Date, as the case may
be.
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| 7. |
Obligations
of the Corporation upon Termination During the Protection
Period.
|
| (a) |
Death.
If the Executive's employment is terminated during the Protection
Period
by reason of the Executive's death, this Agreement shall terminate
without
further obligations to the Executive's legal representatives under
this
Agreement, other than those obligations accrued or earned and vested
as of
the Date of Termination. Except as otherwise provided in any plan
or
arrangement in effect on the effective date of the Agreement, all
such
amounts under this Section 7(a) shall be paid to the Executive's
estate or
beneficiary, as applicable, in a lump sum in cash within 30 days
of the
Date of Termination.
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| (b) |
Disability.
If the Executive's employment is terminated during the Protection
Period
by reason of the Executive's Disability this Agreement shall terminate
without further obligations to the Executive, other than those obligations
accrued or earned and vested as of the Date of Termination. Except
as
otherwise provided in any plan or arrangement in effect on the effective
date of the Agreement, all such amounts described in the preceding
sentence shall be paid to the Executive in a lump sum in cash within
30
days of the Date of Termination. Anything in this Agreement to the
contrary notwithstanding, the Executive shall be paid disability
and other
benefits from and after the Date of Termination at least equal to
those
provided in accordance with Section
5(d).
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| (c) |
Cause;
Other than for Good Reason.
If the Executive's employment shall be terminated during the Protection
Period for Cause, the Corporation shall pay
the
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Executive
his full Base Salary through the Date of Termination at the rate
in effect
at the time Notice of Termination is given, and the Corporation shall
have
no further obligations to the Executive under this Agreement, except
that
such termination shall not modify or affect in any way any accrued
right
of the Executive to any other compensation payable pursuant to Section
5
or to any vested or accrued benefits payable in accordance with such
Section. If the Executive terminates employment during the Protection
Period other than for Good Reason, this Agreement shall terminate
without
further obligations to the Executive, other than those obligations
accrued
or earned and vested as of the Date of Termination. Except as otherwise
provided in any plan or arrangement in effect on the effective date
of the
Agreement, all such amounts under this Section 7(c) shall be paid
to the
Executive in a lump sum in cash within 30 days of the Date of
Termination.
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| (d) |
Good
Reason; Other Than for Cause or Disability.
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| (i) |
Termination
Payments.
Subject to clause (ii) hereof and Section 9, if during the Protection
Period the Corporation shall terminate the Executive's employment
other
than for Cause or Disability, or if the Executive shall terminate
his
employment for Good Reason, the Corporation shall pay to the Executive
the
following amounts and provide him with the following
benefits:
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| (A) |
If
not theretofore paid, the Executive shall be paid, within 30 days
of the
Date of Termination, (x) a lump-sum cash payment equal to his Base
Salary
through the Date of Termination at the rate in effect on the Date
of
Termination (or, if greater, the rate required by Section 5(a)),
and (y) a
lump-sum cash payment equal to (X) the product of (i) a fraction, the
numerator of which equals the number of days elapsed since the beginning
of the fiscal year in which the Executive's Date of Termination occurs
through the Date of Termination and the denominator of which is 365,
and
(ii) the average of the Annual Bonus paid to the Executive for the
two full fiscal years ended prior to the Date of Termination, minus
(Y)
the amount of any Initial Prorated Bonus
Payment.
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| (B) |
Within
30 days of the Date of Termination, a lump-sum cash payment equal
to
[two]1
times the sum of (x) the Executive's annual Base Salary (at the rate
in
effect immediately prior to the Date of Termination, or, if greater,
the
rate required by Section 5(a)) and (y) the average of the Annual
Bonuses paid to the Executive for the two full fiscal years ended
prior to
the Date of Termination.
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| (C) |
(x)
For a period of eighteen (18) months following the Date of Termination
(the "COBRA Period"), the Corporation will arrange to provide the
Executive, at no cost to the Executive, with medical and dental benefits
substantially similar to those that the Executive was receiving or
entitled to
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1
The
Chief Executive Officer benefit multiple will increase from two times
to three
times.
