EXHIBIT 10 (i)
SEVERANCE PROTECTION AGREEMENT
THIS AGREEMENT made as of the 19th day of June 1998, by and between
Xxxxxxx-Xxxxxx Corporation (the "Company") and Xxxxx Xxxxx (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the possibility of a Change in Control (as hereinafter defined) exists and
that the threat or the occurrence of a Change in Control can result in
significant distraction of the Company's key management personnel because of the
uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders, for the Company to retain the
services of the Executive in the event of a threat or occurrence of a Change in
Control and to ensure the Executive's continued dedication and efforts in such
event without undue concern for the Executive's personal financial and
employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Company and/or one of its Affiliates (the entity or entities employing the
Executive, the "Employing Affiliate"), particularly in the event of a threat or
the occurrence of a Change in Control, the Company desires to enter into this
Agreement with the Executive to provide the Executive with certain benefits in
the event the Executive's employment is terminated as a result of, or in
connection with, a Change in Control.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. Term of Agreement. This Agreement shall commence as of June 1, 1998, and
shall continue in effect until December 31, 2001 (the "Term"); provided,
however, that on January 1, 1999, and on each January 1 thereafter, the Term
shall automatically be extended for one (1) year unless either the Executive or
the Company shall have given written notice to the other at least ninety (90)
days prior thereto that the Term shall not be so extended; provided, further,
however, that following the occurrence of a Change in Control, the Term shall
not expire prior to the expiration of twenty-four (24) months after such
occurrence.
2. Termination of Employment. If, during the Term, the Executive's
employment with the Company or an Employing Affiliate shall be terminated within
twenty-four (24) months following a Change in Control, the Executive shall be
entitled to the following compensation and benefits:
(a) If the Executive's employment with the Company or an Employing
Affiliate shall be terminated (1) by the Company for Cause or Disability, (2) by
reason of the Executive's death, or (3) by the Executive other than for Good
Reason, the Company shall pay to the Executive his Accrued Compensation.
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(b) If the Executive's employment with the Company or an Employing
Affiliate shall be terminated for any reason other than as specified in Section
2(a), the Executive shall be entitled to the following:
(1) the Company shall pay the Executive all Accrued Compensation
and a Pro Rata Bonus;
(2) the Company shall pay the Executive as severance pay and in
lieu of any further compensation for periods subsequent to the Termination Date,
an amount equal to two times the sum of (A) the Executive's Base Amount and (B)
the Executive's Bonus Amount;
(3) for twenty-four (24) months following the Executive's
Termination Date (the "Continuation Period"), the Company shall continue on
behalf of the Executive and his dependents and beneficiaries the life insurance,
disability, medical, dental, prescription drug and hospitalization coverages and
benefits provided to the Executive immediately prior to the Change in Control
or, if greater, the coverages and benefits provided at any time thereafter. The
coverages and benefits (including deductibles and costs to the Executive)
provided in this Section 2(b)(3) during the Continuation Period shall be no less
favorable to the Executive and his dependents and beneficiaries than the most
favorable of such coverages and benefits referred to above. The Company's
obligation hereunder with respect to the foregoing coverages and benefits shall
be reduced to the extent that the Executive obtains any such coverages and
benefits pursuant to a subsequent employer's benefit plans, in which case the
Company may reduce any of the coverages or benefits it is required to provide
the Executive hereunder so long as the aggregate coverages and benefits
(including deductibles and costs to the Executive) of the combined benefit plans
is no less favorable to the Executive than the coverages and benefits required
to be provided hereunder. This Section 2(b)(3) shall not be interpreted so as to
limit any benefits to which the Executive, his dependents or beneficiaries may
be entitled under any of the Company's employee benefit plans, programs or
practices following the Executive's termination of employment, including without
limitation, retiree medical and life insurance benefits;
(4) the Executive shall be fully vested in all benefits accrued
through the Termination Date under the Company's Retirement and Retirement
