FORM OF AMENDED AND RESTATED EXECUTIVE RETENTION AGREEMENT
Exhibit
99.1
FORM
OF
AMENDED
AND RESTATED EXECUTIVE RETENTION AGREEMENT
THIS
AMENDED AND RESTATED EXECUTIVE RETENTION AGREEMENT
by and between KĀDANT INC., a Delaware corporation (the “Company”), and
Xxxxxxx
X. Xxxxxxxxx (the “Executive”) is made as of December 5, 2006 (the “Effective
Date”).
WHEREAS,
the Company and the Executive are parties to that certain Executive Retention
Agreement dated as of August 8, 2001 (the “Original Agreement”);
WHEREAS,
the Board of Directors of the Company (the “Board”) recognizes that, as is the
case with many publicly-held corporations, the possibility of a change in
control of the Company exists and that such possibility, and the uncertainty
and
questions which it may raise among key personnel, may result in the departure
or
distraction of key personnel to the detriment of the Company and its
stockholders;
WHEREAS,
the Board has determined that appropriate steps should be taken to reinforce
and
encourage the continued employment and dedication of the Company's key personnel
without distraction from the possibility of a change in control of the Company
and related events and circumstances; and
WHEREAS,
the original term of the Original Agreement has expired and is subject to
year-to-year renewal, which could create uncertainty among key personnel, and
the Board, based upon the recommendation of the Compensation Committee of the
Board, and the Executive desire to extend the term on the terms and conditions
set forth herein; and
NOW,
THEREFORE, as an inducement for and in consideration of the Executive remaining
in the Company’s employ and in consideration of the additional severance
benefits set forth in this Agreement to be received by the Executive in the
event the Executive's employment with the Company is terminated under the
circumstances described below subsequent to a Change in Control (as defined
in
Section 1.1), the Executive and the Company agree as follows:
1. Key
Definitions.
As
used
herein, the following terms shall have the following respective
meanings:
1.1 “Change
in Control”
means
an event or occurrence set forth in any one or more of subsections (a) through
(d) below (including an event or occurrence that constitutes a Change in Control
under one of such subsections but is specifically exempted from another such
subsection):
(a) the
acquisition by an individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of
the Company if, after such acquisition, such Person beneficially owns (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) 20% or more of
either (i) the then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (ii) the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”);
provided,
however,
that
for purposes of this subsection (a), the following acquisitions shall not
constitute a Change in Control: (i) any acquisition by the Company, (ii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or
(iii)
any acquisition by any corporation pursuant to a transaction which complies
with
clauses (i) and (ii) of subsection (c) of this Section 1.1; or
(b) such
time
as the Continuing Directors (as defined below) do not constitute a majority
of
the Board (or, if applicable, the Board of Directors of a successor corporation
to the Company), where the term “Continuing Director” means at any date a member
of the Board (i) who was a member of the Board on the date of the execution
of
this Agreement or (ii) who was nominated or elected subsequent to such date
by
at least a majority of the directors who were Continuing Directors at the time
of such nomination or election or whose election to the Board was recommended
or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided,
however,
that
there shall be excluded from this clause (ii) any individual whose initial
assumption of office occurred as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual
or
threatened solicitation of proxies or consents, by or on behalf of a person
other than the Board; or
(c) the
consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving the Company or a sale or other disposition
of
all or substantially all of the assets of the Company in one or a series of
transactions (a “Business Combination”), unless, immediately following such
Business Combination, each of the following two conditions is satisfied: (i)
all
or substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 80% of the then-outstanding shares of common
stock and the combined voting power of the then-outstanding securities entitled
to vote generally in the election of directors, respectively, of the resulting
or acquiring corporation in such Business Combination (which shall include,
without limitation, a corporation which as a result of such transaction owns
the
Company or substantially all of the Company's assets either directly or through
one or more subsidiaries) (such resulting or acquiring corporation is referred
to herein as the “Acquiring Corporation”) in substantially the same proportions
as their ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively; and (ii) no Person (excluding the Acquiring Corporation or any
employee benefit plan (or related trust) maintained or sponsored by the Company
or by the Acquiring Corporation) beneficially owns, directly or indirectly,
20%
or more of the then outstanding shares of common stock of the Acquiring
Corporation, or of the combined voting power of the then-outstanding securities
of such corporation entitled to vote generally in the election of directors;
or
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(d) approval
by the stockholders of the Company of a complete liquidation or dissolution
of
the Company.
