CHANGE IN CONTROL SEVERANCE AGREEMENT
Exhibit 10.2
THIS AGREEMENT, dated as of May 19, 2008, is made by and
between XXXXXX HOLDINGS, INC., a Delaware corporation (the
“Company”), and Xxxx X. Xxxxxxxx (the
“Executive”). The capitalized words and terms used
throughout this Agreement are defined in Article XIII.
Recitals
A. The Company considers it essential to the best interests
of its shareholders to xxxxxx the continuous employment of key
management personnel.
B. The Board recognizes that, as is the case with many
publicly held corporations, the possibility of a Change in
Control exists and that such a possibility, and the uncertainty
and questions that it may raise among management, may result in
the departure or distraction of management personnel to the
detriment of the Company and its shareholders.
C. The Board has determined that appropriate steps should
be taken to reinforce and encourage the continued attention and
dedication of members of the Company’s management,
including the Executive, to their assigned duties without
distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control.
D. The parties intend that no amount or benefit will be
payable under this Agreement unless a termination of the
Executive’s employment with the Company occurs following a
Change in Control, or is deemed to have occurred following a
Change in Control, as provided in this Agreement.
Agreement
In consideration of the premises and the mutual covenants and
agreements set forth below, the Company and the Executive agree
as follows:
ARTICLE I
Term of
Agreement
This Agreement will commence on the date stated above and will
continue in effect through December 31, 2009. Beginning on
January 1, 2010, and each subsequent January 1, the
term of this Agreement will automatically be extended for one
additional year, unless either party gives the other party
written notice not to extend this Agreement at least
30 days before the extension would otherwise become
effective or unless a Change in Control occurs. If a Change in
Control occurs during the term of this Agreement, this Agreement
will continue in effect for a period of 24 months from the
end of the month in which the Change in Control occurs.
Notwithstanding the foregoing provisions of this Article, this
Agreement will terminate on the Executive’s Retirement Date.
ARTICLE II
Compensation
other than Severance Payments
Section 2.01. Disability
Benefits. Following a Change in Control and
during the term of this Agreement, during any period that the
Executive fails to perform the Executive’s full-time duties
with the Company as a result of Disability, the Executive will
receive short-term and long-term disability benefits as provided
under short-term and long-term disability plans having terms no
less favorable than the terms of the Company’s short-term
and long-term disability plans as in effect immediately prior to
the Change in Control, together with all other compensation and
benefits payable to the Executive pursuant to the terms of any
compensation or benefit plan, program, or arrangement maintained
by the Company during the period of Disability.
Section 2.02. Compensation
Previously Earned. If the Executive’s
employment is terminated for any reason following a Change in
Control and during the term of this Agreement, the Company will
pay the Executive’s salary accrued through the Date of
Termination, at the rate in effect at the time the Notice of
Termination is given, together with all other compensation and
benefits payable to the Executive through the Date of
Termination under the terms of any compensation or benefit plan,
program, or arrangement maintained by the Company during that
period.
Section 2.03. Normal
Post-Termination Compensation and
Benefits. Except as provided in
Section 3.01, if the Executive’s employment is
terminated for any reason following a Change in Control and
during the term of this Agreement, the Company will pay the
Executive the normal post-termination compensation and benefits
payable to the Executive under the terms of the Company’s
retirement, insurance, and other compensation or benefit plans,
programs, and arrangements, as in effect immediately prior to
the Change in Control. This provision does not restrict the
Company’s right to amend, modify, or terminate any plan,
program, or arrangement prior to a Change in Control.
Section 2.04. No
Duplication. Notwithstanding any other
provision of this Agreement to the contrary, the Executive will
not be entitled to duplicate benefits or compensation under this
Agreement and the terms of any other plan, program, or
arrangement maintained by the Company or any affiliate.
ARTICLE III
Severance
Payments
Section 3.01. Payment
Triggers. (a) In lieu of any other
severance compensation or benefits to which the Executive may
otherwise be entitled under any plan, program, policy, or
arrangement of the Company (and which the Executive hereby
expressly waives), the Company will pay the Executive the
Severance Payments described in Section 3.02 upon
termination of the Executive’s employment following a
Change in Control and during the term of this Agreement, in
addition to the payments and benefits described in
Article II, unless the termination is (1) by the
Company for Cause, (2) by reason of the Executive’s
death, or (3) by the Executive without Good Reason.
(b) For purposes of this Section 3.01, the
Executive’s employment will be deemed to have been
terminated following a Change in Control by the Company without
Cause or by the Executive with Good Reason if (1) the
Executive’s employment is terminated without Cause prior to
a Change in Control at the direction of a Person who has entered
into an agreement with the Company, the consummation of which
will constitute a Change in Control; or (2) the Executive
terminates his employment with Good Reason prior to a Change in
Control (determined by treating a Potential Change in Control as
a Change in Control in applying the definition of Good Reason),
if the circumstance or event that constitutes Good Reason occurs
at the direction of such a Person.
