Exhibit 10.19
TERMINATION PROTECTION AGREEMENT
This Agreement ("Agreement") is made this _____ day of _______________,
200_ between Esterline Technologies Corporation, a Delaware corporation, with
its principal offices at 000 000xx Xxxxxx X.X., Xxxxx 0000, Xxxxxxxx, Xxxxxxxxxx
00000 (the "Company") and _______________ (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board") has determined
it is appropriate to encourage the continued attention and dedication of Company
executives to their assigned duties without distraction in circumstances arising
from a possible change in control of the Company; and
WHEREAS, the Executive is willing to enter into this Agreement for the
purposes and on the terms and conditions described below;
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
1.1 "Cause" shall mean: (a) the willful and continued failure by the
Executive to substantially perform his or her duties and obligations to the
Company (other than any such failure resulting from illness, sickness, or
physical or mental incapacity) which failure continues after the Company
has given notice to the Executive; or (b) the willful engaging by the
Executive in misconduct that is significantly injurious to the Company,
monetarily or otherwise. For purposes of this definition, no act, or
failure to act, on the Executive's part shall be considered "willful"
unless done, or omitted to be done, by the Executive in bad faith and
without reasonable belief that his or her action or omission was in the
best interests of the Company.
1.2 "Change in Control Event" shall mean the first to occur of the
following events:
(a) an acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) of the Exchange Act) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 30% or more of either (1) the then outstanding shares
of common stock of the Company or (2) the combined voting power of the
then outstanding voting securities of the Company entitled to vote
generally in the election of directors, excluding, however, the
following (i) any acquisition directly from the Company, other than an
acquisition by virtue of the exercise of a conversion privilege where
the security being so converted was not acquired directly from the
Company by the party exercising the conversion privilege, (ii) any
acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any Related Company, or (iv) a Related Party Transaction; or
(b) a change in the composition of the Board during any two-year
period such that the individuals who, as of the beginning of such
two-year period, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board;
provided, however, that for purposes of this definition, any
individual who becomes a member of the Board subsequent to the
beginning of the two-year period, whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least two-thirds of those individuals
who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso) shall
be considered as though such individual were a member of the Incumbent
Board; and provided further, however, that any such individual whose
initial assumption of office occurs as a result of or in connection
with an actual or threatened solicitation of proxies or consents by or
on behalf of an Entity other than the Board shall not be considered a
member of the Incumbent Board.
1.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.4 "Contract Period" shall mean the twenty-four (24) month period
beginning on the Effective Date.
1.5 "Disability" shall mean any physical or mental condition for which the
Executive would be eligible to receive benefits under the disability
insurance provisions of (a) the Social Security Act or (b) the Company's
long-term disability program.
1.6 "Effective Date" shall mean the day preceding a Change in Control
Event.
1.7 "Equity Incentive Plan" shall mean the Xxxxxxxxx Technologies
Corporation 2004 Equity Incentive Plan, as amended from time to time.
1.8 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.9 "Fringe Benefit Program" shall mean any employee benefit plan, program,
or arrangement, including, without limitation, employee benefit plans
within the meaning of the Employee Retirement Income Security Act of 1974,
as amended, but excluding the Equity Incentive Plan and any nonqualified
deferred compensation plan or other incentive compensation plan.
1.10 "Final Fiscal Period" shall mean the number of days the Executive was
employed by the Company during the Fiscal Year in which the Executive's
Termination Date occurs.
1.11 "Fiscal Year" shall mean the twelve (12)-month period ending on
October 31.
1.12 "Good Reason" shall mean:
(a) Assignment to the Executive of any duties inconsistent with, or
the reduction of powers or functions associated with, his or her
positions, duties, responsibilities and status with the Company
immediately prior to the Effective Date, or any removal of the
Executive from or any failure to re-elect the Executive to any
positions or offices the Executive held immediately prior to the
Effective Date, except in connection with the termination of the
Executive's employment by the Company for Cause or for Disability, or
the failure to maintain a working environment conducive to the
performance of the Executives' duties or the effective exercise of the
powers or functions associated with the Executive's position,
responsibilities and status with Company immediately prior to the
Effective Date; or
(b) The Company's failure to pay the Executive a monthly base salary
at least equal to the then applicable Minimum Base Salary; or
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(c) The Company's failure to pay the Executive, within seventy-five
(75) days following the end of a Fiscal Year, compensation with
respect to each such Fiscal Year ending after the Effective Date in an
amount at least equal to the Minimum Total Compensation; or
(d) The Company's mandatory transfer of the Executive to another
geographic location, without the Executive's consent, outside of a
twenty (20) mile radius from the Executive's current location, except
for required travel on the Company's business to an extent
substantially consistent with the Executive's business travel
obligations prior to the Effective Date; or
(e) Company action or omission, in its capacity as a plan
administrator or otherwise, that would adversely affect the
Executive's participation in any Fringe Benefit Program in effect on
the Effective Date, or materially reduce the value of his or her
benefits under any such program, including benefits under any Company
car allowance and vacation policy; or
(f) Failure by the Company to obtain an assumption of the obligations
of the Company to perform this Agreement by any successor, as provided
in Section 7.1.