1.2 “Change
in Control Date”
means
the first date during the Term (as defined in Section 2) on which a Change
in
Control occurs. Anything in this Agreement to the contrary notwithstanding,
if
(a) a Change in Control occurs, (b) the Executive's employment with the Company
is terminated prior to the date on which the Change in Control occurs, and
(c)
it is reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (ii) otherwise arose
in
connection with or in anticipation of a Change in Control, then for all purposes
of this Agreement the “Change in Control Date” shall mean the date immediately
prior to the date of such termination of employment.
1.3 “Cause”
means
the Executive's willful engagement in illegal conduct or gross misconduct after
the Change in Control Date which is materially and demonstrably injurious to
the
Company. For purposes of this Section 1.3, no act or failure to act by the
Executive shall be considered “willful” unless it is done, or omitted to be
done, in bad faith and without reasonable belief that the Executive's action
or
omission was in the best interests of the Company.
1.4 “Good
Reason”
means
the occurrence, without the Executive's written consent, of any of the events
or
circumstances set forth in clauses (a) through (g) below on or after the Change
in Control Date. Notwithstanding the occurrence of any such event or
circumstance, such occurrence shall not be deemed to constitute Good Reason
if,
prior to the Date of Termination specified in the Notice of Termination (each
as
defined in Section 3.2(a)) given by the Executive in respect thereof, such
event
or circumstance has been fully corrected and the Executive has been reasonably
compensated for any losses or damages resulting therefrom (provided that such
right of correction by the Company shall only apply to the first Notice of
Termination for Good Reason given by the Executive).
(a) the
assignment to the Executive of duties inconsistent in any material respect
with
the Executive's position (including status, offices, titles and reporting
requirements, including but not limited to a change in any of the foregoing
that
results in the Executive no longer being an officer of a public company),
authority or responsibilities in effect immediately prior to the earliest to
occur of (i) the Change in Control Date, (ii) the date of the execution by
the
Company of the initial written agreement or instrument providing for the Change
in Control or (iii) the date of the adoption by the Board of Directors of a
resolution providing for the Change in Control (with the earliest to occur
of
such dates referred to herein as the “Measurement Date”) or a material
diminution in such position, authority or responsibilities;
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(b) a
reduction in the Executive's annual base salary as in effect on the Measurement
Date or as the same was or may be increased thereafter from time to
time;
(c) the
failure by the Company to (i) continue in effect any material compensation
or
benefit plan or program (including without limitation any life insurance,
medical, health and accident or disability plan and any vacation or automobile
program or policy) (a “Benefit Plan”) in which the Executive participates or
which is applicable to the Executive immediately prior to the Measurement Date,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan or program, (ii)
continue the Executive's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable than the basis
existing immediately prior to the Measurement Date (iii) award cash bonuses
to
the Executive in amounts and in a manner substantially consistent with past
practice in light of the Company's financial performance or (iv) continue to
provide any material fringe benefit enjoyed by Executive immediately prior
to
the Measurement Date;
(d) a
change
by the Company in the location at which the Executive performs his or
her principal
duties for the Company to a new location that is both (i) outside a radius
of 50
miles from the Executive's principal residence immediately prior to the
Measurement Date and (ii) more than 30 miles from the location at which the
Executive performed his or her principal
duties for the Company immediately prior to the Measurement Date; or a
requirement by the Company that the Executive travel on Company business to
a
substantially greater extent than required immediately prior to the Measurement
Date;
(e) the
failure of the Company to obtain the agreement from any successor to the Company
to assume and agree to perform this Agreement, as required by Section 6.1;
(f) a
purported termination of the Executive's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section
3.2(a); or
(g) any
failure of the Company to pay or provide to the Executive any portion of the
Executive's compensation or benefits due under any Benefit Plan within seven
days of the date such compensation or benefits are due, or any material breach
by the Company of this Agreement or any employment agreement with the
Executive.