(c) The Severance Payments described in this
Article III are subject to the conditions stated in
Article VI.
Section 3.02. Severance
Payments. The following are the Severance
Payments referenced in Section 3.01:
(a) Lump Sum Severance Payment. In
lieu of any further salary payments to the Executive for periods
after the Date of Termination, and in lieu of any severance
benefits otherwise payable to the Executive, the Company will
pay to the Executive, in accordance with Section 3.04, a
lump sum severance payment, in cash, equal to two (or, if less,
the number of years, including fractions, from the Date of
Termination until the Executive reaches his Retirement Date),
times the sum of (1) the higher of the Executive’s
annual base salary in effect immediately prior to the event or
circumstance upon which the Notice of Termination is based or in
effect immediately prior to the Change in Control, and
(2) if Severance Payments are triggered under
Section 3.01(a), the amount of the Executive’s target
annual bonus entitlement under the Incentive Plan (or any other
bonus plan of the Company then in effect) as in effect
immediately prior to the event or circumstance giving rise to
the Notice of Termination, or, if Severance Payments are
triggered under Section 3.01(b), the amount of the largest
aggregate annual bonus paid to the Executive with respect to the
three years immediately prior to the year in which the Notice of
Termination was given. If the Board determines that it is not
workable to determine the amount that the Executive’s
target bonus would have been for the year in which the Notice of
Termination was given, then, for purposes of this
paragraph (a), the Executive’s target annual bonus
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entitlement will be the amount of the largest aggregate annual
bonus paid to the Executive with respect to the three years
immediately prior to the year in which the Notice of Termination
was given.
(b) Incentive
Compensation. Notwithstanding any provision
of the Incentive Plan or any other compensation or incentive
plans of the Company, the Company will pay to the Executive, in
accordance with Section 3.04, a lump sum amount, in cash,
equal to the sum of (1) any incentive compensation that has
been allocated or awarded to the Executive for a completed
calendar year or other measuring period preceding the Date of
Termination (to the extent not payable pursuant to
Section 2.02), and (2) a pro rata portion (based on
elapsed time) to the Date of Termination of the aggregate value
of all contingent incentive compensation awards to the Executive
for the current calendar year or other measuring period under
the Incentive Plan, the Award Plan, or any other compensation or
incentive plans of the Company, calculated as to each such plan
using the Executive’s annual target percentage under that
plan for that year or other measuring period and as if all
conditions for receiving that target award had been met.
(c) Options and Restricted
Shares. All outstanding Options will become
immediately vested and exercisable (to the extent not yet vested
and exercisable as of the Date of Termination). To the extent
not otherwise provided under the written agreement evidencing
the grant of any restricted Shares to the Executive, all
outstanding Shares that have been granted to the Executive
subject to restrictions that, as of the Date of Termination,
have not yet lapsed will lapse automatically upon the Date of
Termination, and the Executive will own those Shares free and
clear of all such restrictions. Notwithstanding the foregoing,
options and restricted Shares remain subject to any forfeiture
or clawback claims under the applicable option plan or award
agreement.
(d) Welfare Benefits. Except as
otherwise provided in this Section 3.02(d), for a
24-month
period after the Date of Termination, the Company will arrange
to provide the Executive with life insurance coverage
substantially similar to that which the Executive is receiving
from the Company immediately prior to the Notice of Termination
(without giving effect to any reduction in that coverage
subsequent to a Change in Control). Life insurance coverage
otherwise receivable by the Executive pursuant to this
Section 3.02(d) will be reduced to the extent comparable
coverage is actually received by or made available to the
Executive without greater cost to him than as provided by the
Company during the
24-month
period following the Executive’s termination of employment
(and the Executive will report to the Company any such coverage
actually received by or made available to the Executive).
If, as of the Date of Termination, the Company reasonably
determines that the continued life insurance coverage required
by this Section 3.02(d) is not available from the
Company’s group insurance carrier, cannot be procured from
another carrier, and cannot be provided on a self-insured basis
without adverse tax consequences to the Executive or his death
beneficiary, then, in lieu of continued life insurance coverage,
the Company will pay the Executive, in accordance with
Section 3.04, a lump sum payment, in cash, equal to 24
times the full monthly premium payable to the Company’s
group insurance carrier for comparable coverage for an executive
employee under the Company’s group life insurance plan then
in effect.