Benefits Restoration Plans; provided, however, if the vesting under any such
plan is not permitted by applicable law, the Company shall pay to the Executive
in cash in a lump sum the amount of the Executive's nonvested benefits under the
applicable plan, determined using the actuarial assumptions used by such plan
for calculating lump sum distributions;
(5) the Company shall permit the Executive to purchase at its
wholesale value the Company-provided automobile being provided to the Executive
on the Termination Date (if any);
(6) with respect to performance units and performance shares
granted to the Executive under the Company's 1995 Long-Term Incentive Plan (or
any successor plan) relating to performance cycles which are incomplete as of
the Termination Date,
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upon the completion of each such performance cycle, the Executive shall be
entitled to payment of the performance units and performance shares relating to
such performance cycle based on the actual performance of the Company or an
Employing Affiliate, as appropriate, during such performance cycle (with
appropriate adjustments to the performance goals made in good faith by the
Company to reflect the transaction which constitutes the Change in Control and
any material transaction, financing, restructuring, reorganization or other
event following the Change in Control to ensure that comparable performance will
result in comparable awards in respect of the performance units and performance
shares) as if the Executive had been a participant under such plan for the
entirety of such performance cycle, multiplied by a fraction the numerator of
which shall be equal to the number of whole and partial months from the
commencement of such performance cycle through the Termination Date and the
denominator of which shall be the number of months in such performance cycle,
such payment to be made in a lump sum in cash within ten (10) days following the
completion of such performance cycle.
(c) The amounts provided for in Sections 2(a) and 2(b)(1), (2) and (4)
shall be paid in a single lump sum cash payment within ten (10) days after the
Executive's Termination Date (or earlier, if required by applicable law).
(d) The severance pay and benefits provided for in this Section 2
shall be in lieu of any other severance pay to which the Executive may be
entitled under any severance agreement with the Company or any other plan,
agreement or arrangement of the Company or any other Affiliate of the Company.
The Executive's entitlement to any compensation or benefits other than as
provided herein shall be determined in accordance with the employee benefit
plans of the Company and any of its Affiliates and other applicable agreements,
programs and practices as in effect from time to time.
(e) If the Executive's employment is terminated by the Company or an
Employing Affiliate without Cause prior to the date of a Change in Control but
the Executive reasonably demonstrates that such termination (1) was at the
request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control (a "Third Party") and who
effectuates a Change in Control or (2) otherwise arose in connection with, or in
anticipation of, a Change in Control which has been threatened or proposed and
which actually occurs, such termination shall be deemed to have occurred after a
Change in Control.
3. (a) Vesting of Certain Awards. Whether or not the Executive's employment
with the Company or an Employing Affiliate terminates during the Term, and
notwithstanding anything to the contrary in any other plan or agreement, on the
date of the occurrence of a Change in Control (the "Acceleration Date") (1) all
stock options and stock appreciation rights granted to the Executive by the
Company and outstanding on the Acceleration Date shall become fully vested and
exercisable and (2) all restrictions shall lapse on all shares of restricted
stock granted to the Executive by the Company and outstanding on the
Acceleration Date.
(b) (1) Gross-Up Payment. In the event it shall be determined that any
payment or distribution of any type to or for the benefit of the Executive
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(other than the payment provided for in this Section 3(b)) directly or
indirectly by the Company, any Affiliate of the Company, any Person who acquires
ownership or effective control of the Company or ownership of a substantial
portion of the Company's assets (within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder) or any Affiliate of such Person, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Total Payments"), is or will 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 collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive 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 Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Total Payments.
