TRANSACTION BONUS AND SEVERANCE AGREEMENT BY AND BETWEEN SEQUA CORPORATION AND GERARD M. DOMBEK
Exhibit
10.1.1
BY
AND BETWEEN
SEQUA
CORPORATION
AND
XXXXXX
X. XXXXXX
Sequa
Corporation and its affiliates, subsidiaries, divisions, successors and assigns
(collectively, the “Company”) and Xxxxxx X. Xxxxxx (the “Employee”) mutually
agree to enter into this Transaction Bonus and Severance Agreement (the
“Agreement”) as of the 5th day of September, 2007, the terms and conditions of
which are set forth below.
|
1.
|
Effective
Date
|
The
effective date of this Agreement (the “Effective Date”) is the date of the
“Effective Time” of the “Merger” as those terms are defined in that certain
Agreement and Plan of Merger dated as of July 8, 2007 by and among Blue Xxx
Acquisition Corporation, Blue Xxx Merger Corporation and the
Company. This Agreement shall be of no force and effect if such
merger is not consummated. In addition, this Agreement shall be of no
force and effect if the employment of the Employee terminates for any reason
prior to the Effective Date.
|
2.
|
Transaction
Bonus
|
Subject
to Section 6 below, if the Employee remains in the employment of the Company
until the Effective Date, the Company shall pay to the Employee in a single
lump
sum within fifteen (15) days after the Effective Date, a bonus in the amount
of
$600,000.
|
3.
|
Severance
Payment
|
Subject
to Sections 4, 6 and 7 below, if (i) the Employee remains in the employment
of
the Company until the Effective Date, and (ii) his employment with the Company
terminates within the two (2)-year period beginning on the Effective Date either
by reason of an involuntary termination of employment by the Company without
Cause (as defined below) or by reason of a termination of employment by the
Employee for Good Reason (as defined below), the Company shall pay to the
Employee in a single lump sum within sixty (60) days after such termination
of
employment a severance benefit in an amount equal to two (2) times the greater
of the Employee’s rate of annual base salary as in effect on the date of this
Agreement or the Employee’s rate of annual base salary as in effect immediately
prior to such termination of employment; provided, however, that (A) the
Employee’s entitlement to such payment shall be conditioned on the Employee’s
execution, within fifty (50) days following such termination of employment,
of
an agreement and general release in a customary form to be provided by the
Company in its sole good faith discretion and not revoking such release; (B)
if
the termination of the Employee’s employment occurs within the last fifty (50)
days of a calendar year, the payment shall be made in the succeeding calendar
year but no later than sixty (60) days after such termination of employment,
and
(C) in no event shall the Employee be entitled to such payment if the
Employee’s
employment
terminates as a result of death or Disability. It is expressly
understood that said agreement and general release shall not require the
Employee to waive (i) any right to indemnification the Employee may have under
applicable bylaws or insurance policies maintained by the Company or its
subsidiaries or (ii) any right to vested employee benefits.
For
purposes of this Agreement, the term “Cause” shall mean a reasonable and good
faith determination by the Company that the Employee (i) has failed, including
either willfully or grossly negligently, to perform the Employee’s duties; (ii)
has engaged in misconduct which is injurious to the Company (including but
not
limited to violations of policies related to workplace practices and
harassment); (iii) has been convicted of a crime (including conviction or a
nolo
contendere plea) involving, in the good faith judgment of the Company, fraud,
dishonesty or moral turpitude; (iv) has breached any of the non-competition,
non-disclosure, non-solicitation or other restrictive covenants contained in
the
employment agreement dated May 31, 2005 between the Company and the Employee,
as
amended by letter agreements dated May 10, 2006 and May 3, 2007 (the “Employment
Agreement”) or any other employment or other agreement between the Company and
the Employee; (v) has intentionally refused (except by reason of incapacity
due
to physical or mental illness or disability by the Employee) to devote his
entire business time to the performance of his duties as an employee of the
Company; (vi) has breached the provisions of the Company’s trade secrets
agreement to which he is a party; (vii) has engaged in theft or misappropriation
of assets of the Company; or (viii) has engaged in any willful, intentional
or
grossly negligent act having the effect of injuring the reputation or business
of the Company; or (ix) materially breached the Company’s Code of
Conduct.
For
purposes of this Agreement, the term “Good Reason” shall mean the existence of
one or more of the following conditions arising without the consent of the
Employee: (i) a material diminution in the Employee’s base
compensation; (ii) a material diminution in the Employee’s authority, duties or
responsibilities; or (iii) a material change in the geographic location at
which
the Employee must perform the Employee’s services to the Company. A
material diminution in the Employee’s authority, duties or responsibilities
within the meaning of clause (ii) of the preceding sentence shall not be deemed
to have occurred merely because the Company ceases to be a public company or
there is a change in the person or entity to whom the Employee reports or
because the Employee’s title is changed, provided the Employee’s authority,
duties and responsibilities otherwise remain substantially the
same. Notwithstanding the foregoing, the Employee’s termination of
employment shall not be considered as for Good Reason unless the Employee
provides written notice to the Company of the existence of the condition or
conditions providing the basis for a Good Reason termination within ninety
(90)
days of the initial existence of the condition and the Company fails to remedy
the condition within thirty (30) days after receiving such notice.
For
purposes of this Agreement, the term “Disability” shall have the meaning set
forth in the Employee’s employment or similar agreement with the Company, or if
there is no such agreement containing a definition of “Disability”, the term
“Disability” shall mean that the Employee is physically or mentally
incapacitated so as to render the Employee incapable of performing the essential
functions of the job and such incapacity cannot be reasonably accommodated
by
the Company without undue hardship.