The Company will offer the Executive and any eligible family
members the opportunity to elect to continue medical and dental
coverage pursuant to COBRA. The Executive will be responsible
for paying the required monthly premium for that coverage, but
the Company will pay the Executive, in accordance with
Section 3.04, a lump sum cash stipend equal to 24 times the
monthly COBRA premium then charged to qualified beneficiaries
for the same level of health and dental coverage the Executive
had in effect immediately prior to his termination, and the
Executive may, but is not required to, choose to use the stipend
for the payment of COBRA premiums for any COBRA coverage that
the Executive or eligible family members may elect. The Company
will pay the stipend to the Executive whether or not the
Executive or any eligible family member elects COBRA coverage,
whether or not the Executive continues COBRA coverage for the
maximum period permitted by law, and whether or not the
Executive receives medical or dental coverage from another
employer while the Executive is receiving COBRA continuation
coverage. Payment of the stipend will not in any way extend or
modify the Executive’s continuation coverage rights under
COBRA or any similar continuation coverage law.
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(e) Matching and Fixed
Contributions. In addition to the vested
amounts, if any, to which the Executive is entitled under the
Savings Plan as of the Date of Termination, the Company will pay
the Executive, in accordance with Section 3.04, a lump sum
amount equal to the value of the unvested portion, if any, of
the employer matching and fixed contributions (and attributable
earnings) credited to the Executive under the Savings Plan.
(f) Outplacement Services. For a
period not to exceed six (6) months following the Date of
Termination, the Company will provide the Executive with
reasonable outplacement services consistent with past practices
of the Company prior to the Change in Control or, if no past
practice has been established prior to the Change in Control,
consistent with the prevailing practice in the medical device
manufacturing industry.
Section 3.03. Gross-Up
Payment.
(a) In the event that any Severance Payments paid or
payable to the Executive or for his benefit pursuant to the
terms of this Agreement or otherwise in connection with a Change
in Control (“Total Payments”) would be subject to any
Excise Tax, then the Executive will be entitled to receive an
additional payment (a
“Gross-Up
Payment”) in an amount such that after the Executive’s
payment of all taxes (including any interest, penalties,
additional tax, or similar items imposed with respect to the
Gross-Up
Payment and the Excise Tax), including any Excise Tax upon the
Gross-Up
Payment, the Executive retains an amount of the
Gross-Up
Payment equal to the Excise Tax imposed upon the Total Payments.
(b) An initial determination as to whether a
Gross-Up
Payment is required pursuant to this Agreement and the amount of
that
Gross-Up
Payment will be made at the Company’s expense by an
Accounting Firm selected by the Executive and reasonably
acceptable to the Company. The Accounting Firm will provide its
determination, together with detailed supporting calculations
and documentation, to the Company and the Executive within 10
business days after the Date of Termination, or such other time
as requested by the Company and the Executive. If the Accounting
Firm determines that no Excise Tax is payable by the Executive
with respect to the Payments, it will furnish the Executive with
an opinion reasonably acceptable to the Executive that no Excise
Tax will be imposed with respect to the Payments. Within 10
business days after the Accounting Firm delivers its
determination to the Executive, the Executive will have the
right to dispute the determination. The
Gross-Up
Payment, if any, as determined by the Accounting Firm in
accordance with the preceding provisions of this Section, will
be paid by the Company to the Executive within 5 business days
of the receipt of the Accounting Firm’s determination. The
existence of a dispute will not in any way affect the
Executive’s right to receive the
Gross-Up
Payment in accordance with the determination. If there is no
dispute, the determination will be final, binding, and
conclusive upon the Company and the Executive. If there is a
dispute, then the Company and the Executive will together select
a second Accounting Firm, which will review the determination
and the Executive’s basis for the dispute and then render
its own determination, which will be final, binding, and
conclusive on the Company and the Executive. The Company will
bear all costs associated with that determination, unless the
determination is not greater than the initial determination, in
which case all such costs will be borne by the Executive.
(c) The value of any non-cash benefits or any deferred
payment or benefit paid or payable to the Executive will be
determined in accordance with the principles of Code
section 280G(d)(3) and (4). For purposes of determining the
amount of the
Gross-Up
Payment, the Executive will 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 applicable 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, net of the maximum reduction in federal income
taxes that would be obtained from deduction of those state and
local taxes.
(d) Notwithstanding anything contained in this Agreement to
the contrary, in the event that, according to the Accounting
Firm’s determination, an Excise Tax will be imposed on the
Total Payments, the Company will pay to the applicable
government taxing authorities as Excise Tax withholding the
amount of the Excise Tax that the Company has actually withheld
from the Total Payments in accordance with applicable law.