(2) Determination By Accountant. All mathematical determinations,
and all determinations as to whether any of the Total Payments are "parachute
payments" (within the meaning of Section 280G of the Code), that are required to
be made under this Section 3(b), including determinations as to whether a
Gross-Up Payment is required, the amount of such Gross-Up Payment and amounts
relevant to the last sentence of this Section 3(b)(2), shall be made by an
independent accounting firm selected by the Executive from among the five (5)
largest accounting firms in the United States (the "Accounting Firm"), which
shall provide its determination (the "Determination"), together with detailed
supporting calculations regarding the amount of any Gross-Up Payment and any
other relevant matter, both to the Company and the Executive by no later than
ten (10) days following the Termination Date, if applicable, or such other time
as is requested by the Company or the Executive (if the Executive reasonably
believes that any of the Total Payments may be subject to the Excise Tax or that
an Underpayment (as defined below) has occurred). If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive and the Company with a written statement that such Accounting Firm has
concluded that no Excise Tax is payable (including the reasons therefor) and
that the Executive has substantial authority for filing his federal income tax
return accordingly. If a Gross-Up Payment is determined to be payable, it shall
be paid to the Executive within twenty (20) days after the Determination (and
all accompanying calculations and other material supporting the Determination)
is delivered to the Company by the Accounting Firm. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive, absent
manifest error. As a result of 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 not made by the Company should
have been made ("Underpayment"), or that Gross-Up Payments will have been made
by the Company which should not have been made ("Overpayments"). In either such
event, the Accounting Firm shall determine the amount of the Underpayment or
Overpayment that has occurred. In the case of an Underpayment, the amount of
such Underpayment (including any applicable interest and penalties) shall be
promptly paid by the Company to or for the benefit of the Executive. In the
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case of an Overpayment, the Executive shall, at the direction and expense of the
Company, take such steps as are reasonably necessary (including the filing of
returns and claims for refund), follow reasonable instructions from, and
procedures established by, the Company, and otherwise reasonably cooperate with
the Company to correct such Overpayment, provided, however, that (i) the
Executive shall not in any event be obligated to return to the Company an amount
greater than the net after-tax portion of the Overpayment that he has retained
or has recovered as a refund from the applicable taxing authorities and (ii)
this provision shall be interpreted in a manner consistent with the intent of
Section 3(b)(1), which is to make the Executive whole, on an after-tax basis,
from the application of the Excise Tax, it being understood that the correction
of an Overpayment may result in the Executive repaying to the Company an amount
which is less than the Overpayment. The cost of all such determinations made
pursuant to this Section 3 shall be paid by the Company.
4. Notice of Termination. Following a Change in Control, any intended
termination of the Executive's employment by the Company or an Employing
Affiliate shall be communicated by a Notice of Termination from the Company to
the Executive, and any intended termination of the Executive's employment by the
Executive for Good Reason shall be communicated by a Notice of Termination from
the Executive to the Company.
5. Fees and Expenses. The Company shall pay, as incurred, all legal fees
and related expenses (including the costs of experts, evidence and counsel) that
the Executive may incur following a Change in Control as a result of or in
connection with (a) the Executive's contesting, defending or disputing the basis
for the termination of the Executive's employment, (b) the Executive's hearing
before the Board of Directors of the Company as contemplated in Section 16.5 of
this Agreement or (c) the Executive seeking to obtain or enforce any right or
benefit provided by this Agreement or by any other plan or arrangement
maintained by the Company or one of its Affiliates under which the Executive is
or may be entitled to receive benefits.
6. Unauthorized Disclosure. The Executive agrees and understands that in
the Executive's position with the Company or an Employing Affiliate the
Executive has been and will be exposed to and receive information relating to
the affairs of the Company considered by the Company to be confidential and in
the nature of trade secrets. The Executive agrees that during his employment
with the Company or an Employing Affiliate and thereafter, the Executive will
keep such information confidential and will not disclose such information,
either directly or indirectly, to any third person or entity without the prior
written consent of the Company; provided, however, that (i) the Executive shall
have no such obligation to the extent such information is or becomes publicly
known other than as a result of the Executive's breach of his obligations
hereunder and (ii) the Executive may, after giving prior notice to the Company
to the extent practicable under the circumstances, disclose such information to
the extent required by applicable laws or governmental regulations or judicial
or regulatory process.
7. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including any Notice of
Termination) shall be in writing, shall be signed by the Executive if to the
Company or by a duly
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authorized officer of the Company if to the Executive, and shall be deemed to
have been duly given when personally delivered or sent by certified mail, return
receipt requested, postage prepaid, addressed to the respective addresses last
given by each party to the other, provided that all notices to the Company shall
be directed to the attention of the Board with a copy to the Secretary of the
Company. All notices and communications shall be deemed to have been received on
the date of delivery thereof or on the third business day after the mailing
thereof (whichever is earlier), except that notice of change of address shall be
effective only upon receipt.
8. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any other
Affiliate of the Company and for which the Executive may qualify, nor shall
anything herein limit or reduce such rights as the Executive may have under any
other agreements with the Company or any other Affiliate of the Company. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company or any other Affiliate of the
Company shall be payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
9. (a) 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 circumstances, including, without
limitation, any set-off, counterclaim, defense, recoupment, or other claim,
right or action which the Company may have against the Executive or others.
(b) No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment
except as provided in Section 2(b)(3).
10. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and the Company. No waiver by any party
hereto at any time of any breach by any other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by any party which are not expressly set forth in this Agreement.
11. Trust Funding. Within five (5) days following the occurrence of a
Change in Control or a Potential Change in Control (as defined in the Trust) the
Company shall contribute to the trust established pursuant to the trust
agreement dated as of January 30, 1998 between the Company and PNC Bank,
National Association (the "Trust"), for the benefit of the Executive, an amount
equal to the aggregate amounts payable to the Executive pursuant to Sections
2(b)(1), (2), (4), (6) and 3(b), determined as if the Executive's Termination
Date was the date of the Change in Control or the Potential Change in Control,
as the case may be. If the amounts payable are not determinable
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by the fifth day following the date of the Change in Control or the Potential
Change in Control, as the case may be, the Company shall make a reasonable good
faith estimate of the amount to be contributed to the Trust. The amounts
contributed to the Trust pursuant to this Section shall be held pursuant to the
terms of the Trust, but shall in no event revert to the Company or any of its
Affiliates until all obligations of the Company to the Executive pursuant to
this Agreement have been satisfied.
12. Successors; Binding Agreement.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company and its Successors and Assigns. The Company shall require
its Successors and Assigns, by agreement in form and substance reasonably
satisfactory to the Executive, 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 or assignment had taken place.
(b) Neither this Agreement nor any right or interest hereunder shall
be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal personal representative.
13. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New Jersey without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Agreement shall be brought and maintained in a court of competent
jurisdiction in Bergen County in the State of New Jersey.
14. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto, and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto,
with respect to the subject matter hereof.
16. Definitions.
16.1. Accrued Compensation. For purposes of this Agreement, "Accrued
Compensation" shall mean all amounts of compensation for services rendered to
the Company or an Employing Affiliate that have been earned or accrued through
the Termination Date but that have not been paid as of the Termination Date
including (a) base salary, (b) reimbursement for reasonable and necessary
business expenses incurred by the Executive on behalf of the Company or an
Employing Affiliate during the period ending on the Termination Date and (c)
vacation pay; provided, however, that Accrued Compensation shall not include any
amounts described in clause (a) that have been deferred pursuant to any salary
reduction or deferred compensation elections made by the Executive.
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16.2. Affiliate. For purposes of this Agreement, "Affiliate" means,
with respect to any Person, any entity, directly or indirectly, controlled by,
controlling or under common control with the Person.
16.3. Base Amount. For purposes of this Agreement, "Base Amount" shall
mean the Executive's annual base salary at the rate in effect as of the date of
a Change in Control or, if greater, at any time thereafter, determined without
regard to any salary reduction or deferred compensation elections made by the
Executive.
16.4. Bonus Amount. For purposes of this Agreement, "Bonus Amount"
shall mean the average of the annual bonus paid or payable under the Incentive
Plan in respect of any of the three (3) full fiscal years ended prior to the
Termination Date or, if greater, the three (3) full fiscal years ended prior to
the Change in Control (or, in either case, such lesser number of full fiscal
years that the Executive has been employed by the Company or an Employing
Affiliate); provided, however, if, as of the date of the Change in Control, the
Executive has not been employed by the Company or an Employing Affiliate for a
full fiscal year, the Bonus Amount shall not be less than the target annual
bonus payable to the Executive under the Incentive Plan in respect of the fiscal
year during which the Change in Control occurs.
