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EXHIBIT 10.AK
EXECUTIVE SEVERANCE AGREEMENT.
This AGREEMENT ("Agreement") dated February 17, 1998 by and between
Xxxxx-Xxxxxx Company, a Massachusetts corporation (the "Company"), and Xxxxxx X.
Xxxxx (the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to have the services of the Executive as its
Vice President, Chief Financial Officer and Treasurer; and
WHEREAS, the Executive is willing to serve the Company as its Vice
President, Chief Financial Officer and Treasurer, but desires assurance that he
will not be materially disadvantaged by a change in control of the Company;
NOW, THEREFORE, in consideration of the Executive's service to the Company
and the mutual agreements herein contained, the Company and the Executive hereby
agree, as follows:
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ARTICLE I
ELIGIBILITY FOR BENEFITS
SECTION 1.1. QUALIFYING TERMINATION. The Company shall not be required to
provide any benefits to the Executive pursuant to this Agreement unless a
Qualifying Termination occurs before the Agreement expires in accordance with
Section 6.1 hereof. For purposes of this Agreement, a Qualifying Termination
shall occur only if
(a) a Change in Control occurs, and
(b) within three years after the Change in Control,
(i) the Company terminates the Executive's employment other than
for Cause; or
(ii) the Executive terminates his employment with
the Company for Good Reason;
provided, that a Qualifying Termination shall not occur if the Executive's
employment with the Company terminates by reason of the Executive's Disability,
death, or retirement. For the purposes hereof "retirement" shall mean any
termination of employment which occurs at or after age 65.
SECTION 1.2. CHANGE IN CONTROL. Except as provided below, a Change in
Control shall be deemed to occur when and only when the first of the following
events occurs:
(a) the acquisition (including by purchase, exchange, merger or other
business combination, or any
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combination of the foregoing) by any individuals, firms,
corporations or other entities, acting in concert ("Person"),
together with all Affiliates and Associates of such Person, of
beneficial ownership of securities of the Company representing 20
percent or more of the combined voting power of the Company's
then outstanding voting securities, or
(b) members of the Incumbent Board cease to constitute a majority of
the Board of Directors.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
pursuant to paragraph (a), above, (i) solely because 20 percent or more of the
combined voting power of the Company's outstanding securities is acquired by one
or more employee benefit plans maintained by the Company, or (ii) if the
Executive is included among the individuals, firms, corporations or other
entities that, acting in concert, acquire the Company's securities. For purposes
of this Section 1.2, the terms "Affiliates" and "Associates" shall have the
meanings set forth in Rule 12b-2 of the General Rules and Regulations
promulgated under the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); the
terms "beneficial ownership" and "beneficially owned" shall have the meaning set
forth in section 13(d) of the Exchange Act, as amended, and in Rule 13d-3
promulgated thereunder, the term "Board of Directors" shall mean the Board of
Directors of the
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Company and the term "Incumbent Board" shall mean (i) the members of the Board
of Directors on the date hereof, to the extent that they continue to serve as
members of the Board of Directors, and (ii) any individual who becomes a member
of the Board of Directors after the date hereof, if his election or nomination
for election as a director was approved by a vote of at least three quarters of
the then Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board of Directors.
SECTION 1.3. TERMINATION FOR CAUSE. The Company shall have Cause to
terminate the Executive's employment with the Company for purposes of Section
1.1 hereof only if the Executive (a) engages in unlawful acts intended to result
in the substantial personal enrichment of the Executive at the Company's
expense, or (b) engages (except (i) by reason of incapacity due to illness or
injury or (ii) in connection with an actual or anticipated termination of
employment by the Executive for Good Reason) in a material violation of his
responsibilities to the Company that results in a material injury to the
Company.