(e) Notwithstanding the preceding provisions of this
Section 3.03, the Company will not have any obligation to
make the
Gross-Up
Payment unless the value of the Total Payments exceeds 110% of
the maximum amount of parachute payments that could be paid to
the Executive without any imposition of golden parachute excise
taxes
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under Code sections 280G and 4999 (the “110%
Amount”). In the event the value of the Total Payments does
not exceed the 110% Amount, the value of the Total Payments will
be reduced to the extent necessary so that, within the meaning
of Code section 280G(b)(2)(A)(ii), the aggregate present
value of the payments in the nature of compensation to (or for
the benefit of) the Executive that are contingent on a Change in
Control (with a Change in Control for this purpose being defined
in terms of a “change” described in Code
section 280G(b)(2)(A)(i) or (ii)), do not exceed 2.999
multiplied by the Base Amount. For this purpose, cash Severance
Payments will be reduced first (if necessary, to zero), and all
other, non-cash Severance Payments will be reduced next (if
necessary, to zero). For purposes of the limitation described in
the preceding sentence, the following will not be taken into
account: (1) any portion of the Total Payments the receipt
or enjoyment of which the Executive effectively waived in
writing prior to the Date of Termination, and (2) any
portion of the Total Payments that, in the opinion of the
Accounting Firm, does not constitute a “parachute
payment” within the meaning of Code section 280G(b)(2).
(f) For purposes of this Section 3.03, the value of
any non-cash benefit or any deferred payment or benefit included
in the Total Payments will be determined by the Accounting Firm
in accordance with the principles of Code
sections 280G(d)(3) and (4).
(g) Notwithstanding the foregoing, any payment under this
Section 3.03 shall be made by March 15 of the year
following the Executive’s Date of Termination.
Section 3.04. Time
of Payment. Except as otherwise expressly
provided in Section 3.02 or Section 3.03, payments
provided for in those Sections will be made as follows:
(a) Subject to Section 3.04(d), no later than the
fifth business day following the Date of Termination, the
Company will pay to the Executive an estimate, as determined by
the Company in good faith, of 90% of the minimum amount of the
payments under Sections 3.02 and 3.03 to which the
Executive is clearly entitled.
(b) Subject to Section 3.04(d), the Company will pay
to the Executive the remainder of the payments due him under
Sections 3.02 and 3.03 (together with interest at the rate
provided in Code section 1274(b)(2)(B)) not later than the
30th business day after the Date of Termination.
(c) At the time that payment is made under
Section 3.04(b), the Company will provide the Executive
with a written statement setting forth the manner in which all
of the payments to him under this Agreement were calculated and
the basis for the calculations including, without limitation,
any opinions or other advice the Company received from auditors
or consultants (other than legal counsel) with respect to the
calculations (and any such opinions or advice that are in
writing will be attached to the statement).
(d) Notwithstanding any of the foregoing, if, as of the
date of the Executive’s separation from service, the
Executive is a “specified employee” under the
Section 409A Standards, any and all payments under this
Agreement that constitute deferred compensation under the
Section 409A Standards shall be suspended until, and will
be payable on, the date that is six (6) months after the
Executive’s separation from service (or, if earlier, the
date the Executive dies after separation from service).
Section 3.05. Attorneys
Fees and Expenses. To the extent permissible
under the Section 409A Standards, if the Executive finally
prevails with respect to any bona fide, good faith dispute
between the Executive and the Company regarding the
interpretation, terms, validity or enforcement of this Agreement
(including any dispute as to the amount of any payment due under
this Agreement), the Company will pay or reimburse the Executive
for all reasonable attorneys fees and expenses incurred by the
Executive in connection with that dispute pursuant to the terms
of this paragraph. Payment or reimbursement of those fees and
expenses will be made within fifteen (15) business days
after delivery of the Executive’s written request for
payment, accompanied by such evidence of fees and expenses
incurred as the Company reasonably may require, but the
Executive may not submit such a request until the dispute has
been finally resolved by a legally binding settlement or by an
order or judgment that is not subject to appeal or with respect
to which all appeals have been exhausted. Any payment pursuant
to this paragraph will be made no later than the end of the
calendar year following the calendar year in which the dispute
is finally resolved by a legally binding settlement or
nonappealable judgment or order.
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In addition, the Company will pay the reasonable legal fees and
expenses incurred by the Executive in connection with any tax
audit or proceeding to the extent attributable to the
application of Code section 4999 to any payment or benefit
provided under this Agreement and including, but not limited to,
auditors’ fees incurred in connection with the audit or
proceeding. Payment pursuant to the preceding sentence shall be
made within fifteen (15) business days after the delivery
of the Executive’s written request for payment, accompanied
by such evidence of fees and expenses incurred as the Company
reasonably may require, but in no case later than the end of the
calendar year following the calendar year in which the audit is
completed or there is a final and nonappealable settlement or
other resolution of the matter.
ARTICLE IV
Termination
of Employment
Section 4.01. Notice
of Termination. After a Change in Control and
during the term of this Agreement, any purported termination of
the Executive’s employment (other than by reason of death)
will be communicated by a written Notice of Termination from one
party to the other party in accordance with Article VIII.