1.13 "Minimum Base Salary" shall mean the Executive's annual rate of salary
on the Effective Date, payable monthly, increased by ten (10)% per annum
compounded annually on each anniversary of the Executive's most recent
raise.
1.14 "Minimum Total Compensation" shall mean a sum equal to the Executive's
aggregate gross cash compensation (excluding Non-Recurring Compensation)
paid to the Executive by the Company during the twenty-four (24) month
period ending on the Effective Date, divided by two (2).
1.15 "Non-Recurring Compensation" shall mean amounts received by the
Executive (a) under any nonqualified deferred compensation plan or
arrangement or, (b) as the result of the exercise or receipt of stock
appreciation rights, stock options or other equity-based compensation.
1.16 "Related Company" shall have the meaning given such term under the
Equity Incentive Plan.
1.17 "Related Party Transaction" shall have the meaning given such term
under the Equity Incentive Plan
1.18 "Termination Date" shall mean the effective date of the Executive's
"separation from service" (as that term is defined under Code Section 409A
and the regulations issued thereunder) from the Company.
2. Scope of Agreement. This Agreement shall apply with respect to any
termination of employment of the Executive that occurs during the Contract
Period. It shall not apply to any termination of the Executive's employment that
occurs other than during the Contract Period.
3. Termination During Contract Period.
3.1 General. During the Contract Period and subject to any employment
agreement between the Company and the Executive, the Company shall have the
right to terminate
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the Executive's employment with the Company for any reason or for no
reason, and the Executive may terminate his or her employment with the
Company for any reason or for no reason. In the event of any such
termination of employment, the Executive shall be entitled to such
compensation, if any, as provided for in this Agreement.
3.2 Without Cause or For Good Reason. In the event the Executive's
employment with the Company is terminated during the Contract Period by the
Company without Cause, or by the Executive with Good Reason, then the
Executive shall be entitled to the compensation and benefits provided in
Section 4.
3.3 Other Than For Good Reason. In the event the Executive terminates his
or her employment with the Company during the Contract Period for any
reason other than for Good Reason, the Executive shall not be entitled to
any compensation under this Agreement, other than the Executive's accrued
but unpaid salary and accrued but unused vacation through his or her
Termination Date.
3.4 For Cause, Disability, or Death. In the event the Executive's
employment with the Company is terminated by the Company during the
Contract Period for Cause or for Disability, or if the Executive's
employment with the Company is terminated as the result of the Executive's
death, neither the Executive nor his or her beneficiary, as the case may
be, shall be entitled to receive any compensation or benefits under this
Agreement other than the Executive's accrued but unpaid salary and accrued
but unused vacation through his or her Termination Date.
4. Compensation and Benefits Upon Termination by the Company Without Cause or by
Executive for Good Reason.
4.1 If the conditions set forth in Section 3.2 are satisfied, the Executive
shall be entitled to receive the following compensation and benefits:
(a) a pro rata amount of the Minimum Total Compensation, calculated as
follows: the Minimum Total Compensation multiplied by a fraction, the
numerator of which is the Final Fiscal Period and the denominator of
which is 365, with the product thereof reduced (but not below zero) by
the cash compensation (excluding Non-Recurring Compensation) actually
paid, or earned and unpaid, to the Executive with respect to service
performed during the Final Fiscal Period;
(b) all other amounts earned by the Executive and unpaid as of the
Termination Date, including any accrued but unpaid vacation;
(c) an amount equal to three (3) times the Minimum Total Compensation;
(d) reimbursement of all legal fees and related expenses as may be
incurred by the Executive in seeking to obtain or enforce any right or
benefit provided to the Executive by this Agreement, provided (1) the
Executive's claims are determined under Section 9, or by agreement of
the parties, to be well-founded in substantial part, and (2) that fees
and expenses are reasonable in light of the claims at issue; and,
(e) all life insurance, medical, health, dental, accident and
disability coverage provided to the Executive immediately prior to the
Termination Date, until the earliest to occur of (1) the end of the
Contract Period, or (2) the Executive's
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commencement of full time employment with a new employer; provided
that the Executive's continued participation in the plans, programs or
arrangements providing such coverage is practicable under the general
terms and provisions of such plans, programs or arrangements. If the
Executive's participation in any such plan, program or arrangement is
not practicable, the Company shall in its sole discretion arrange to
provide the Executive with: (3) benefits substantially similar to
those the Executive was entitled during employment to receive under
such plans, programs or arrangements; or (4) cash compensation on an
after-tax basis sufficient for the Executive to purchase such
benefits.