The
Executive's right to terminate his or her employment for Good Reason shall
not
be affected by the Executive’s incapacity due to physical or mental illness.
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1.5 “Disability”
means
the Executive's absence from the full-time performance of the Executive's duties
with the Company for 180 consecutive calendar days as a result of incapacity
due
to mental or physical illness which is determined to be total and permanent
by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative.
2.
Term
of Agreement.
This
Agreement, and all rights and obligations of the parties hereunder, shall take
effect upon the Effective Date and shall expire upon the first to occur of
(a)
the expiration of the Term (as defined below) if a Change in Control has not
occurred during the Term, (b) the date 24 months after the Change in Control
Date, if the Executive is still employed by the Company as of such later date,
or (c) the fulfillment by the Company of all of its obligations under Sections
4
and 5.2 if the Executive's employment with the Company terminates within 24
months following the Change in Control Date. “Term” shall mean the period
commencing as of the Effective Date and continuing in effect through December
31, 2011; provided,
however,
that
commencing on January 1, 2012 and each January 1, thereafter, the Term shall
be
automatically extended for one additional year unless, not later than 90 days
prior to the scheduled expiration of the Term (or any extension thereof), the
Company shall have given the Executive written notice that the Term will not
be
extended.
3.
Employment
Status; Termination Following Change in Control.
3.1 Not
an
Employment Contract.
The
Executive acknowledges that this Agreement does not constitute a contract of
employment or impose on the Company any obligation to retain the Executive
as an
employee and that this Agreement does not prevent the Executive from terminating
employment at any time. If the Executive's employment with the Company
terminates for any reason and subsequently a Change in Control shall occur,
the
Executive shall not be entitled to any benefits hereunder except as otherwise
provided pursuant to Section 1.2.
3.2 Termination
of Employment.
(a) If
the
Change in Control Date occurs during the Term, any termination of the
Executive's employment by the Company or by the Executive within 24 months
following the Change in Control Date (other than due to the death of the
Executive) shall be communicated by a written notice to the other party hereto
(the “Notice of Termination”), given in accordance with Section 7. Any Notice of
Termination shall: (i) indicate the specific termination provision (if any)
of
this Agreement relied upon by the party giving such notice, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) specify the Date of Termination (as defined
below). The effective date of an employment termination (the “Date of
Termination”) shall be the close of business on the date specified in the Notice
of Termination (which date may not be less than 15 days or more than 120 days
after the date of delivery of such Notice of Termination), in the case of a
termination other than one due to the Executive's death, or the date of the
Executive's death, as the case may be. In the event the Company fails to satisfy
the requirements of Section 3.2(a) regarding a Notice of Termination, the
purported termination of the Executive’s employment pursuant to such Notice of
Termination shall not be effective for purposes of this Agreement.
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(b) The
failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting any such fact or circumstance in enforcing the Executive's or
the
Company's rights hereunder.
(c) Any
Notice of Termination for Cause given by the Company must be given within 90
days of the occurrence of the event(s) or circumstance(s) that constitute(s)
Cause. Prior to any Notice of Termination for Cause being given (and prior
to
any termination for Cause being effective), the Executive shall be entitled
to a
hearing before the Board of Directors of the Company at which the Executive
may,
at the Executive’s election, be represented by counsel and at which the
Executive shall have a reasonable opportunity to be heard. Such hearing shall
be
held on not less than 15 days prior written notice to the Executive stating
the
Board of Directors' intention to terminate the Executive for Cause and stating
in detail the particular event(s) or circumstance(s) that the Board of Directors
believes constitutes Cause for termination.