16.5. Cause. For purposes of this Agreement, a termination of
employment is for "Cause" if the Executive
(a) has been convicted of a felony;
(b) intentionally and continually failed substantially to perform his
reasonably assigned duties with the Company or an Employing Affiliate (other
than a failure resulting from the Executive's incapacity due to physical or
mental illness or from the assignment to the Executive of duties that would
constitute Good Reason) which failure continued for a period of at least thirty
(30) days after a written notice of demand for substantial performance, signed
by a duly authorized officer of the Company, has been delivered to the Executive
specifying the manner in which the Executive has failed substantially to
perform; or
(c) intentionally engaged in illegal conduct or willful misconduct
which is demonstrably and materially injurious to the Company or an Employing
Affiliate.
For purposes of this Agreement, no act, nor failure to act, on the
Executive's part, shall be considered "intentional" unless the Executive has
acted, or failed to act, with a lack of good faith and with a lack of reasonable
belief that the Executive's action or failure to act was in the best interest of
the Company or an Employing Affiliate. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Company's Chief Executive Officer or a senior officer of the
Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company or an Employing Affiliate.
The termination of employment of the Executive shall not be deemed to be for
Cause pursuant to subparagraph (b) or (c) above unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of
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not less than three-fourths of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice is
provided to the Executive and the Executive is given an opportunity, together
with counsel, to be heard before the Board) finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (b) or (c) above, and specifying the particulars thereof in detail.
Notwithstanding anything contained in this Agreement to the contrary, no failure
to perform by the Executive after a Notice of Termination is given to the
Company by the Executive shall constitute Cause for purposes of this Agreement.
16.6. Change in Control. A "Change in Control" shall mean the
occurrence during the term of the Agreement of:
(a) An acquisition (other than directly from the Company) of any
common stock of the Company ("Common Stock") or other voting securities of the
Company entitled to vote generally for the election of directors (the "Voting
Securities") by any "Person" (as the term person is used for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), immediately after which such Person has "Beneficial Ownership" (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of the then outstanding shares of Common Stock or the combined
voting power of the Company's then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has occurred, Voting
Securities which are acquired in a Non-Control Acquisition (as hereinafter
defined) shall not constitute an acquisition which would cause a Change in
Control; provided, further, however, that with respect to any acquisition of
Beneficial Ownership by Unitrin Inc., the reference to twenty percent (20%) in
this Section 16.6(a) and Section 16.6(c) shall be deemed to be forty-five
percent (45%). A "Non-Control Acquisition" shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (A) the
Company or (B) any corporation or other Person of which a majority of its voting
power or its voting equity securities or equity interest is owned, directly or
indirectly, by the Company (a "Subsidiary") (ii) the Company or its
Subsidiaries, or (iii) any Person in connection with a Non-Control Transaction
(as hereinafter defined);
(b) The individuals who, as of June 1, 1998, are members of the Board
(the "Incumbent Board"), cease for any reason to constitute at least a majority
of the members of the Board; provided, however, that if the election, or
nomination for election by the Company's shareholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Agreement, be considered as a member of the
Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 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 (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(c) The consummation of:
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(1) A merger, consolidation or reorganization to which the
Company is a party or in which securities of the Company are issued, unless such
merger, consolidation or reorganization is a "Non-Control Transaction." A
"Non-Control Transaction" shall mean a merger, consolidation or reorganization
with or into the Company or in which securities of the Company are issued where:
(A) the shareholders of the Company, immediately before such
merger, consolidation or reorganization, own directly or indirectly immediately
following such merger, consolidation or reorganization, at least sixty percent
(60%) of the combined voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or reorganization (the
"Surviving Corporation") in substantially the same proportion as their ownership
of the Voting Securities immediately before such merger, consolidation or
reorganization,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such merger,
consolidation or reorganization constitute at least a majority of the members of
the board of directors of the Surviving Corporation, or a corporation
beneficially directly or indirectly owning a majority of the combined voting
power of the outstanding voting securities of the Surviving Corporation, and
(C) no Person other than (i) the Company, (ii) any
Subsidiary, (iii) any employee benefit plan (or any trust forming a part
thereof) that, immediately prior to such merger, consolidation or
reorganization, was maintained by the Company, the Surviving Corporation, or any
Subsidiary, or (iv) any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership of twenty percent (20%)
or more of the then outstanding Voting Securities or common stock of the
Company, has Beneficial Ownership of twenty percent (20%) or more of the
combined voting power of the Surviving Corporation's then outstanding voting
securities or its common stock.