SECTION 1.4. TERMINATION FOR GOOD REASON. The Executive shall have a Good
Reason for terminating employment with the
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Company only if one or more of the following occurs after a Change in Control:
(a) a change in the Executive's status or position (including for
this purpose a change in the principal place of the Executive's
employment on a basis that does not conform with the Company's
present policies for executive relocation, but excluding required
travel on the Company's business to an extent substantially
consistent with the Executive's present business travel
obligations) with the Company that, in the Executive's reasonable
judgment, represents an adverse change from the Executive's
status or position in effect immediately before the Change in
Control;
(b) the assignment to the Executive of any duties or responsibilities
that, in the Executive's reasonable judgment, are inconsistent
with the Executive's status or position in effect immediately
before the Change in Control;
(c) layoff or involuntary termination of the Executive's employment,
except in connection with the termination of the Executive's
employment for Cause or as a result of the Executive's
Disability, death or retirement;
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(d) a reduction by the Company in the Executive's total compensation
as in effect at the time of the Change in Control (which shall be
deemed, for this purpose, to be equal to his base salary plus the
most recent award that he has earned under the Company's
Management Incentive Plan, as amended from time to time, or any
successor thereto (the "MIP")) or as the same may be increased
from time to time;
(e) the failure by the Company to continue in effect any Plan in
which the Executive is participating at the time of the Change in
Control (or plans or arrangements providing the Executive with
substantially equivalent benefits) other than as a result of the
normal expiration of any such Plan in accordance with its terms
as in effect at the time of the Change in Control;
(f) any action or inaction by the Company that would adversely affect
the Executive's continued participation in any Plan on at least
as favorable a basis as was the case at the time of the Change in
Control, or that would materially reduce the Executive's benefits
in the future under the Plan or deprive him if any material
benefits that he
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enjoyed at the time of the Change in Control, except to the
extent that such action or inaction by the Company is required by
the terms of the Plan as in effect immediately before the Change
in Control, or is necessary to comply with applicable law or to
preserve the qualification of the Plan under section 401(a) of
the Internal Revenue Code (the "Code"), and except to the extent
that the Company provides the Executive with substantially
equivalent benefits;
(g) the Company's failure to obtain the express assumption of this
Agreement by any successor to the Company as provided by Section
6.3 hereof;
(h) any material violation by the Company of any agreement (including
this Agreement) between it and the Executive; or
(i) the failure by the Company, without the Executive's consent, to
pay to him any portion of his current compensation, or to pay to
the Executive any portion of any deferred compensation, within 30
days of the date the Executive notifies the Company that any such
compensation payment is past due.
Notwithstanding the foregoing, no action by the Company shall give rise to a
Good Reason if it results from the Executive's
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termination for Cause, death or retirement, and no action by the Company
specified in paragraphs (a) through (d) of the preceding sentence shall give
rise to a Good Reason if it results from the Executive's Disability. A Good
Reason shall not be deemed to be waived by reason of the Executive's continued
employment as long as the termination of the Executive's employment occurs
within the time prescribed by Section 1.1(b) hereof. For purposes of this
Section 1.4, "Plan" means any compensation plan, such as an incentive or stock
option plan, or any employee benefit plan, such as a thrift, pension,
profit-sharing, stock bonus, long-term performance award, medical, disability,
accident, or life insurance plan, or any other plan, program or policy of the
Company that is intended to benefit employees.
SECTION 1.5. DISABILITY. For purposes of this Agreement, "Disability" shall
mean illness or injury that prevents the Executive from performing his duties
(as they existed immediately before the illness or injury) on a full-time basis
for six consecutive months.
SECTION 1.6. NOTICE. If a Change in Control occurs, the Company shall
notify the Executive of the occurrence of the Change in Control within two weeks
after the Change in Control.
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ARTICLE II
BENEFITS AFTER A QUALIFYING TERMINATION
SECTION 2.1. BASIC SEVERANCE PAYMENT. If the Executive incurs a Qualifying
Termination following a Change in Control that occurs on or before termination
of this Agreement as provided in Section 6.1 hereof, the Company shall pay
within 30 days after the date of the Qualifying Termination to the Executive a
single lump sum cash amount equal to his Total Annual Compensation multiplied by
the lesser of (a) 2.50 or (b) .0833 multiplied by the number of full months
remaining between termination and his attaining age 65. "Total Annual
Compensation" shall mean the sum of annual base salary in effect immediately
preceding termination or the Change of Control, whichever is higher, and annual
incentive compensation earned under the "MIP" (annualized in the case of less
than a full year's service) in the last full fiscal year immediately preceding
termination or the Change in Control, whichever is higher.
SECTION 2.2. INSURANCE. If the Executive incurs a Qualifying Termination
following a Change in Control that occurs on or before termination of this
Agreement as provided in Section 6.1 hereof, the Company shall provide the
Executive, at the Company's expense, for a period beginning on the date of the
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Qualifying Termination, the same medical, accident, disability, life and any
other insurance coverage as was provided to him by the Company immediately
before the Change in Control (or, if greater, as in effect immediately before
the Qualifying Termination occurs); such coverage shall end upon the earlier of
(a) the expiration of 24 months after the Qualifying Termination or (b) with
respect to each coverage, the date on which the Executive first becomes eligible
for insurance coverage of a similar nature provided by a firm that employs him
following the Qualifying Termination.
SECTION 2.3. EXECUTIVE LONG-TERM INCENTIVE PROGRAM. If the Executive incurs
a Qualifying Termination following a Change in Control that occurs on or before
termination of this Agreement as provided in Section 6.1 hereof, all of the
options to purchase common stock of the Company (and the alternative common
stock appreciation rights) granted to the Executive prior to termination of this
Agreement as provided in Section 6.1 hereof, under the Executive Long-Term
Incentive Program shall become exercisable in accordance with the terms set
forth in the applicable Agreement.
