FORM A
HUTTIG BUILDING PRODUCTS, INC.
EMPLOYMENT/SEVERANCE AGREEMENT
AGREEMENT by and between HUTTIG BUILDING PRODUCTS, INC., a Delaware
corporation (the "Company"), and XXXXX X. XXXXX (the "Employee"), dated October
18, 1999.
The Board of Directors of the Company (the "Board"), on the advice of its
Organization and Compensation Committee, has determined that it is in the best
interests of the Company and its shareholders to assure that the Company will
have the continued dedication of the Employee as President and Chief Executive
Officer of the Company, notwithstanding the possibility, threat, or occurrence
of a Change of Control (as defined below) of the Company. The Board believes it
is imperative to diminish the inevitable distraction of the Employee by virtue
of the personal uncertainties and risks created by a pending or threatened
Change of Control, to encourage the Employee's full attention and dedication to
the Company currently and in the event of any threatened or pending Change of
Control, and to provide the Employee with compensation arrangements upon a
Change of Control which provide the Employee with individual financial security
and which are competitive with those of other corporations and, in order to
accomplish these objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
l. Certain Definitions.
(a) The "Effective Date" shall be the first date during the "Change of
Control Period" (as defined in Section l(b)) on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if the
Employee's employment with the Company is terminated prior to the date on
which a Change of Control occurs, and it is reasonably demonstrated that
such termination (l) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (2) otherwise
arose in connection with or anticipation of a Change of Control, then for
all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination.
(b) The "Change of Control Period" is the period commencing on the
date hereof and ending on the earlier to occur of (i) the third anniversary
of such date or (ii) the first day of the month next following the
Employee's normal retirement date ("Normal Retirement Date") under the
Huttig Building Products, Inc. Savings & Investment Plan, or any successor
retirement plan (the "Retirement Plan"); 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 is hereinafter
referred to as the "Renewal Date"), the Change of Control Period shall be
automatically extended so as to terminate on the earlier of (x) three years
from such Renewal Date or (y) the first day of the month coinciding with or
next
following the Employee's Normal Retirement Date, unless at least 60 days
prior to the Renewal Date the Company shall give notice that the Change of
Control Period shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean:
(i) The acquisition, other than from the Company, 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")) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of either the then outstanding shares of
common stock of the Company or the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors, but excluding, for this purpose, any such
acquisition by the Company or any of its subsidiaries, by The Rugby Group
plc or any direct transferee from The Rugby Group plc, or any employee
benefit plan (or related trust) of the Company or its subsidiaries, or any
corporation with respect to which, following such acquisition, more than
50% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by
substantially the same individuals and entities who were the beneficial
owners, respectively, of the common stock and voting securities of the
Company immediately prior to such acquisition in substantially the same
proportion as their ownership, immediately prior to such acquisition, of
the then outstanding shares of common stock of the Company or the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors, as the case may
be; or
(ii) Individuals who, as of the date hereof, constitute the Board (as
of the date hereof the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act); or
(iii) Approval by the stockholders of the Company of a reorganization,
merger or consolidation, in each case, with respect to which substantially
the same individuals and entities who were the respective beneficial owners
of the common stock and voting securities of the Company immediately prior
to such reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, 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 corporation resulting from such
reorganization, merger or consolidation, or a complete liquidation or
dissolution of the Company or of the sale or other disposition of all or
substantially all of the assets of the Company.
3. Employment Period. The Company hereby agrees to continue the Employee in
its employ, and the Employee hereby agrees to remain in the employ of the
Company, for the period commencing on the Effective Date and ending on the
earlier to occur of (a) the third anniversary of such date or (b) the first day
of the month coinciding with or next following the Employee's Normal Retirement
Date (the "Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Employee's position
(including status, offices, titles and reporting requirements) authority duties
and responsibilities shall be at least commensurate in all material respects
with those held, exercised and assigned at any time during the 90-day period
immediately preceding the Effective Date and (B) the Employee's services shall
be performed at the location where the Employee was employed immediately
preceding the Effective Date or any office or location less than thirty-five
(35) miles from such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Employee is entitled, the Employee agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Employee hereunder, to use the Employee's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. It is expressly understood and agreed that to the extent that
any outside activities have been conducted by the Employee prior to the
Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective Date
shall not thereafter be deemed to interfere with the performance of the
Employee's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Employee shall
receive an annual base salary ("Base Salary") at a rate at least equal to twelve
times the highest monthly base salary paid or payable to the Employee by the
Company during the twelve-month period immediately preceding the month in which
the Effective Date occurs. During the Employment Period, the Base Salary shall
be reviewed at least annually and shall be increased at any time and from time
to time as shall be substantially consistent with increases in base salary
awarded in the ordinary course of business to other key employees of the Company
and its subsidiaries. Any increase in Base Salary shall not serve to limit or
reduce any other obligation to the Employee under this Agreement. Base Salary
shall not be reduced after any such increase.