The Notice of Termination will indicate the specific termination
provision in this Agreement relied upon and will set forth in
reasonable detail the facts and circumstances claimed to provide
a basis for termination of the Executive’s employment under
the cited provision.
SECTION 4.02. Date of
Termination. Except as otherwise provided in
Section 4.01, with respect to any purported termination of
the Executive’s employment after a Change in Control and
during the term of this Agreement, the term “Date of
Termination” will have the meaning set forth in this
Section. If the Executive’s employment is terminated for
Disability, Date of Termination means thirty (30) days
after Notice of Termination is given, provided that the
Executive does not return to the full-time performance of the
Executive’s duties during that
30-day
period. If the Executive’s employment is terminated for any
other reason, Date of Termination means the date specified in
the Notice of Termination, which, in the case of a termination
by the Company, cannot be less than 30 days (except in the
case of a termination for Cause) and, in the case of a
termination by the Executive, cannot be less than 15 days
nor more than 60 days from the date on which the Notice of
Termination is given.
ARTICLE V
No
Mitigation
The Company agrees that, if the Executive’s employment by
the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt
in any way to reduce any amounts payable to the Executive by the
Company pursuant to Article III. Further, the amount of any
payment or benefit provided for in Article III (other than
Section 3.02(d)) will not be reduced by any compensation
earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount
claimed to be owed by the Executive to the Company, or otherwise.
ARTICLE VI
The
Executive’s Covenants
Section 6.01. Noncompetition
Agreement. In consideration for this
Agreement, the Executive will execute, concurrent with the
execution of this Agreement, a noncompetition agreement with the
Company; provided, however, that if the Executive has an
existing noncompetition agreement with the Company, the Company,
rather than entering into a new noncompetition agreement with
the Executive, may instead, as a condition to entering into this
agreement, require that the Executive acknowledge and affirm his
continuing obligations under such existing noncompetition
agreement and re-affirm his agreement to honor the obligations
as set forth in that document.
Section 6.02. Potential
Change in Control. The Executive agrees that,
subject to the terms and conditions of this Agreement, in the
event of a Potential Change in Control during the term of this
Agreement, the Executive will remain employed by the Company
until the earliest of (a) a date that is six months from
the date of the Potential Change of Control, (b) the date
of a Change in Control, (c) the date on which the Executive
terminates employment for Good Reason (determined by treating
the Potential Change in Control as a Change in Control in
applying the definition of Good Reason) or by reason of death,
or (d) the date the Company terminates the Executive’s
employment for any reason.
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Section 6.03. General
Release. The Executive agrees that,
notwithstanding any other provision of this Agreement, the
Executive will not be eligible for any Severance Payments under
this Agreement unless the Executive timely signs, and does not
timely revoke, a General Release in substantially the form
attached to this Agreement as Exhibit A. The Executive will
be given 21 days to consider the terms of the General
Release. The General Release will not become effective until
seven days following the date the General Release is executed.
If the Executive does not return the executed General Release to
the Company by the end of the 21 day period, that failure
will be deemed a refusal to sign, and the Executive will not be
entitled to receive any Severance Payments under this Agreement.
In certain circumstances, the 21 day period to consider the
General Release may be extended to a 45 day period. The
Executive will be advised in writing if the 45 day period
is applicable. In the absence of such notice, the 21 day
period applies.
ARTICLE VII
Successors;
Binding Agreement
Section 7.01. Obligation
of Successors.
(a) In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation,
or otherwise) to all or substantially all of the business
and/or
assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no succession had
occurred.
(b) Subject to Section 7.01(c), failure of the Company
to obtain such an assumption and agreement under
Section 7.01(a) prior to the effectiveness of any such
succession will be a breach of this Agreement and will entitle
the Executive to compensation from the Company in the same
amount as the Executive would be entitled to under this
Agreement if the Executive were to terminate employment for Good
Reason after a Change in Control, except that, for purposes of
implementing the foregoing, the date on which the succession
becomes effective will be deemed the Date of Termination.
(c) Payment of benefits under Section 7.01(b) shall be
made on the deemed Date of Termination if, and only if, the
succession resulted from a transaction that satisfies the
definition of change in control under Section 409A of the
Code. If the transaction does not satisfy the definition of
change in control under Section 409A, payment of benefits
due under Section 7.01(b) shall be made within 30 days
of the Executive’s actual date of termination of
employment, subject to the provisions of Section 3.04(d).
No interest or earnings shall be paid due to any delay in
payment under this Section 7.01(c).
Section 7.02. Enforcement
Rights of Others. This Agreement will inure
to the benefit of and be enforceable by the Executive’s
personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees. If the
Executive dies while any amount is still payable to the
Executive under this Agreement, (other than amounts that, by
their terms, terminate upon the Executive’s death), then,
unless otherwise provided in this Agreement, all such amounts
will be paid in accordance with the terms of this Agreement to
the executors, personal representatives, or administrators of
the Executive’s estate.