8
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receive
immediately prior to the Date of Termination (or, if greater, immediately
prior to the reduction, termination, or denial described in Section
6(c)(ii)) subject to the terms and conditions of such medical and
dental
plans, including, but not limited to, timely payment of any employee
contributions necessary to maintain participation, except that the
level
of such benefit to be provided to the Executive may be reduced in
the
event of a corresponding reduction generally applicable to all recipients
of or participants in such benefits. The COBRA Period shall be considered
to be the period during which the Executive shall be eligible for
continuation coverage under Section 4980B of the Code, and the Corporation
shall reimburse the Executive for the amount of premiums for such
continuation coverage; provided,
however,
that without otherwise limiting the purposes or effect of Section
10, the
benefits otherwise receivable by the Executive pursuant to this Section
7(d)(ii)(C)(x) will be reduced to the extent comparable benefits
are
actually received by the Executive from another employer during the
COBRA
Period following the Executive's Date of Termination, and any such
benefits actually received by the Executive shall be reported by
the
Executive to the Corporation. Notwithstanding the foregoing, if the
Corporation determines that the provision of benefits under this
Section
7(d)(ii)(C)(x) is likely to result in negative tax consequences to
the
Executive, the Corporation will use its reasonable best efforts to
make
other arrangements to provide a substantially similar benefit to
the
Executive that does not have such negative tax consequences, which
may
include, making a lump sum payment at the earliest time permitted
under
Section 409A of the Code, in an amount equal to the Corporation's
reasonable determination of the present value of any such benefits
that,
if provided, would result in negative tax consequences to the Executive
and/or providing such benefit through insurance coverage on the
Executive's behalf.
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(y)
The
Executive will also be entitled to (i) a lump sum payment in an amount equal
to
the present value of the cost of health and dental coverage for an additional
six (6) months, provided that if the payment described in this Section
7(d)(ii)(C)(y) is subject to tax, the Corporation will pay to the Executive
an
additional amount such that after payment by the Executive of all taxes so
imposed on such benefits and on such payments, the Executive retains an amount
equal to such taxes and (ii) an additional lump sum payment equal to the
Corporation's reasonable determination of the value of two (2) years of
continued participation in the Corporation's accidental
death and travel accident insurance plan and the Corporation's disability
plans.
(z)
For a
period of twenty-four (24) months following the Date of Termination (the
"Continuation Period"), the Corporation will arrange to provide
9
the
Executive with group life insurance benefits substantially similar to those
that
the Executive was receiving or entitled to receive immediately prior to the
Date
of Termination (or, if greater, immediately prior to the reduction, termination,
or denial described in Section 6(c)(ii)), except that the level of such benefit
to be provided to the Executive may be reduced in the event of a corresponding
reduction generally applicable to all recipients of or participants in such
benefits. Without otherwise limiting the purposes or effect of Section 10,
benefits otherwise receivable by the Executive pursuant to this Section
7(d)(ii)(C)(z) will be reduced to the extent comparable benefits are actually
received by the Executive from another employer during the Continuation Period
following the Executive's Date of Termination, and any such benefits actually
received by the Executive shall be reported by the Executive to the
Corporation.
| (D) |
The
Executive shall be considered fully vested in any compensation or
benefit
amounts accrued, accruable or payable by the Corporation to the Executive
under any Corporation sponsored compensation or benefit plan, whether
qualified or unqualified, including but not limited to Salary Deferral
Plans, Executive Bonus Plans, Executive Long-Term Performance Plans
and
such other plans as may have been in effect for the Executive immediately
prior to the effective date of this Agreement and/or his Date of
Termination.
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| (E) |
If,
despite the provisions of Sections 7(d)(i)(C) and 7(d)(i)(D) above,
benefits or service credits under any such employee benefit plan
cannot be
payable or provided under any such plan to the Executive, or his
dependents, beneficiaries and estate, because he is no longer an
employee
of the Corporation, the Corporation itself shall, to the extent necessary,
pay or provide for payment of such benefits and service credits for
such
benefits to the Executive, his dependents, beneficiaries and estate
along
with, in the case of any benefit described herein that is subject
to tax
because it is not or cannot be paid under any such plan, an additional
lump sum payment in an amount such that after payment by the Executive
or
the Executive's dependents or beneficiaries, as the case may be,
of all
taxes so imposed, the recipient retains an amount equal to such
taxes.
|
| (F) |
Executive
shall be entitled to a payment under the Long-Term Performance Plan,
at
the times and otherwise as provided in such plan, as if Executive
had
terminated his employment with the Corporation due to retirement.
Any such
payment shall be reduced for amounts, if any, paid to Executive under
such
Plan prior to termination of employment on account of any change
in
control (as defined in such Plan).