(ii) Annual Bonus. In addition to Base Salary, the Employee shall
be eligible (but not entitled) to receive, for each fiscal year during the
Employment Period, an annual bonus (an "Annual Bonus") (either pursuant to any
incentive compensation plan maintained by the Company or otherwise) in cash on
the same basis as in the fiscal year immediately preceding the fiscal year in
which the Effective Date occurs or, if more favorable to the Employee, on the
same basis as awarded at any time thereafter to other key employees of the
Company and its subsidiaries.
(iii) Incentive, Savings and Retirement Plans. In addition to
Base Salary and Annual Bonus payable as hereinabove provided, the Employee shall
be entitled to participate during the Employment Period in all incentive,
savings and retirement plans, practices, policies and programs applicable to
other key employees of the Company and its subsidiaries.
Such plans, practices, policies and programs, in the aggregate, shall
provide the Employee with compensation, benefits and reward opportunities at
least as favorable in the aggregate as the most favorable of such compensation,
benefits and reward opportunities provided by the Company for the Employee under
such plans, practices, policies and programs as in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Employee, as provided at any time thereafter with respect to other key
employees of the Company and its subsidiaries.
(iv) Welfare Benefit Plans. During the Employment Period, the
Employee and/or the Employee's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its subsidiaries
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs), at least as favorable as the most
favorable of such plans, practices, policies and programs in effect at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Employee and/or the
Employee's family, as in effect at any time thereafter with respect to other key
employees of the Company and its subsidiaries.
(v) Expenses. During the Employment Period, the Employee shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Employee in accordance with the most favorable policies, practices and
procedures of the Company and its subsidiaries in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Employee, as in effect at any time thereafter with respect to other key
employees of the Company and its subsidiaries.
(vi) Fringe Benefits. During the Employment Period, the Employee
shall be entitled to fringe benefits, including use of an automobile and payment
of related expenses, in accordance with the most favorable plans, practices,
programs and policies of the Company and its subsidiaries in effect at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Employee, as in effect at any time thereafter with respect to
other key employees of the Company and its subsidiaries.
(vii) Office and Support Staff. During the Employment Period, the
Employee shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the Employee by
the Company and its subsidiaries at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Employee,
as provided at any time thereafter with respect to other key employees of the
Company and its subsidiaries.
(viii) Vacation. During the Employment Period, the Employee shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its subsidiaries as in
effect at any time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Employee, as in effect at any time thereafter
with respect to other key employees of the Company and its subsidiaries.
5. Termination.
(a) Death or Disability. This Agreement shall terminate
automatically upon the Employee's death. If the Company determines in good faith
that the Disability of the Employee has occurred (pursuant to the definition of
"Disability" set forth below), it may give to the Employee written notice (given
in accordance with Section 12(b) hereof) of its intention to terminate the
Employee's employment. In such event, the Employee's employment with the Company
shall terminate effective on the 30th day after receipt of such notice by the
Employee (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Employee shall not have returned to full-time
performance of the Employee's duties. For purposes of this Agreement,
"Disability" means disability which, at least 26 weeks after its commencement,
is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Employee or the Employee's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Employee's employment for
"Cause." For purposes of this Agreement, "Cause" shall constitute either (i)
personal dishonesty or breach of fiduciary duty involving personal profit at the
expense of the Company (ii) repeated violations by the Employee of the
Employee's obligations under Section 4(a) of this Agreement which are
demonstrably willful and deliberate on the Employee's part and which are not
remedied in a reasonable period of time after receipt of written notice from the
Company or (iii) the commission of a criminal act related to the performance of
duties, or the furnishing of proprietary confidential information about the
Company to a competitor, or potential competitor, or third party whose interests
are adverse to those of the Company; (iv) habitual intoxication by alcohol or
drugs during work hours; or (v) conviction of a felony.