(d) Any
Notice of Termination for Good Reason given by the Executive must be given
within 90 days of the occurrence of the event(s) or circumstance(s) that
constitute(s) Good Reason.
4. Benefits
to Executive.
4.1 Stock
Acceleration.
If the
Change in Control Date occurs during the Term, then, effective upon the Change
in Control Date, (a) each outstanding option to purchase shares of Common Stock
of the Company held by the Executive shall become immediately exercisable in
full and will no longer be subject to a right of repurchase by the Company
and
(b) each outstanding restricted stock award shall be deemed to be fully vested
and will no longer be subject to a right of repurchase by the
Company.
4.2 Compensation.
If the
Change in Control Date occurs during the Term and the Executive's employment
with the Company terminates within 24 months following the Change in Control
Date, the Executive shall be entitled to the following benefits:
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(a) Termination
Without Cause or for Good Reason.
If the
Executive's employment with the Company is terminated by the Company (other
than
for Cause, Disability or Death) or by the Executive for Good Reason within
24
months following the Change in Control Date, then the Executive shall be
entitled to the following benefits:
(i) the
Company shall pay to the Executive in a lump sum in cash within 30 days after
the Date of Termination the aggregate of the following amounts:
(1) the
sum
of (A) the Executive's base salary through the Date of Termination, (B) the
annual bonus paid or payable (including any bonus or portion thereof which
has
been earned but deferred) for the most recently completed fiscal year (if such
bonus has not yet been paid), (C) the product of (x) the greater of (I) the
annual bonus paid or payable to the Executive (including any bonus or portion
thereof which has been earned but deferred) for the most recently completed
fiscal year and (II) the Executive’s target or reference bonus for the fiscal
year in which the Date of Termination took place 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 and (D) the amount
of
any compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each case to
the
extent not previously paid (the sum of the amounts described in clauses (A),
(B), (C) and (D) shall be hereinafter referred to as the “Accrued Obligations”);
and
(2) the
amount equal to (A) three multiplied by (b) the sum of (x) the Executive's
highest annual base salary in any twelve-month period (on a rolling basis)
during the five-year period prior to the Change in Control Date and (y) the
greater of (I) the Executive's highest annual bonus in any twelve-month period
(on a rolling basis) during the five-year period prior to the Change in Control
Date and (II) the Executive’s target or reference bonus for the fiscal year in
which the Change in Control took place.
(ii) for
three
years after the Date of Termination, or such longer period as may be provided
by
the terms of the appropriate plan, program, practice or policy, the Company
shall continue to provide benefits (including, without limitation, automobile,
retirement, medical, dental, life insurance and disability benefits) to the
Executive and the Executive's family at least equal to those which would have
been provided to them if the Executive's employment had not been terminated,
in
accordance with the applicable benefit plans in effect on the Measurement Date
or, if more favorable to the Executive and the Executive’s family, in effect
generally at any time thereafter with respect to other peer executives
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of
the
Company and its affiliated companies; provided,
however,
that if
the Executive becomes reemployed with another employer and is eligible to
receive a particular type of benefits (e.g., medical benefits) from such
employer on terms at least as favorable to the Executive and the Executive’s
family as those being provided by the Company, then the Company shall no longer
be required to provide those particular benefits to the Executive and the
Executive’s family; and provided
further, however,
that (A)
if any particular benefits cannot be provided because of plan or regulatory