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10
| (ii) |
Certain
Additional Payments by the Corporation.
|
| (A) |
Anything
in this Agreement to the contrary notwithstanding, but subject to
subsection (B) of this Section 7(d)(ii), in the event that this Agreement
becomes operative and it is determined (as hereafter provided) that
any
payment (other than the Gross-Up payments provided for in this Section
7(d)(ii)) or distribution by the Corporation or any of its affiliates
to
or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement
or
otherwise pursuant to or by reason of any other agreement, policy,
plan,
program or arrangement, including without limitation any stock option,
performance share, performance unit, stock appreciation right or
similar
right, or the lapse or termination of any restriction on or the vesting
or
exercisability of any of the foregoing (a "Payment"), would be subject
to
the excise tax imposed by Section 4999 of the Internal Revenue Code
of
1986, as amended (the "Code") (or any successor provision thereto)
by
reason of being considered "contingent on a change in ownership or
control" of the Corporation, within the meaning of Section 280G of
the
Code (or any successor provision thereto) or to any similar tax imposed
by
state or local law, or any interest or penalties with respect to
such tax
(such tax or taxes, together with any such interest and penalties,
being
hereafter collectively referred to as the "Excise Tax"), then the
Executive will be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"); provided, however, that no
Gross-up
Payment will be made with respect to the Excise Tax, if any, attributable
to (i) any incentive stock option, as defined by Section 422 of the
Code
("ISO") granted prior to the execution of this Agreement, or (ii)
any
stock appreciation or similar right, whether or not limited, granted
in
tandem with any ISO described in clause (i). The Gross-Up Payment
will be
in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such
taxes),
including any Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed
upon the Payment. For purposes of determining the amount of the Gross-Up
Payment, the Executive will be considered to pay (x) federal income
taxes
at the highest rate in effect in the year in which the Gross-Up Payment
will be made and (y) state and local income taxes at the highest rate
in effect in the state or locality in which the Gross-Up Payment
would be
subject to state or local tax, net of the maximum reduction in federal
income tax that could be obtained from deduction of such state and
local
taxes.
|
| (B) |
Notwithstanding
any provision of this Agreement to the contrary, but giving effect
to any
re-determination of the amount of Gross-Up payments otherwise required
by
this Section 7(d)(ii), if (i) but for this sentence, the Corporation
would
be obligated to make a Gross-Up Payment to the
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11
|
Executive,
and (ii) the aggregate "present value" of the "parachute payments"
to be
paid or provided to the Executive under this Agreement or otherwise
does
not exceed 1.10 multiplied by three times the Executive's "base amount,"
then the payments and benefits to be paid or provided under this
Agreement
will be reduced (or repaid to the Corporation, if previously paid
or
provided) to the minimum extent necessary so that no portion of any
payment or benefit to the Executive, as so reduced or repaid, constitutes
an "excess parachute payment." For purposes of this subsection (B),
the
terms "excess parachute payment," "present value," "parachute payment,"
and "base amount" will have the meanings assigned to them by Section
280G
of the Code. The determination of whether any reduction in or repayment
of
such payments or benefits to be provided under this Agreement is
required
pursuant to this subsection (B) will be made at the expense of the
Corporation, if requested by the Executive or the Corporation, by
the
Accounting Firm. Appropriate adjustments will be made to amounts
previously paid to Executive, or to amounts not paid pursuant to
this
subsection (B), as the case may be, to reflect properly a subsequent
determination that the Executive owes more or less Excise Tax than
the
amount previously determined to be due. In the event that any payment
or
benefit intended to be provided under this Agreement or otherwise
is
required to be reduced or repaid pursuant to this subsection (B),
the
Executive will be entitled to designate the payments and/or benefits
to be
so reduced or repaid in order to give effect to this subsection (B).
The
Corporation will provide the Executive with all information reasonably
requested by the Executive to permit the Executive to make such
designation. In the event that the Executive fails to make such
designation within 10 business days prior to the Termination Date
or other
due date, the Corporation may effect such reduction or repayment
in any
manner it deems appropriate.
|
As
a
result of the uncertainty in the application of Section 280G of the Code at
the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Agreement Payments will have been made by the Corporation which
should not have been made ("Overpayment") or that additional Agreement Payments
which will have not been made by the Corporation could have been made
("Underpayment)," in each case, consistent with the calculation of the Reduced
Amount hereunder.