(c) Good Reason. The Employee's employment may be terminated by the
Employee for Good Reason. For purposes of this Agreement, "Good Reason" means:
(i) the assignment to the Employee of any duties inconsistent in
any respect with the Employee's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Employee;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Employee;
(iii) the Company's requiring the Employee to be based at any
office or location other than that described in Section 4(a)(i)(B) hereof,
except for travel reasonably required in the performance of the Employee's
responsibilities;
(iv) any purported termination by the Company of the Employee's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Employee shall be conclusive. Anything in this Agreement to
the contrary notwithstanding, a termination by the Employee for any reason
during the 30-day period
immediately following the first anniversary of the Effective Date shall be
deemed to be a termination for Good Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause or
by the Employee for Good Reason shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 12(b) of this
Agreement. 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 Employee's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than fifteen (15) days after
the giving of such notice). The failure by the Employee to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason shall not waive any right of the Employee hereunder or preclude the
Employee from asserting such fact or circumstance in enforcing his rights
hereunder.
(e) Date of Termination. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date specified therein, as the
case may be; provided, however, that (i) if the Employee's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Employee of such
termination and (ii) if the Employee's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Employee or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
(a) Death. If the Employee's employment is terminated by reason of the
Employee's death, this Agreement shall terminate without further obligations to
the Employee's legal representatives under this Agreement, other than those
obligations accrued or earned and vested (if applicable) by the Employee as of
the Date of Termination, including, for this purpose (i) the Employee's full
Base Salary through the Date of Termination at the rate in effect on the Date of
Termination or, if higher, at the highest rate in effect at any time from the
90-day period preceding the Effective Date through the Date of Termination (the
"Highest Base Salary"), (ii) the product of the Annual Bonus paid to the
Employee for the last full fiscal year and a fraction, the numerator of which is
the number of days in the current fiscal year through the Date of Termination,
and the denominator of which is 365 and (iii) any compensation previously
deferred by the Employee (together with accrued interest thereon, if any) and
not yet paid by the Company and any accrued vacation pay not yet paid by the
Company (such amounts specified in clauses (i), (ii) and (iii) are hereinafter
referred to as "Accrued Obligations"). All such Accrued Obligations shall be
paid to the Employee's estate or beneficiary, as applicable, in a lump sum in
cash within 30 days of the Date of Termination. Anything in this Agreement to
the contrary notwithstanding, the Employee's family shall be entitled to receive
benefits at least equal to the most favorable benefits provided by the Company
and any of its subsidiaries to surviving families of employees of the Company
and such subsidiaries under such plans,
programs, practices and policies relating to family death benefits, if any, in
accordance with the most favorable plans, programs, practices and policies of
the Company and its subsidiaries in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Employee
and/or the Employee's family, as in effect on the date of the Employee's death
with respect to other key employees of the Company and its subsidiaries and
their families.
(b) Disability. If the Employee's employment is terminated by reason
of the Employee's Disability, this Agreement shall terminate without further
obligations to the Employee, other than those obligations accrued or earned and
vested (if applicable) by the Employee as of the Date of Termination, including
for this purpose, all Accrued Obligations. All such Accrued Obligations shall be
paid to the Employee in a lump sum in cash within 30 days of the Date of
Termination. Anything in this Agreement to the contrary notwithstanding, the
Employee shall be entitled after the Disability Effective Date to receive
disability and other benefits at least equal to the most favorable of those
provided by the Company and its subsidiaries to disabled employees and/or their
families in accordance with such plans, programs, practices and policies of the
Company and its subsidiaries in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Employee
and/or the Employee's family, as in effect at any time thereafter with respect
to other key employees of the Company and its subsidiaries and their families.
(c) Cause; Other than for Good Reason. If the Employee's employment
shall be terminated for Cause, this Agreement shall terminate without further
obligations to the Employee other than the obligation to pay to the Employee the
Highest Base Salary through the Date of Termination plus the amount of any
compensation previously deferred by the Employee (together with accrued interest
thereon, if any). If the Employee terminates employment other than for Good
Reason, this Agreement shall terminate without further obligations to the
Employee, other than those obligations accrued or earned and vested (if
applicable) by the Employee through the Date of Termination, including for this
purpose, all Accrued Obligations. All such Accrued Obligations shall be paid to
the Employee in a lump sum in cash within 30 days of the Date of Termination.