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ARTICLE VIII
Notices
For the purpose of this Agreement, notices and all other
communications provided for in the Agreement will be in writing
and will be deemed to have been duly given when delivered or
mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective
addresses set forth below, or to such other address as either
party may furnish to the other in writing in accordance with
this Article VIII, except that notice of change of address
will be effective only upon actual receipt:
To the Company:
Xxxxxx Holdings, Inc.
Attention: General Counsel
000 Xxxx Xxxx Xxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxx, Xxxxxxx 00000-0000
Attention: General Counsel
000 Xxxx Xxxx Xxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxx, Xxxxxxx 00000-0000
To the Executive:
Xxxx X. Xxxxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
00 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
ARTICLE IX
Miscellaneous
This Agreement will not be construed as creating an express or
implied contract of employment and, except as otherwise agreed
in writing between the Executive and the Company, the Executive
will not have any right to be retained in the employ of the
Company. No provision of this Agreement may be modified, waived,
or discharged unless the waiver, modification, or discharge is
agreed to in writing and signed by the Executive and an officer
of the Company specifically designated by the Board. 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 will be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at
any other time. Neither party has made any agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter of this Agreement that are not
expressly set forth in this Agreement. Except as provided in the
following two sentences, the validity, interpretation,
construction, and performance of this Agreement will be governed
by the laws of the State of Indiana, to the extent not preempted
by federal law. This Agreement will at all times be effected,
construed, interpreted, and applied in a manner consistent with
the Section 409A Standards, and in resolving any
uncertainty as to the meaning or intention of any provision of
this Agreement, the interpretation that will prevail is the
interpretation that causes the Agreement to comply with the
Section 409A Standards. In addition, to the extent that any
terms of this Agreement would subject the Executive to gross
income inclusion, interest, or additional tax pursuant to Code
Section 409A, those terms are to that extent superseded by
the applicable Section 409A Standards. All references to
sections of the Exchange Act or the Code will be deemed also to
refer to any successor provisions to those sections. Any
payments provided for under this Agreement will be paid net of
any applicable withholding required under federal, state, or
local law and any additional withholding to which the Executive
has agreed. The obligations of the Company and the Executive
under Articles III, IV, and VI will survive the expiration
of the term of this Agreement.
ARTICLE X
Validity
The invalidity or unenforceability of any provision or this
Agreement will not affect the validity or enforceability of any
other provision of this Agreement, which will remain in full
force and effect.
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ARTICLE XI
Counterparts
This Agreement may be executed in several counterparts, each of
which will be deemed to be an original but all of which together
will constitute one and the same instrument.
ARTICLE XII
Settlement
of Disputes; Arbitration
All claims by the Executive for benefits under this Agreement
must be in writing and will be directed to and determined by the
Board. Any denial by the Board of a claim for benefits under
this Agreement will be delivered to the Executive in writing and
will set forth the specific reasons for the denial and the
specific provisions of this Agreement relied upon. The Board
will afford a reasonable opportunity to the Executive for a
review of the decision denying a claim and will further allow
the Executive to appeal to the Board a decision of the Board
within 60 days after notification by the Board that the
Executive’s claim has been denied. Any further dispute or
controversy arising under or in connection with this Agreement
will be settled exclusively by arbitration in Warsaw, Indiana in
accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction. Each
party will bear its own expenses in the arbitration for
attorneys’ fees, for its witnesses, and for other expenses
of presenting its case. Other arbitration costs, including
arbitrators’ fees, administrative fees, and fees for
records or transcripts, will be borne equally by the parties.
Notwithstanding anything in this Article to the contrary, if the
Executive prevails with respect to any dispute submitted to
arbitration under this Article, the Company will reimburse or
pay all reasonable legal fees and expenses that the Executive
incurred in connection with that dispute as required by
Section 3.05.
ARTICLE XIII
Definitions
For purposes of this Agreement, the following terms will have
the meanings indicated below:
(a) “Accounting Firm” means an
accounting firm, other than the Company’s independent
auditors, that is designated as one of the four largest
accounting firms in the United States.
(b) “Award Plan” means any of the
Xxxxxx Holdings, Inc. 2006 Stock Incentive Plan, the Xxxxxx
Holdings, Inc. 2001 Stock Incentive Plan or the Xxxxxx Holdings,
Inc. TeamShare Stock Option Plan.
(c) “Base Amount” has the meaning
stated in Code section 280G(b)(3).
(d) “Beneficial Owner” has the
meaning stated in
Rule 13d-3
under the Exchange Act.
(e) [RESERVED]
(f) “Board” means the Board of
Directors of the Company.