In
the
event that the Accounting Firm determines that an Overpayment has been made,
any
such Overpayment shall, to the extent permitted by law, be repaid by the
Executive to the Corporation together with interest at the applicable Federal
rate provided for in Section 7872 (f)(2) of the Code; provided, however, that
no
amount shall be payable by the Executive to the Corporation (or if paid by
the
Executive to the Corporation shall be returned to the Executive) if and to
the
extent such payment would not reduce the amount which is subject to taxation
under Section 4999 of the Code. In the event that
12
the
Accounting Firm determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Corporation to or for the benefit
of
the Executive together with interest at the applicable Federal rate provided
for
in Section 7872(f)(2) of the Code. Notwithstanding the foregoing provisions
of
this Section 7(d)(ii), any Underpayment hereunder will be made in a manner
and
to the extent (and at the earliest date(s)) such that Section 409A of the Code
will not be violated.
| 8. |
Confidentiality
and Noncompetition.
The Executive shall hold in a fiduciary capacity for the benefit
of the
Corporation all secret or confidential information, knowledge or
data
relating to the Corporation or any of its affiliated companies, and
their
respective businesses, which shall have been obtained by the Executive
during his employment by the Corporation or any of its affiliated
companies and which shall not be public knowledge. After termination
of
the Executive's employment with the Corporation he shall not, without
the
prior written consent of the Corporation, communicate or divulge
any such
information, knowledge, or data to anyone other than the Corporation
and
those designated by it. The obligations imposed by this paragraph
will not
apply if (a) such confidential information has become, through no
fault of
the Executive, generally known to the public, or (b) the Executive
is
required by law to make disclosure (after giving the Corporation
notice
and an opportunity to contest such
requirement).
|
The
Executive agrees that in the event that the Executive's employment is terminated
such that he has received or is receiving benefits under Section 7(d), he shall
not for a period of one year following such termination enter into any
relationship whatsoever, either directly or indirectly, alone or in partnership,
or as an officer, Director, employee or stockholder (beneficially owning stock
or options to acquire stock totaling more than five percent of the outstanding
shares) of any corporation (other than the Corporation), or otherwise acquire
or
agree to acquire a significant present or future equity or other proprietorship
interest, whether as a stockholder, partner, proprietor or otherwise, with
any
enterprise, business or division thereof (other than the Corporation), which
is
engaged in the same business in those states within the United States in which
the Corporation is at the time of such termination of employment conducting
its
business and which has annual sales of at least $10,000,000.
In
no
event shall an asserted violation of the provisions of this Section 8 constitute
a basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
| 9. |
Compliance
with Section 409A of the Code.
To the extent applicable, it is intended that this Agreement be in
full
compliance with Section 409A of the Code. To the extent any provision
in
this Agreement is or will be in violation of Section 409A of the
Code, the
Agreement shall be amended in such manner as the parties may agree
such
that the Agreement is or remains in compliance with Section 409A
and the
intent of the parties is maintained to the maximum extent possible.
In
particular, to the extent the Executive becomes entitled to receive
payment subject to Section 409A upon an event that does not constitute
a
permitted distribution event under Section 409A(a)(2) of the Code
or that
would constitute a "deferral of compensation" under Code Section
409A or
that would otherwise would subject the Executive to tax under Section
409A
of the Code, then notwithstanding anything to the contrary in this
Agreement, payment will be made (or commenced) to the Executive on
the
earlier of (a) the Executive's "separation from
|
13
|
service"
with the Corporation (determined in accordance with Section 409A);
provided, however, that if the Executive is a "specified employee"
(within
the meaning of Section 409A), the Executive's date of payment shall
be
made on the date which is 6 months after the date of the Executive's
separation from service with the Corporation or (b) the Executive's
death.
Reference to Section 409A of the Code is to Section 409A of the Internal
Revenue Code of 1986, as amended, and will also include any proposed,
temporary or final regulations, or any other guidance, promulgated
with
respect to such Section by the U.S. Department of the Treasury or
the
Internal Revenue Service.
|
| 10. |
No
Obligation to Mitigate Damages.
In the event of the termination of the Executive's employment, the
Executive shall not be under any obligation to mitigate damages by
seeking
other employment and no amounts shall be offset against payments
due to
the Executive hereunder unless specifically provided
herein.
|
| 11. |
Non-Exclusivity
of Rights.
Nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive
or
other plan or program provided by the Corporation or any of its affiliated
companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may
have
under other agreements with the Corporation or any of its affiliated
companies. Amounts which are vested benefits or which the Executive
is
otherwise entitled to receive under any plan or program of the Corporation
or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan or
program.
|
| 12. |
Full
Settlement.