SECTION 2.4. NONDUPLICATION. Nothing in this Agreement shall require the
Company to make any payment or to provide any benefit or service credit that the
Company is otherwise required to provide under any other contract, agreement,
policy, plan or arrangement.
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ARTICLE III
EFFECT ON SEVERANCE POLICY
SECTION 3.1. EFFECT ON SEVERANCE POLICY. If the Executive becomes entitled to
receive benefits hereunder, the Executive shall not be entitled to any benefits
under any other Company severance policy.
ARTICLE IV
TAX MATTERS
SECTION 4.1. WITHHOLDING. The Company may withhold from any amount payable
to the Executive hereunder all federal, state or other taxes that the Company
may reasonably determine are required to be withheld pursuant to any applicable
law or regulation.
SECTION 4.2 SPECIAL LIMITATION.
(a) If part or all of the payments or benefits payable to the
Executive, when added to other payments payable to the Executive
as a result of a Change in Control, constitute Parachute
Payments, the following limitation shall apply. If the Parachute
Payments, net of the sum of the Excise Tax and the Federal income
and employment taxes, state and local income taxes on the amount
of the Parachute Payments in excess of the Threshold
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Amount, are greater than the Threshold Amount, the Executive
shall be entitled to the full payments and benefits payable under
this Agreement. If the Threshold Amount is greater than the
Parachute Payments, net of the sum of the Excise Tax, and the
Federal income and employment taxes, state and local income taxes
on the amount of the Parachute Payments in excess of the
Threshold Amount, then the payments and benefits under this
Agreement shall be reduced to the extent necessary so that the
maximum Parachute Payments shall not exceed the Threshold Amount.
In the event a reduction is required, it shall be the Executive's
choice as to which payments or benefits shall be so reduced. The
Company shall select a firm of independent certified public
accountants to determine which of the foregoing alternative
provisions shall apply. For purposes of determining the amount of
the Federal income and employment taxes, and state and local
income taxes on the amount of the Parachute Payments in excess of
the Threshold Amount, the Executive shall be deemed to pay
Federal income taxes at the highest marginal rate of Federal
income taxation applicable to individuals for the calendar year
in which the payments and benefits under this Agreement are
payable and state and local income taxes at the
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highest marginal rates of individual taxation in the state and
locality of the Executive's residence for the calendar year in
which the payments and benefits under this Agreement are payable,
net of the maximum reduction in Federal income taxes which could
be obtained from deduction of such state and local taxes.
(b) ADDITIONAL DEFINITIONS
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Parachute Payments" shall mean any payment or provision by the
Employer of any amount or benefit to and for the benefit of the
Executive, whether paid or payable or provided or to be provided under
the terms of this Agreement or otherwise, that would be considered
"parachute payments" within the meaning of Section 280G(B)(2)(A) of
the Code and the regulations promulgated thereunder.
"Threshold Amount" shall mean three times the Executive's "base
amount" within the meaning of Section 280G(b)(3) of the Code and the
regulations promulgated thereunder, less one dollar.
"Excise Tax" shall mean the excise tax imposed by Section 4999 of
the Code.
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ARTICLE V
COLLATERAL MATTERS
SECTION 5.1. NATURE OF PAYMENTS. All payments to the Executive under this
Agreement shall be considered either payments in consideration of his continued
service to the Company or severance payments in consideration of his past
services thereto.
SECTION 5.2. LEGAL EXPENSES. The Company shall pay all legal fees and
expenses that the Executive may incur as a result of the Company's contesting
the validity, the enforceability or the Executive's interpretation of, or
determinations under, this Agreement.
SECTION 5.3. MITIGATION. The Executive shall not be required to mitigate
the amount of any payment provided for in this Agreement either by seeking other
employment or otherwise. The amount of any payment provided for herein shall not
be reduced by an remuneration that the Executive may earn from employment with
another employer or otherwise following his Qualifying Termination.
SECTION 5.4. AUTHORITY. The execution of this Agreement has been authorized
by the Board of Directors of the Company.
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ARTICLE VI
GENERAL PROVISIONS
SECTION 6.1. TERM OF AGREEMENT. This Agreement shall become effective on
the date hereof and shall continue in effect until the earliest of (a) October
31, 1999, if no Change in Control has occurred before that date; provided,
however, that commencing on November 1, 1999 and each November 1 thereafter, the
term of this Agreement shall automatically be extended for an additional year
unless, not later than January 30 of the same year, the Company shall have given
notice that it does not wish to extend this Agreement; (b) the termination of
the Executive's employment with the Company for any reason prior to a Change in
Control; (c) the Company's termination of the Executive's employment for Cause,
or the Executive's resignation for other than Good Reason, following a Change in
Control and the Company's and the Executive's fulfillment of all of their
obligations hereunder; and (d) the expiration following a Change in Control of
three years and the fulfillment by the Company and the Executive of all of their
obligations hereunder. Furthermore, nothing in this Article VI shall cause this
Agreement to terminate before both the Company and the Executive have fulfilled
all of their obligations hereunder.