(g) “Cause” for termination by the
Company of the Executive’s employment, after any Change in
Control, means (1) the willful and continued failure by the
Executive to substantially perform the Executive’s duties
with the Company (other than any such failure resulting from the
Executive’s incapacity due to physical or mental illness or
any such actual or anticipated failure after the issuance of a
Notice of Termination for Good Reason by the Executive pursuant
to Section 4.01) for a period of at least 30 consecutive
days after a written demand for substantial performance is
delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes
that the Executive has not substantially performed the
Executive’s duties; (2) the Executive willfully
engages in conduct that is demonstrably and materially injurious
to the Company or its subsidiaries, monetarily or otherwise; or
(3) the Executive is convicted of, or has entered a plea of
no contest to, a felony. For purposes of clauses (1) and
(2) of this definition, no act, or failure to act, on the
Executive’s part will be deemed “willful” unless
it is done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that the Executive’s
act, or failure to act, was in the best interest of the Company.
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(h) A “Change in Control” will be
deemed to have occurred if any of the following events occur:
(1) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in
the securities beneficially owned by that Person any securities
acquired directly from the Company or its affiliates)
representing 20% or more of the combined voting power of the
Company’s then outstanding securities; or
(2) during any period of two consecutive years (not
including any period prior to the execution of this Agreement),
individuals who at the beginning of the period constitute the
Board and any new director (other than a director designated by
a Person who has entered into an agreement with the Company to
effect a transaction described in clause (1), (3) or
(4) of this paragraph whose election by the Board or
nomination for election by the Company’s stockholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning
of the period or whose election or nomination for election was
previously approved), cease for any reason to constitute a
majority of the Board; or
(3) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than (A) a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior
to the merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, at least 75% of
the combined voting power of the voting securities of the
Company or the surviving entity outstanding immediately after
the merger or consolidation; or (B) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person acquires
more than 50% of the combined voting power of the Company’s
then outstanding securities; or
(4) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all the
Company’s assets.
Notwithstanding the foregoing, a Change in Control will not
include any event, circumstance, or transaction occurring during
the six-month period following a Potential Change in Control
that results from the action of any entity or group that
includes, is affiliated with, or is wholly or partly controlled
by the Executive; provided, further, that such an
action will not be taken into account for this purpose if it
occurs within a six-month period following a Potential Change in
Control resulting from the action of any entity or group that
does not include the Executive.
(i) “COBRA” means the continuation
coverage provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(j) “Code” means the Internal
Revenue Code of 1986, as amended from time to time, and
interpretative rules and regulations.
(k) “Company” means Xxxxxx
Holdings, Inc., a Delaware corporation, and any successor to its
business
and/or
assets that assumes and agrees to perform this Agreement by
operation of law, or otherwise (except in determining, under
Section XIII(h), whether or not any Change in Control of
the Company has occurred in connection with the succession).
(l) “Company Shares” means shares
of common stock of the Company or any equity securities into
which those shares have been converted.
(m) “Date of Termination” has the
meaning stated in Section 4.02.
(n) “Disability” has the meaning
stated in the Company’s short-term or long-term disability
plan, as applicable, as in effect immediately prior to a Change
in Control.
(o) “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time,
and interpretive rules and regulations.
(p) “Excise Tax” means any excise
tax imposed under Code Section 4999.
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(q) “Executive” means the
individual named in the first paragraph of this Agreement.
(r) “General Release” has the
meaning stated in Section 6.03.