The Corporation's obligation to make the payments provided for in
this
Agreement and otherwise to perform its obligations hereunder shall
not be
affected by any circumstances, including without limitation any set-off,
counterclaim, recoupment, defense or other right which the Corporation
may
have against the Executive or others. The Corporation agrees to pay,
to
the full extent permitted by law, all legal fees and expenses which
the
Executive may reasonably incur as a result of any contest (regardless
of
the outcome thereof) by the Corporation or others of the validity
or
enforceability of, or liability under, any provision of this Agreement
or
any guarantee of performance thereof or as a result of any contest
by the
Executive against the amount of any deduction pursuant to Section
7(d)(ii)
hereof, plus in each case interest, compounded quarterly, on the
total
unpaid amount determined to be payable under this Agreement, such
interest
to be calculated on the basis of the applicable Federal rate provided
for
in Section 7872 of the Code in effect from time to time during the
period
of such nonpayment. Such payments of legal fees and expenses (and
interest
payments relating thereto) will only be made if, and to the extent
and at
the earliest date(s) that, such actions are determined to be permitted
without violating Section 409A of the Code.
|
| 13. |
Notices.
Any notices, requests, demands and other communications provided
for by
this Agreement shall be in writing and will be deemed to have been
duly
given when hand delivered or dispatched by electronic or facsimile
transmission (with receipt thereof orally confirmed) or five business
days
after having been mailed by United States registered or certified
mail,
return receipt requested, postage prepaid, or three business days
after
having been sent by a nationally recognized overnight courier service
such
as Fed Ex or UPS, addressed to the Corporation (to the attention
of the
Secretary of the Corporation) at its principal executive office and
to the
Executive at the Executive's principal residence, or to such other
address
as any party may have furnished to the other in writing and in accordance
herewith, except that notices of changes of address will be effective
only
upon receipt.
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14
| 14. |
Non-Alienation.
The Executive shall not have any right to pledge, hypothecate, anticipate
or in any way create a lien upon any amounts provided under this
Agreement; and no benefits payable hereunder shall be assignable
in
anticipation of payment either by voluntary or involuntary acts,
or by
operation of law, except by will or the laws of descent and
distribution.
|
| 15. |
Governing
Law.
The provisions of this Agreement shall be construed in accordance
with the
laws of the State of Iowa, without reference to principles of conflicts
of
laws.
|
| 16. |
Amendment.
This Agreement may be amended or cancelled by mutual agreement of
the
parties in writing without the consent of any other person and, so
long as
the Executive lives, no person, other than parties hereto, shall
have any
rights under or interest in this Agreement or the subject matter
hereof.
|
| 17. |
Successor
to the Corporation.
This Agreement shall inure to the benefit of and be binding upon
the
Corporation and its successors. The Corporation shall require any
successor to all or substantially all of the business and/or assets
of the
Corporation, whether direct or indirect, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement
in form
and substance satisfactory to the Executive, expressly to assume
and agree
to perform this Agreement in the same manner and to the same extent
as the
Corporation would be required to perform if no such succession had
taken
place. This Agreement will inure to the benefit of and be enforceable
by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and
legatees.
|
| 18. |
Miscellaneous.
|
| (a) |
In
the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall be unaffected thereby and shall
remain
in full force and effect.
|
| (b) |
The
Corporation may withhold from any amounts payable under this Agreement
such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or
regulation.
|
| (c) |
This
Agreement contains the entire understanding with the Executive with
respect to the subject matter hereof and shall supersede any similar
agreement previously entered into between the Corporation and the
Executive.
|
| (d) |
The
Corporation hereby waives any and all conflicts of interest and
attorney-client privilege that would prohibit counsel to the Corporation
from representing the Executive in disputes relating to this
Agreement.
|
| (e) |
The
Executive and the Corporation acknowledge that the employment of
the
Executive by the Corporation prior to the effective date of this
Agreement
is "at will," and, prior to such effective date, may be terminated
by
either the Executive or the Corporation at any time. Subject to the
final sentence of Section 2, upon a termination of the Executive's
employment or upon the Executive's ceasing to be an officer of the
Corporation, in each case, prior to that Effective Date, there shall
be no
further rights under this
Agreement.
|
15
IN
WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the
authorization from its Board of Directors the Corporation has caused these
presents to be executed in its name on its behalf, and its corporate seal to
be
hereunto affixed and attested by its Secretary, all as of the day and year
first
above written.
(SEAL)
ATTEST:
|
|
|
| Secretary | |
16