(2) A complete liquidation or dissolution of the Company; or
(3) The sale or other disposition of all or substantially all of
the assets of the Company to any Person (other than a transfer to a Subsidiary
or a distribution to the Company's shareholders).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding common stock
or Voting Securities as a result of the acquisition of Common Stock or Voting
Securities by the Company which, by reducing the number of shares of Common
Stock or Voting Securities then outstanding, increases the proportional number
of shares Beneficially Owned by the Subject Person, provided that if a Change in
Control would occur (but for the operation of this sentence) as a result of the
acquisition of shares of Common Stock or Voting Securities by the Company, and
after such share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional shares of Common Stock or Voting Securities
which increases the percentage of the then outstanding shares of Common Stock or
Voting Securities Beneficially Owned by the Subject
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Person, then a Change in Control shall occur.
16.7. Company. For purposes of this Agreement, all references to
the Company shall include its Successors and Assigns.
16.8. Disability. For purposes of this Agreement, "Disability" shall
mean a physical or mental infirmity which impairs the Executive's ability to
substantially perform his duties with the Company or an Employing Affiliate for
six (6) consecutive months, and within the time period set forth in a Notice of
Termination given to the Executive (which time period shall not be less than
thirty (30) days), the Executive shall not have returned to full-time
performance of his duties; provided, however, that if the Company's Long Term
Disability Plan, or any successor plan (the "Disability Plan"), is then in
effect, the Executive shall not be deemed disabled for purposes of this
Agreement unless the Executive is also eligible for long-term disability
benefits under the Disability Plan (or similar benefits in the event of a
successor plan).
16.9. Good Reason. (a) For purposes of this Agreement, "Good Reason"
shall mean the occurrence after a Change in Control of any of the following
events or conditions:
(1) a change in the Executive's status, title, position or
responsibilities (including reporting responsibilities) which, in the
Executive's reasonable judgment, represents an adverse change from his status,
title, position or responsibilities as in effect immediately prior thereto; the
assignment to the Executive of any duties or responsibilities which, in the
Executive's reasonable judgment, are inconsistent with his status, title or
position; or any removal of the Executive from or failure to reappoint or
reelect him to any of such offices or positions, except in connection with the
termination of his employment for Disability, Cause, as a result of his death or
by the Executive other than for Good Reason;
(2) a reduction in the Executive's annual base salary below the
Base Amount;
(3) the relocation of the offices of the Company or an Employing
Affiliate at which the Executive is principally employed to a location more than
twenty-five (25) miles from the location of such offices immediately prior to
the Change in Control, or the requirement that the Executive to be based
anywhere other than such offices, except to the extent the Executive was not
previously assigned to a principal location and except for required travel on
the business of the Company or an Employing Affiliate to an extent substantially
consistent with the Executive's business travel obligations at the time of the
Change in Control;
(4) the failure by the Company or an Employing Affiliate to pay
to the Executive any portion of the Executive's current compensation or to pay
to the Executive any portion of an installment of deferred compensation under
any deferred compensation program of the Company or an Employing Affiliate in
which the Executive participated, within seven (7) days of the date such
compensation is due;
(5) the failure by the Company or an Employing Affiliate to (A)
continue in effect (without reduction in benefit level and/or reward
opportunities) any material
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compensation or employee benefit plan in which the Executive was participating
immediately prior to the Change in Control, including, but not limited to, any
of the plans listed in Appendix A hereto, unless a substitute or replacement
plan has been implemented which provides substantially identical compensation or
benefits to the Executive or (B) provide the Executive with compensation and
benefits, in the aggregate, at least equal (in terms of benefit levels and/or
reward opportunities) to those provided for under each other compensation,
employee benefit or fringe benefit plan, program or practice in which the
Executive was participating immediately prior to the Change in Control;
(6) the failure of the Company to obtain from its Successors or
Assigns the express assumption and agreement required under Section 12 hereof;
or
(7) any purported termination of the Executive's employment by
the Company or an Employing Affiliate which is not effected pursuant to a Notice
of Termination satisfying the terms set forth in the definition of Notice of
Termination (and, if applicable, the terms set forth in the definition of
Cause).