restrictions, then the Company will pay to the Executive an amount equal to
the
cost the Executive will incur in acquiring such benefits directly as a result
of
the Company not providing such benefits and (B) to the extent the Company
determines that the Executive’s qualifying event for purposes of continuation of
medical benefits under COBRA occurs on the Executive’s Date of Termination, such
period of continuation of benefits shall not be counted against or otherwise
reduce the period for which the Company must provide continuation of medical
benefits under this Section 4.2(a)(ii) unless the Executive otherwise
agrees;
(iii) to
the
extent not previously paid or provided, the Company shall timely pay or provide
to the Executive any other amounts or benefits required to be paid or provided
or which the Executive is eligible to receive following the Executive's
termination of employment under any plan, program, policy, practice, contract
or
agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the “Other Benefits”);
and
(iv) Retirement
Plan Benefits. If not already vested, the Executive shall be deemed fully vested
as of the Measurement Date in any Company retirement plans or other written
agreements between the Executive and the Company relating to pay or other
benefits upon retirement in which the Executive was a participant, party or
beneficiary immediately prior to the Change in Control, and any additional
plans
or agreements in which such Executive became a participant, party or beneficiary
after the Change in Control and before the Date of Termination. In addition
to
the foregoing, for purposes of determining the amounts to be paid to the
Executive under such plans or agreements, the years of service with the Company
and the age of the Executive under all such plans and agreements shall be deemed
increased by thirty-six (36) months. For purposes of this Section 4.2 (a)(iv),
the term “plans” includes, without limitation, the Company’s qualified pension
plan, non-qualified pension plans, profit-sharing plans and 401(k) plans, and
any companion, successor or amended plans, and the term “agreements”
encompasses, without limitation, the terms of any offer letter leading to the
Executive’s employment with the Company where the Executive was a signatory
thereto, any written amendments to the foregoing and any subsequent amendments
on such matters. In the event the terms of the plans referenced in this Section
4.2 (a)(iv) do not for any reason coincide with the provisions of this Section
4.2 (a)(iv) (e.g., if plan amendments would cause disqualification of qualified
plans), the Executive shall be entitled to receive from the Company, under
the
terms of this Agreement, an amount equal to all amounts the Executive would
have
received , at the time the Executive would have received such amounts, had
all
such plans continued in existence as in effect on the date of this Agreement
after being amended to coincide with the terms of this Section 4.2
(a)(iv).
(b) Resignation
without Good Reason; Termination for Death or Disability.
If the
Executive voluntarily terminates his or her employment with the Company within
24 months following the Change in Control Date, excluding a termination for
Good
Reason, or if the Executive's employment with the Company is terminated by
reason of the Executive's death or Disability within 24 months following the
Change in Control Date, then the Company shall (i) pay the Executive (or the
Executive’s estate, if applicable), in a lump sum in cash within 30 days after
the Date of Termination, the Accrued Obligations and (ii) timely pay or provide
to the Executive the Other Benefits.
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(c) Termination
for Cause.
If the
Company terminates the Executive's employment with the Company for Cause within
24 months following the Change in Control Date, then the Company shall (i)
pay
the Executive, in a lump sum in cash within 30 days after the Date of
Termination, the sum of (A) the Executive's annual base salary through the
Date
of Termination and (B) the amount of any compensation previously deferred by
the
Executive, in each case to the extent not previously paid, and (ii) timely
pay
or provide to the Executive the Other Benefits.