(s) “Good Reason” for termination
by the Executive of the Executive’s employment means the
occurrence (without the Executive’s express written
consent) of any one of the following acts by the Company, or
failures by the Company to act, unless, in the case of any act
or failure to act described in paragraph (1), (4), (5),
(6), or (7) below, the act or failure to act is corrected
prior to the Date of Termination specified in the
Executive’s Notice of Termination:
(1) the assignment to the Executive of any duties
inconsistent with the Executive’s status as an executive
officer of the Company or a substantial adverse alteration in
the nature or status of the Executive’s responsibilities
from those in effect immediately prior to a Change in Control;
(2) a reduction by the Company in the Executive’s
annual base salary as in effect on the date of this Agreement or
as the same may be increased from time to time, or the level of
the Executive’s entitlement under the Incentive Plan as in
effect on the date of this Agreement or as the same may be
increased from time to time;
(3) the Company’s requiring the Executive to be based
more than 50 miles from the Company’s offices at which
the Executive is based immediately prior to a Change in Control
(except for required travel on the Company’s business to an
extent substantially consistent with the Executive’s
business travel obligations immediately prior to the Change in
Control), or, in the event the Executive consents to any such
relocation of his offices, the Company’s failure to provide
the Executive with all of the benefits of the Company’s
relocation policy as in operation immediately prior to the
Change in Control;
(4) the Company’s failure, without the
Executive’s consent, to pay to the Executive any portion of
the Executive’s current compensation (which means, for
purposes of this paragraph (4), the Executive’s annual
base salary as in effect on the date of this Agreement, or as it
may be increased from time to time, and the awards earned
pursuant to the Incentive Plan) or to pay to the Executive any
portion of an installment of deferred compensation under any
deferred compensation program of the Company, within seven days
of the date the compensation is due;
(5) the Company’s failure to continue in effect any
compensation plan in which the Executive participates
immediately prior to a Change in Control, which plan is material
to the Executive’s total compensation, including, but not
limited to, the Incentive Plan and the Award Plan or any
substitute plans adopted prior to the Change in Control, unless
an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to that plan, or
the Company’s failure to continue the Executive’s
participation in such a plan (or in a substitute or alternative
plan) on a basis not materially less favorable, both in terms of
the amount of benefits provided and the level of the
Executive’s participation relative to other participants,
as existed at the time of the Change in Control;
(6) the Company’s failure to continue to provide the
Executive with benefits substantially similar to those enjoyed
by the Executive under any of the Company’s pension
(including, without limitation, to the extent applicable to the
Executive, the Company’s Savings and Investment Program,
including the Company’s Benefit Equalization Plan for the
Savings and Investment Program), life insurance, medical, health
and accident, or disability plans in which the Executive was
participating at the time of the Change in Control; the taking
of any action by the Company that would directly or indirectly
materially reduce any of those benefits or deprive the Executive
of any material fringe benefit enjoyed by the Executive at the
time of a Change in Control; or the Company’s failure to
provide the Executive with the number of paid vacation days to
which the Executive is entitled on the basis of years of service
with the Company in accordance with the Company’s normal
vacation policy in effect at the time of the Change in
Control; or
(7) any purported termination of the Executive’s
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 4.01;
for purposes of this Agreement, no such purported termination
will be effective.
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The Executive’s right to terminate the Executive’s
employment for Good Reason will not be affected by the
Executive’s incapacity due to physical or mental illness.
The Executive’s continued employment will not constitute
consent to, or a waiver of rights with respect to, any act or
failure to act that constitutes Good Reason.
Notwithstanding the foregoing, the occurrence of an event that
would otherwise constitute Good Reason will cease to be an event
constituting Good Reason if the Executive does not timely
provide a Notice of Termination to the Company within
120 days of the date on which the Executive first becomes
aware (or reasonably should have become aware) of the occurrence
of that event.
(t) “Incentive Plan” means the
Company’s Executive Performance Incentive Plan.
(u) “Notice of Termination” has the
meaning stated in Section 4.01.
(v) “Options” means options for
Shares granted to the Executive under the Award Plan.
(w) “Person” has the meaning stated
in section 3(a)(9) of the Exchange Act, as modified and
used in sections 13(d) and 14(d) of the Exchange Act;
however, a Person will not include (1) the Company or any
of its subsidiaries, (2) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company
or any of its subsidiaries, (3) an underwriter temporarily
holding securities pursuant to an offering of those securities,
or (4) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
(x) “Potential Change in Control”
will be deemed to have occurred if any one of the following
events occurs:
(1) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(2) the Company or any Person publicly announces an
intention to take or to consider taking actions that, if
consummated, would constitute a Change in Control;
(3) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the
Company’s then outstanding securities, increases that
Person’s beneficial ownership of those securities by 5% or
more over the percentage so owned by that Person on the date of
this Agreement; or
(4) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
(y) “Retirement Date” means the
later of (1) age 65, or (2) another date for
retirement by the Executive that has been approved by the Board
at any time prior to a Change in Control.
(z) [RESERVED]
(aa) “Savings Plan” means the
Xxxxxx Holdings, Inc. Savings and Investment Program, which, for
purposes of this Agreement, will be deemed to include the
Benefit Equalization Plan of Xxxxxx Holdings, Inc. and Its
Subsidiary or Affiliated Corporations Participating in the
Xxxxxx Holdings, Inc. Savings and Investment Program.
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(bb) “Section 409A Standards”
means the standards for nonqualified deferred compensation plans
established by Code Section 409A.
(cc) “Severance Payments” means the
payments described in Section 3.02.
(dd) “Shares” means shares of the
common stock, $0.01 par value, of the Company.
(ee) “Total Payments” has the
meaning stated in Section 3.03(a).
|
EXECUTIVE
|
||||
| XXXXXX HOLDINGS, INC. | ||||
|
/s/ Xxxx
X. Xxxxxxxx |
By: |
/s/ Xxxx
X. Xxxxxx |
||
|
Xxxx X. Xxxxxxxx Group President, Global Businesses |
Xxxx X. Xxxxxx Senior Vice President, General Counsel and Secretary |
|||
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