4.2 The amounts specified in Sections 4.1(a), (b), (c), and (e)(4) (if
applicable), shall be payable to the Executive in a lump sum as soon as
practicable, but no later than within sixty (60) days of his or her
Termination Date.
4.3 The benefits or amounts specified in Sections 4.1(d) and (if
applicable) the clauses in (e)(1), (2) or (3) shall be provided or payable
to the Executive only to the extent provision or payment of such benefits
or amounts would not be subject to tax under Code Section 409A.
4.4 Except as specifically provided herein, the amount of any compensation
or benefits provided for in this Agreement shall not be subject to
mitigation by the Executive.
5. Specified Employees. Notwithstanding any provision of this Agreement to the
contrary, in the event that the Executive is a "Specified Employee" (as that
term is defined under Section 409A of the Code and the regulations issued
thereunder) at the time the Executive becomes entitled to any benefits under
this Agreement, no benefit shall be paid to the Executive under this Agreement
until the date that is six months and one day following the Executive's
Termination Date. If the preceding sentence results in a delay in the payment of
the Executive's benefits under this Agreement, such benefits shall be credited
with interest for the period commencing on the Executive's Termination Date and
ending on the date the Executive's benefits under this Agreement are actually
distributed to him based on an annual interest rate equal to the greater of (a)
the interest rate used to determine participant interest credits under the
Company's defined benefit cash balance plan for the Fiscal Year in which the
Executive's Termination Date occurs and (b) the applicable federal rate
appropriate for a six-month loan determined as of the Executive's Termination
Date.
6. 280G Provisions. Notwithstanding any provision of this Agreement to the
contrary, if all or any portion of the amount payable to the Executive pursuant
to this Agreement, alone or together with other payments the Executive has the
right to receive from the Company, constitute "excess parachute payments" within
the meaning of Section 280G of the Code, as amended, that are subject to the
excise tax imposed by Section 4999 of the Code, such amounts payable hereunder
shall be reduced to the extent necessary, after first applying any similar
reduction to payments to be received from any other plan or program sponsored by
the Company from which the Executive has a right to receive payments subject to
Sections 280G and 4999 of the Code, so that the excise tax imposed by Section
4999 of the Code does not apply; provided, however, that this payment reduction
shall take place only if such reduction would provide to the Executive a greater
net, after-tax benefit than he or she would receive if such amounts were not
subject to such reduction.
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7. Successors; Binding Agreement.
7.1 The Company will require any successor or successors (whether direct or
indirect, by purchase, merger, consolidation, liquidation or otherwise) to
all or substantially all of the business and/or assets of the Company, upon
or prior to such succession, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. A copy of
such assumption and agreement shall be delivered to the Executive promptly
after its execution by the successor. Failure of the Company to obtain such
agreement upon or prior to the effectiveness of any such succession shall
entitle the Executive to terminate his or her employment for Good Reason,
as set forth in Section 1.12(f). As used in this Agreement "Company" shall
include any successor to its business and/or assets that executes and
delivers the agreement provided for in this Section 7.1 or that otherwise
becomes bound by all the terms and provisions of this Agreement by
operation of law.
7.2 This Agreement is personal to the Executive and the Executive may not
assign or transfer any part of his or her rights or duties hereunder, or
any compensation due to him hereunder, to any other person, except that
this Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
heirs, distributees, devisees, legatees or beneficiaries.
8. Modification; Waiver. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and by the Chief Executive Officer of the
Company or such other director or officer as may be specifically designated by
the Board. Waiver by any party of any breach of or failure to comply with any
provision of this Agreement by the other party shall not be construed as, or
constitute, a continuing waiver of such provision, or a waiver of any other
breach of, or failure to comply with, any other provision of this Agreement.
9. Arbitration of Disputes.
9.1 Any disagreement, dispute, controversy or claim arising out of or
relating to this Agreement or the interpretation or validity hereof shall
be settled exclusively and finally by arbitration. It is specifically
understood and agreed that any disagreement, dispute or controversy that
cannot be resolved between the parties, including without limitation any
matter relating to the interpretation of this Agreement, may be submitted
to arbitration irrespective of the magnitude thereof, the amount in
controversy or whether such disagreement, dispute or controversy would
otherwise be considered justiciable or ripe for resolution by a court or
arbitral tribunal.