-2-
|
4.
|
Reduction
for Other Severance
Payments
|
Anything
in this Agreement to the contrary notwithstanding, if the Employee becomes
entitled to the severance payment described in Section 3 above and is also
entitled to severance payments described in the Employment Agreement or under
any other plan, program, agreement or arrangement with the Company or other
severance payments imposed by applicable law, the severance payment described
in
Section 3 above shall be reduced by the principal amount of any such other
severance payments (even if such other severance payments are payable at a
different time or in a different form than the severance payment described
in
Section 3 above). In such event, the terms of such other severance
plan, program, agreement or arrangement or applicable law shall continue to
govern the time and form of payment of the amounts payable
thereunder. The severance payment described in Section 3 above shall
be reduced only by cash severance payments made by reason of the termination
of
the Employee’s employment and shall not be reduced by any other types
of benefits that may be provided by reason of such termination of employment
(including, but not limited to, continued medical or other welfare benefits
or
payments in kind, if any).
|
5.
|
Withholding
|
The
Company shall withhold from any payment under this Agreement, or any payroll
or
other payment to the Employee, amounts of withholding and other taxes due in
connection with any payment under this Agreement.
|
6.
|
Golden
Parachute Reduction
|
Notwithstanding
the other provisions of this Agreement, in the event that the amount of payments
payable to the Employee under this Agreement, together with any payments or
benefits payable under any other plan, program, arrangement or agreement
maintained by the Company, would constitute an “excess parachute payment”
(within the meaning of Section 280G of the Internal Revenue Code of 1986,
as amended), the payments under this Agreement shall be reduced (by the minimum
possible amounts) until no amount payable to the Employee under this Agreement
constitutes an “excess parachute payment” (within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended);
provided, however, that no such reduction shall be made if the net
after-tax payment (after taking into account Federal, state, local or other
income and excise taxes) to which the Employee would otherwise be entitled
without such reduction would be greater than the net after-tax payment (after
taking into account Federal, state, local or other income and excise taxes)
to
the Employee resulting from the receipt of such payments with such
reduction. If, as a result of subsequent events or conditions
(including a subsequent payment or absence of a subsequent payment under this
Agreement or other plans, programs, arrangements or agreements maintained by
the
Company), it is determined that payments under this Agreement have been reduced
by more than the minimum amount required to prevent any payments from
constituting an “excess parachute payment,” then an additional payment shall be
promptly made to the Employee in an amount equal to the additional amount that
can be paid without causing any payment to constitute an “excess parachute
payment.” All determinations required to be made under this
Section 6, including whether a payment would result in an “ex-
-3-
cess
parachute payment” and the assumptions to be utilized in arriving at such
determination, shall be made by a Big Four accounting firm selected by the
Company which shall provide detailed supporting calculations both to the Company
and the Employee as requested by the Company or the Employee. All
fees and expenses of the accounting firm shall be borne solely by the Company
and shall be paid by the Company. All determinations made by the
accounting firm under this Section 6 shall be final and binding upon the
Company and the Employee.
|
7.
|
Compliance
with Internal Revenue Code Section
409A
|
If
it
should be determined that the severance payment described in Section 3 above
constitutes a “deferral of compensation” subject to Section 409A of the Internal
Revenue Code of 1986, as amended, then, notwithstanding anything in this
Agreement to the contrary, (i) if the Employee is a “specified employee” (within
the meaning of said Section 409A and the regulations thereunder and as
determined by the Company in accordance with Section 409A) at the time of the
Employee’s separation from service (as defined below), the distribution of the
severance payment described in Section 3 above shall be delayed until the date
which is 6 months after the date of the Employee’s separation from service (or,
if earlier than the end of such 6-month period, the date of the Employee’s
death) and (ii) the Employee shall not be deemed to have terminated from
employment for purposes of Section 3 above unless the Employee has experienced
a
“separation from service” within the meaning of said Section 409A and the
regulations thereunder. To the extent the severance payment hereunder
is subject to the 6-month delay, such severance payment will be paid immediately
after the end of such 6-month period. If this Section 7 becomes
applicable, this Agreement shall be interpreted and operated consistently with
the requirements of Section 409A of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
|
8.
|
Governing
Law and Choice of
Forum
|
This
Agreement shall be governed and construed in accordance with the laws of the
State of New York without regard to its conflict of laws
provisions.
|
9.
|
Modification
|
No
modification of this Agreement shall be valid unless made in writing wherein
specific reference is made to this Agreement and signed by both parties
hereto.
|
10.
|
Binding
Effect
|
This
Agreement shall be binding upon the Employee, the Employee’s heirs, executors
and administrators and shall inure to the benefit of the
Company. This Agreement shall be binding upon the Company (including
its successors and assigns). This Agreement may not be assigned by
Employee, but may be assigned by Sequa Corporation to a purchaser of its
business or assets.
-4-
|
11.
|
Confidentiality
|
Employee
agrees that the terms of this Agreement are strictly confidential and he,
without the prior written consent of the Company, shall not disclose in any
way
to any third person the terms and conditions of this
Agreement. Nothing in this Section shall be construed to prohibit the
disclosure of such information by Employee to his immediate family members
or to
any legal or financial advisor, provided that persons to whom the disclosure
is
being made agree to be bound by the confidentiality provisions of this
Section. Nothing in this Section shall be construed to prohibit the
disclosure by Employee of such information as may be required by
law.
IN
WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this
Agreement, as of the date first written above.
|
EMPLOYEE
|
| /s/ Xxxxxx X. Xxxxxx |
|
Xxxxxx
X. Xxxxxx
|
|
SEQUA
CORPORATION
|
|
By:
/s/ Xxxxxx Xxxxxxxxx
|
-5-