(d) Good Reason; Other Than for Cause or Disability. If, during the
Employment Period, the Company shall terminate the Employee's employment other
than for Cause, Disability, or death or if the Employee shall terminate his
employment for Good Reason:
(i) the Company shall pay to the Employee in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. to the extent not theretofore paid, the Employee's
Highest Base Salary through the Date of Termination; and
B. the product of (x) the greater of the Annual Bonus paid
or payable (annualized for any fiscal year consisting of less than twelve full
months or for which the Executive has been employed for less than twelve full
months) to the Executive for the most recently completed fiscal year during the
Employment Period, if any, or the average bonus (annualized for any fiscal year
consisting of less than twelve full months or with respect to which the
Executive has been employed by the Company for less than twelve full months)
paid or payable to the Executive by the Company and its affiliated companies in
respect of the three fiscal years immediately preceding the fiscal year in which
the Effective Date occurs (the "Average Annual Bonus"), such greater amount
being hereafter referred to as the "Highest Annual Bonus," and (y) a fraction,
the numerator of which is the number of days in the current fiscal year through
the Date of Termination, and the denominator of which is 365;
C. the product of (x) three and (y) the sum of (i) the
Highest Base Salary and (ii) the Average Annual Bonus; and
D. in the case of compensation previously deferred by the
Employee, all amounts previously deferred (together with accrued interest
thereon, if any) and not yet paid by the Company, and any accrued vacation pay
not yet paid by the Company; and
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the Company shall
continue benefits to the Employee and/or the Employee's family at least equal to
those which would have been provided to them as if the Employee's employment had
not been terminated, in accordance with the most favorable employee welfare
benefit plans (as such term is defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended) of the Company and its
subsidiaries (including health insurance and life insurance) during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Employee, as in effect at any time thereafter with respect to other key
employees and their families, and for purposes of eligibility for retiree
benefits pursuant to such employee welfare benefit plans, the Employee shall be
considered to have remained employed until the end of the Employment Period and
to have retired on the last day of such period.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Employee's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices, provided by the
Company or any of its subsidiaries and for which the Employee may qualify, nor
shall anything herein limit or otherwise affect such rights as the Employee may
have under any stock option, restricted stock, stock appreciation right, or
other agreements with the Company or any of its subsidiaries. Amounts which are
vested benefits or which the Employee is otherwise entitled to receive under any
plan, policy, practice or program of the Company or any of its subsidiaries at
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program provided, however, that in the event the
terms of any such plan, policy, practice or program concerning the payment of
benefits thereunder shall conflict with any provision of this
Agreement, the terms of this Agreement shall take precedence but only if and to
the extent the payment would not adversely affect the tax exempt status (if
applicable) of any such plan, policy, practice or program and only if the
employee agrees in writing that such payment shall be in lieu of any
corresponding payment from such plan, policy, practice or program.
8. Full Settlement. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Employee or
others. In no event shall the Employee be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Employee under any of the provisions of this Agreement. The Company agrees to
pay, to the full extent permitted by law, all legal fees and expenses which the
Employee may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company or others of the validity or enforceability of,
or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Employee about
the amount of any payment pursuant to Section 9 of this Agreement), plus in each
case interest at the applicable Federal rate provided for in Section 7872(f)(2)
of the Internal Revenue Code of 1986, as amended (the "Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any economic benefit or payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (including, but not limited to, any economic benefit
received by the Employee by reason of the acceleration of rights under the
various option, restricted stock and stock appreciation right plans of the
Company, but excluding any other economic benefit which by the terms of the
agreement or other document providing for such economic benefit, is expressly
excluded from inclusion in the economic benefits covered by this Section 9(a))
(a "Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Employee shall be entitled to receive
an additional payment (a "Gross-Up-Payment") in an amount such that after
payment by the Employee 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 Employee retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether a Gross-Up Payment
is required and the amount of such Gross-Up Payment, shall be made by the
Company's regular outside independent public accounting firm (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and the Employee within 15 business days of the Date of Termination, if
applicable, or such earlier time as is requested by the Company. The
initial Gross-Up Payment, if any, as determined pursuant to this Section 9(b),
shall be paid to the Employee within 5 days of the receipt of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax is
payable by the Employee, it shall furnish the Employee with an opinion that he
has substantial authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding upon the
Company and the Employee. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 9(c) and the Employee
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Employee.