(b) Any event or condition described in Section 16.9(a)(1) through (7)
which occurs prior to a Change in Control but which the Executive reasonably
demonstrates (1) was at the request of a Third Party who effectuates a Change in
Control or (2) otherwise arose in connection with, or in anticipation of a
Change in Control which has been threatened or proposed and which actually
occurs, shall constitute Good Reason for purposes of this Agreement
notwithstanding that it occurred prior to a Change in Control.
16.10. Incentive Plan. For purposes of this Agreement, "Incentive
Plan" shall mean the Company's Modified Incentive Compensation Plan, or any
successor annual incentive plan, maintained by the Company or any Affiliate of
the Company.
16.11. Notice of Termination. For purposes of this Agreement,
following a Change in Control, "Notice of Termination" shall mean a written
notice of termination of the Executive's employment, signed by the Executive if
to the Company or by a duly authorized officer of the Company if to the
Executive, which indicates the specific termination provision in this Agreement,
if any, relied upon and which sets 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. 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, Disability or Cause shall not serve to
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
16.12. Pro Rata Bonus. For purposes of this Agreement, "Pro Rata
Bonus" shall mean an amount equal to the Bonus Amount multiplied by a fraction
the numerator of which is the number of days in the fiscal year in which the
Executive's Termination Date occurs that have elapsed through the Termination
Date and the denominator of which is 365.
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16.13. Successors and Assigns. For purposes of this Agreement,
"Successors and Assigns" shall mean, with respect to the Company, a corporation
or other entity acquiring all or substantially all the assets and business of
the Company, as the case may be whether by operation of law or otherwise.
16.14. Termination Date. For purposes of this Agreement, "Termination
Date" shall mean (a) in the case of the Executive's death, his date of death,
(b) if the Executive's employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that the Executive shall not have
returned to the performance of his duties on a full-time basis during such
thirty (30) day period) and (c) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than thirty (30) days, and in
the case of a termination for Good Reason shall not be more than sixty (60)
days, from the date such Notice of Termination is given); provided, however,
that if within thirty (30) days after any Notice of Termination is given the
party receiving such Notice of Termination in good faith notifies the other
party that a dispute exists concerning the basis for the termination, the
Termination Date shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, or by the final judgment,
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been taken). Notwithstanding the
pendency of any such dispute, the Company or an Employing Affiliate shall
continue to pay the Executive his Base Amount and continue the Executive as a
participant (at or above the level provided prior to the date of such dispute)
in all compensation, incentive, bonus, pension, profit sharing, medical,
hospitalization, prescription drug, dental, life insurance and disability
benefit plans in which he was participating when the notice giving rise to the
dispute was given, until the dispute is finally resolved whether or not the
dispute is resolved in favor of the Company, and the Executive shall not be
obligated to repay to the Company or an Employing Affiliate any amounts paid or
benefits provided pursuant to this sentence.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
their duly authorized officers and the Executive has executed this Agreement as
of the day and year first above written.
XXXXXXX-XXXXXX CORPORATION
By: S/Xxxxxx X. Xxxx
Title: Vice President
ATTEST:
S/Xxxx X. Xxxxxx
Secretary
By: S/Xxxxx Xxxxx
Executive
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APPENDIX A
Long Term Incentive Plan
Modified Incentive Compensation Plan
Retirement Plan
Retirement Benefits Restoration Plan
Deferred Compensation Plan
Savings and Investment Plan
Medical, dental and prescription coverage
Long Term Disability Plan
Life insurance coverage
Business travel insurance coverage
Salary continuation program
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