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SECTION 6.2. GOVERNING LAW. Except as otherwise expressly provided herein,
this Agreement and the rights and obligations hereunder shall be construed and
enforced in accordance with the laws of The Commonwealth of Massachusetts.
SECTION 6.3. SUCCESSOR TO THE COMPANY. This Agreement shall inure to the
benefit of and shall be binding upon and enforceable by the Company and any
successor thereto, including, without limitation, any corporation or
corporations acquiring directly or indirectly all or substantially all of the
business or assets of the Company, whether by merger, consolidation, sale or
otherwise, but shall not otherwise be assignable by the Company. Without
limitation of the foregoing sentence, the Company shall require any successor
(whether direct or indirect, by merger, consolidation, sale or otherwise) to all
of substantially all of the business or assets of the Company, by agreement in
form satisfactory to the Executive, expressly, absolutely and unconditionally to
assume and to agree to perform this Agreement in the same manner and to the same
extent as the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean the
Company as heretofore defined and any successor to all or substantially all of
its business or assets that executes and delivers the agreement provided for in
this Section 6.3 or that becomes bound by this Agreement either pursuant to this
Agreement or by operation of law.
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SECTION 6.4. SUCCESSOR TO THE EXECUTIVE. This Agreement shall inure to the
benefit of and shall be binding upon and enforceable by the Executive and his
personal and legal representatives, executors, administrators, heirs,
distributees, legatees and, subject to the Section 6.5 hereof, his designees
("Successors"). If the Executive should die while amounts are or may be payable
to him under this Agreement, references hereunder to the "Executive" shall,
where appropriate, be deemed to refer to his Successors; provided that nothing
in this Section 6.5 shall supersede the terms of any plan or arrangement (other
than this Agreement) that is affected by this Agreement.
SECTION 6.5. NONALIENABILITY. No right of or amount payable to the
Executive under this Agreement shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, hypothecation, encumbrance,
charge, execution, attachment, levy or similar process or to setoff against any
obligations or to assignment by operation of law. Any attempt, voluntary or
involuntary, to effect any action specified in the immediately preceding
sentence shall be void. However, this Section 6.5 shall not prohibit the
Executive from designating one or more persons, on a form satisfactory to the
Company, to receive amounts payable to him under this Agreement in the event
that he should die before receiving them.
SECTION 6.6. NOTICES. All notices provided for in this Agreement shall be
in writing. Notices to the Company shall be
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deemed given when personally delivered or sent by certified or registered mail
or overnight delivery service to Xxxxx-Xxxxxx Company, 000 Xxxxxxxxx Xxxxxx,
Xxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Vice President, General Counsel
and Clerk. Notices to the Executive shall be deemed given when personally
delivered or sent by certified or registered mail or overnight delivery service
to the last address for the Executive shown on the records of the Company.
Either the Company or the Executive may, by notice to the other, designate an
address other than the foregoing for the receipt of subsequent notices.
SECTION 6.7. AMENDMENT. No amendment to this Agreement shall be effective
unless in writing and signed by both the Company and the Executive.
SECTION 6.8. WAIVERS. No waiver of any provision of this Agreement shall be
valid unless approved in writing by the party giving such waiver. No waiver of a
breach under any provision of this Agreement shall be deemed to be a waiver of
such provision or any other provision of this Agreement or any subsequent
breach. No failure on the part of either the Company or the Executive to
exercise, and no delay in exercising, any right or remedy conferred by law or
this Agreement shall operate as waiver of such right or remedy, and no exercise
or waiver, in whole or in part, or any right or remedy conferred by law or
herein shall operate as a waiver of any other right or remedy.
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SECTION 6.9. SEVERABILITY. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part, such invalidity or
unenforceability shall not affect any other provision of this Agreement or part
thereof, each of which shall remain in full force and effect.
SECTION 6.10. CAPTIONS. The captions to this respective articles and
section of this Agreement are intended for convenience of reference only and
have no substantive significance.
SECTION 6.11. COUNTERPARTS. This Agreement may be executed in a number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute a single instrument.
SECTION 6.12. ENTIRE AGREEMENT. This Agreement contains a final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and shall constitute the entire agreement between
the parties hereto with respect to the subject matter hereof, superseding all
previous oral statements and other writings (including the Prior Agreement) with
respect thereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ATTEST: XXXXX-XXXXXX COMPANY
/s/ [illegible] By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Chairman
Chief Executive Officer
ATTEST:
/s/ [illegible] /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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