4.3 Taxes.
(a) In
the
event that the Company undergoes a “Change in Ownership or Control” (as defined
below), and thereafter, the Executive becomes eligible to receive “Contingent
Compensation Payments” (as defined below) the Company shall, as soon as
administratively feasible after the Executive becomes so eligible determine
and
notify the Executive (with reasonable detail regarding the basis for its
determinations) (i) which of the payments or benefits due to the Executive
following such Change in Ownership or Control constitute Contingent Compensation
Payments, (ii) the amount, if any, of the excise tax (the “Excise Tax”) payable
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the
“Code”), by the Executive with respect to such Contingent Compensation Payment
and (iii) the amount of the “Gross-Up Payment” (as defined below) due to the
Executive with respect to such Contingent Compensation Payment. Within 30 days
after delivery of such notice to the Executive, the Executive shall deliver
a
response to the Company (the “Executive Response”) stating either (A) that the
Executive agrees with the Company’s determination pursuant to the preceding
sentence or (B) that the Executive disagrees with such determination, in which
case the Executive shall indicate which payment and/or benefits should be
characterized as a Contingent Compensation Payment, the amount of the Excise
Tax
with respect to such Contingent Compensation Payment and the amount of the
Gross-Up Payment due to the Executive with respect to such Contingent
Compensation Payment. If the Executive states in the Executive Response that
the
Executive agrees with the Company’s determination, the Company shall make the
Gross-Up Payment to the Executive within three business days following delivery
to the Company of the Executive Response. If the Executive states in the
Executive Response that the Executive disagrees with the Company’s
determination, then, for a period of 15 days following delivery of the Executive
Response, the Executive and the Company shall use good faith efforts to resolve
such dispute. If such dispute is not resolved within such 15-day period, such
dispute shall be settled exclusively by arbitration in Boston, Massachusetts,
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. The Company shall, within three business days following delivery
to the Company of the Executive Response, make to the Executive those Gross-Up
Payments as to which there is no dispute between the Company and the Executive
regarding whether they should be made. The balance of the Gross-Up Payments
shall be made within three business days following the resolution of such
dispute. The amount of any payments to be made to the Executive following the
resolution of such dispute shall be increased by the amount of the accrued
interest thereon computed at the prime rate announced from time to time by
The
Wall Street Journal compounded monthly from the date that such payments
originally were due. In the event that the Executive fails to deliver an
Executive Response on or before the required date, the Company’s initial
determination shall be final.
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(b) For
purposes of this Section 4.3, the following terms shall have the following
respective meanings:
(i) “Change
in Ownership or Control” shall mean a change in the ownership or effective
control of the Company or in the ownership of a substantial portion of the
assets of the Company determined in accordance with Section 280G(b)(2) of the
Code.
(ii) “Contingent
Compensation Payment” shall mean any payment (or benefit) in the nature of
compensation that is made or supplied to a “disqualified individual” (as defined
in Section 280G(c) of the Code) and that is contingent (within the meaning
of
Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of
the
Company.
(iii) “Gross-Up
Payment” shall mean an amount equal to the sum of (i) the amount of the Excise
Tax payable with respect to a Contingent Compensation Payment and (ii) the
amount necessary to pay all additional taxes imposed on (or economically borne
by) the Executive (including the Excise Taxes, state and federal income taxes
and all applicable withholding taxes) attributable to the receipt of such
Gross-Up Payment. For purposes of the preceding sentence, all taxes attributable
to the receipt of the Gross-Up Payment shall be computed assuming the
application of the maximum tax rates provided by law.
4.4 Outplacement
Services.
In the
event the Executive is terminated by the Company (other than for Cause,
Disability or Death), or the Executive terminates employment for Good Reason,
within 24 months following the Change in Control Date, the Company shall provide
outplacement services through one or more outside firms of the Executive’s
choosing up to an aggregate of $25,000 with such services to extend until the
earlier of (i) 12 months following the termination of Executive’s employment or
(ii) the date the Executive secures full time employment.
4.5 Mitigation.
The
Executive shall not be required to mitigate the amount of any payment or
benefits provided for in this Section 4 by seeking other employment or
otherwise. Further, except as provided in Section 4.2(a)(ii), the amount of
any
payment or benefits provided for in this Section 4 shall not be reduced by
any
compensation earned by the Executive as a 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.
4.6 Deferred
Compensation.
Notwithstanding anything herein to the contrary, if, on the Date of Termination,
the Executive is a “specified employee” within the meaning of Section
409A(a)(2)(B)(ii) of the Internal Revenue Code and the regulations thereunder,
and to the extent that any of the payments to the Executive under this Agreement
constitute “nonqualified deferred compensation” within the meaning of Section
409A of the Internal Revenue Code, then (i) the payments that constitute
“nonqualified deferred compensation” to the Executive will be delayed by a
period of six months, (ii) payments of such nonqualified deferred compensation
that would have been made to the Executive during such six-month period will
be
made in a lump sum in the seventh month following the Date of Termination,
and
(iii) all remaining payments of nonqualified deferred compensation will commence
in the seventh month following the Date of Termination.