9.2 The arbitration shall be conducted in accordance with the Commercial
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA").
9.3 The arbitral tribunal shall consist of one arbitrator. The parties to
the arbitration jointly shall directly appoint such arbitrator within 30
days of initiation of the arbitration. If the parties shall fail to appoint
such arbitrator as provided above, such arbitrator shall be appointed by
the AAA as provided in the Arbitration Rules and shall be a person who (a)
maintains his or her principal place of business in the State of
Washington; and (b) has had substantial experience in business
transactions. The Company shall pay all of the fees, if any, and expenses
of such arbitrator.
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9.4 The arbitration shall be conducted in Seattle, Washington or in such
other city in the United States of America as the parties to the dispute
may designate by mutual written consent.
9.5 At any oral hearing of evidence in connection with the arbitration,
each party thereto or its legal counsel shall have the right to examine its
witnesses and to cross-examine the witnesses of any opposing party. No
evidence of any witness shall be presented in written form unless the
opposing party or parties shall have the opportunity to cross-examine such
witness, except as the parties to the dispute otherwise agree in writing or
except under extraordinary circumstances where the interests of justice
require a different procedure.
9.6 Any decision or award of the arbitral tribunal shall be final and
binding upon the parties to the arbitration proceeding. The parties hereto
hereby waive to the extent permitted by law any rights to appeal or to seek
review of such award by any court or tribunal. The parties hereto agree
that the arbitral award may be enforced against the parties to the
arbitration proceeding or their assets wherever they may be found and that
a judgment upon the arbitral award may be entered in any court having
jurisdiction.
9.7 Nothing herein contained shall be deemed to give the arbitral tribunal
any authority, power, or right to alter, change, amend, modify, add to, or
subtract from any of the provisions of this Agreement.
10. Payment Obligations Absolute. Except as otherwise provided in this
Agreement, the Company's obligation to pay the Executive the amounts provided
for hereunder and to make the arrangements provided for hereunder shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right the Company may have against the Executive or anyone else. Except as
otherwise set forth in this Agreement, all amounts payable by the Company
hereunder shall be paid without notice or demand. Subject to the right of the
Company to seek arbitration under Section 9 and recover any payment made
hereunder, each and every payment made hereunder by the Company shall be final
and the Company will not seek to recover all or any part of such payment from
the Executive or from whosoever may be entitled thereto, for any reason
whatsoever.
11. Notice. All notices, requests, demands and other communications required or
permitted to be given by either party to the other party by this Agreement
(including, without limitation, any notice under the Arbitration Rules of an
intention to arbitrate) shall be in writing and shall be deemed to have been
duly given when delivered personally or received by certified or registered
mail, return receipt requested, postage prepaid, at the address of the other
party, as follows:
If to Company, to
Esterline Technologies Corporation
000 000xx Xxxxxx X.X.
Xxxxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Board of Directors and Secretary
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If to the Executive, to
____________________________
____________________________
____________________________
Either party may change its address for purposes of this Section 11 by giving
fifteen (15) days' prior notice to the other party.
12. Severability. If any term or provision of this Agreement or the application
hereof to any person or circumstances shall to any extent be invalid or
unenforceable, the remainder of this Agreement or the application of such term
or provision to persons or circumstances other than those as to which it is held
invalid or unenforceable shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
13. Headings. The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
this Agreement.
14. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed an original.
15. Governing Law. This Agreement shall in all respects be governed by, and
construed and enforced in accordance with, the laws of the State of Washington,
without regard to its conflicts of laws principles.
16. Payroll and Withholding Taxes. All payments to be made or benefits to be
provided hereunder by the Company shall be subject to reduction for any
applicable payroll-related or withholding taxes.
17. Entire Agreement. This Agreement supersedes any and all other oral or
written agreements made relating to the subject matter hereof and constitutes
the entire agreement of the parties relating to the subject matter hereof;
provided that this Agreement shall not supersede or limit or in any way affect
(a) the Executive's rights under the Company's Equity Incentive Plan, any other
incentive compensation plan, or any deferred compensation plan as in effect on
the Effective Date or with respect to any awards made pursuant to such plans;
(b) any rights the Executive may have under any other company employee benefit
plan, program or arrangement (including, without limitation, any pension, life
insurance, medical, dental, health, vacation and accident and disability plans,
programs and arrangements); or (c) the Company's right to amend or terminate its
employee benefit plans in accordance with their terms.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
EXECUTIVE
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XXXXXXXXX TECHNOLOGIES CORPORATION
By:
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Its Chief Executive Officer
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