(c) The Employee shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the later of either (i)
the date the Employee has actual knowledge of such claim, or (ii) ten days after
the Internal Revenue Service issues to the Employee either a written report
proposing imposition of the Excise Tax or a statutory notice of Deficiency with
respect thereto, and shall apprise the Company of the nature of such claim and
the date on which such claim is requested to be paid. The Employee shall not pay
such claim prior to the expiration of the thirty-day period following the date
on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the
Company notifies the Employee in writing prior to the expiration of such period
that it desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim,
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or
income tax, including interest and penalties with respect thereto, imposed as a
result of such representation and payment of costs and expenses. Without
limitation of the foregoing provisions of this Section 9(c), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Employee to request or accede to a
request for an extension of the statute of limitations with respect only to the
tax claimed, or pay the tax claimed and xxx for a refund or contest the claim in
any permissible manner, and the Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Employee to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Employee, on an interest-free basis and shall indemnify and hold
the Employee harmless, on an after-tax basis, from any Excise Tax or income tax,
including interest or penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations requested
or acceded to by the Employee at the Company's request and relating to payment
of taxes for the taxable year of the Employee with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Employee shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Employee of an amount advanced by the
Company pursuant to Section 9(c), the Employee becomes entitled to receive any
refund with respect to such claim, the Employee shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 9(c), a determination is made that
the Employee shall not be entitled to any refund with respect to such claim and
the Company does not notify the Employee in writing of its intent to contest
such denial of refund prior to the expiration of thirty days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
(e) In the event that any state or municipality or subdivision thereof
shall subject any Payment to any special tax which shall be in addition to the
generally applicable income tax imposed by such state , municipality, or
subdivision with respect to receipt of such Payment, the foregoing provisions of
this Section 9 shall apply, mutatis mutandis, with respect to such special tax.
10. Confidential Information. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries, and their
respective businesses, which shall have
been obtained by the Employee during the Employee's employment by the Company or
any of its subsidiaries and which shall not be or become public knowledge (other
than by acts by the Employee or his representatives in violation of this
Agreement). After termination of the Employee's employment with the Company, the
Employee shall not, without the prior written consent of the Company,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall an asserted
violation of the provisions of this Section 10 constitute a basis for deferring
or withholding any amounts otherwise payable to the Employee under this
Agreement.
11. Successors.
(a) This Agreement is personal to the Employee and without the prior
written consent of the Company shall not be assignable by the Employee otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Employee's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company shall 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 assume
expressly 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 such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Employee:
Xxxxx X. Xxxxx
0 Xxxx Xxxxxx
Xx. Xxxxx, XX 00000
If to the Company:
Crane Co.
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company 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.
(e) The Employee's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.
(f) This Agreement contains the entire understanding of the Company
and the Employee with respect to the subject matter hereof. This Agreement may
not be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(g) The Employee and the Company acknowledge that the employment of
the Employee by the Company is "at will," and, prior to the Effective Date, may
be terminated by either the Employee or the Company at any time. Upon a
termination of the Employee's employment or prior to the Effective Date, there
shall be no further rights under this Agreement.
(h) Notwithstanding any other provision in this Agreement, this
Agreement shall only become effective upon the distribution by Crane Co. of all
the outstanding shares of Common Stock of the Company to stockholders of Crane
Co. (the "Spin-Off"), and the Spin-Off shall not constitute a Change of Control
hereunder. If the Spin-Off does not occur for any reason, this Agreement shall
not have any force or effect.
IN WITNESS WHEREOF, the Employee has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ XXXXX X. XXXXX
------------------------------
XXXXX X. XXXXX
HUTTIG BUILDING PRODUCTS, INC.
By /s/ X. X. Xxxxx
---------------------------
X. X. Xxxxx
Chairman
Attest: /s/ Xxxxxxx Xxxxxxx
---------------------------------
Secretary