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5. Disputes.
5.1 Settlement
of Disputes; Arbitration.
All
claims by the Executive for benefits under this Agreement shall be directed
to
and determined by the Board of Directors of the Company and shall be in writing.
Any denial by the Board of Directors of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set forth
the
specific reasons for the denial and the specific provisions of this Agreement
relied upon. The Board of Directors shall afford a reasonable opportunity to
the
Executive for a review of the decision denying a claim. Any further dispute
or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in Boston, Massachusetts, 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.
5.2 Expenses.
The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal, accounting and other fees and expenses which the Executive may reasonably
incur as a result of any claim or contest (regardless of the outcome thereof)
by
the Company, the Executive or others regarding 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 Executive
regarding the amount of any payment or benefits pursuant to this Agreement),
plus in each case interest on any delayed payment at the applicable Federal
rate
provided for in Section 7872(f)(2)(A) of the Code.
6. Successors.
6.1 Successor
to Company.
The
Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Company expressly to assume and agree to perform this Agreement
to the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain an assumption
of
this Agreement at or prior to the effectiveness of any succession shall be
a
breach of this Agreement and shall constitute Good Reason if the Executive
elects to terminate employment, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, “Company” shall mean
the Company as defined above and any successor to its business or assets as
aforesaid which assumes and agrees to perform this Agreement, by operation
of
law or otherwise.
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6.2 Successor
to Executive.
This
Agreement shall 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 should die while any
amount would still be payable to the Executive or the Executive’s family
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
7. Notice.
All
notices, instructions and other communications given hereunder or in connection
herewith shall be in writing. Any such notice, instruction or communication
shall be sent either (i) by registered or certified mail, return receipt
requested, postage prepaid, or (ii) prepaid via a reputable nationwide overnight
courier service, in each case addressed to the Company, at Xxx Xxxxxxxxxx Xxxx
Xxxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000 and to the Executive at the Executive’s
principal residence as currently reflected on the Company’s records (or to such
other address as either the Company or the Executive may have furnished to
the
other in writing in accordance herewith). Any such notice, instruction or
communication shall be deemed to have been delivered five business days after
it
is sent by registered or certified mail, return receipt requested, postage
prepaid, or one business day after it is sent via a reputable nationwide
overnight courier service. Either party may give any notice, instruction or
other communication hereunder using any other means, but no such notice,
instruction or other communication shall be deemed to have been duly delivered
unless and until it actually is received by the party for whom it is intended.
8. Miscellaneous.
8.1 Severability.
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
8.2 Injunctive
Relief.
The
Company and the Executive agree that any breach of this Agreement by the Company
is likely to cause the Executive substantial and irrevocable damage and
therefore, in the event of any such breach, in addition to such other remedies
which may be available, the Executive shall have the right to specific
performance and injunctive relief.
8.3 Governing
Law.
The
validity, interpretation, construction and performance of this Agreement shall
be governed by the internal laws of the Commonwealth of Massachusetts, without
regard to conflicts of law principles.
8.4 Waivers.
No
waiver by the Executive at any time of any breach of, or compliance with, any
provision of this Agreement to be performed by the Company shall be deemed
a
waiver of that or any other provision at any subsequent time.
8.5 Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed to
be
an original but both of which together shall constitute one and the same
instrument.
8.6 Tax
Withholding.
Any
payments provided for hereunder shall be paid net of any applicable tax
withholding required under federal, state or local law.
8.7 Entire
Agreement.
This
Agreement sets forth the entire agreement of the parties hereto in respect
of
the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto in respect of the subject matter contained herein; and
any
prior agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled.
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8.8 Amendments.
This
Agreement may be amended or modified only by a written instrument executed
by
both the Company and the Executive.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first set forth above.
KĀDANT
INC.
________________________________
By:
Xxxxxx X.
X’Xxxxx
Executive
Vice
President and Chief Financial Officer
EXECUTIVE
___________________________________
Xxxxxxx
X.
Xxxxxxxxx
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