EXHIBIT 10b - CHANGE IN CONTROL AGREEMENT
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of this 15th
day of January, 1996 (the "Effective Date"), by and among Fansteel, Inc., a
Delaware corporation (hereinafter referred to as the "Company"), and the
individual identified on the signature page of this Agreement (the "Executive").
W I T N E S E T H:
WHEREAS, the Board of Directors of the Company (the "Board") has
approved the Company entering into agreements with certain key executives of the
Company providing for certain severance protection following a Change in Control
(as hereinafter defined);
WHEREAS, the Executive is a key executive of the Company;
WHEREAS, the Board of the Company believes that, should the
possibility of a Change in Control arise, it is imperative that the Company be
able to receive and rely upon the Executive's advice, if requested, as to the
best interests of the Company and its shareholders without concern that he or
she might be distracted by the personal uncertainties and risks created by the
possibility of a Change in Control; and
WHEREAS, in addition to the Executive's regular duties, he or she may
be called upon to assist in the assessment of a possible Change in Control,
advise management and the Board of the Company as to whether such Change in
Control would be in the best interests of the Company and its shareholders, and
to take such other actions as the Board determines to be appropriate;
NOW THEREFORE, to assure the Company that it will have the continued
dedication of the Executive and the availability of his or her advice and
counsel notwithstanding the possibility, threat, or occurrence of a Change in
Control, and to induce the Executive to remain in the employ of the Company, and
for other good and valuable consideration, the Company and the Executive,
intending to be legally bound, agree as follows:
Article 1. Definitions
Whenever used in this Agreement, the following terms shall have the
meanings set forth below when the initial letter of the word is capitalized:
(a) "Base Salary" shall mean the salary of record paid by the
Company to the Executive as annual salary, excluding amounts
received under incentive or other bonus plans, whether or not
deferred.
(b) "Beneficiary" shall mean the persons or entities designated or
deemed designated by the Executive pursuant to Section 7.2
herein.
(c) "Cause" shall mean the occurrence of any one or more of the
following:
(i) willful misconduct by the Executive in the performance of
his duties (other than due to disability);
(ii) dishonesty or breach of trust by the Executive which is
demonstrably injurious to the Company or its subsidiaries;
or
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(iii) conviction or plea of nolo contendere to a felony or a
misdemeanor involving moral turpitude.
(d) A "Change in Control" shall mean, and shall be deemed to have
occurred upon the occurrence of, any one of the following
events:
(i) The acquisition in one or more transactions, other than
from the Company, by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of either (i)
30% or more of the outstanding Common Stock of the Company
(the "Outstanding Common Stock") or 30% or more of the
Company Voting Securities; provided, however, that the
following shall not constitute a Change in Control: any
acquisition by (1) the Company or any of its subsidiaries,
any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries, or
(2) any corporation with respect to which, following such
acquisition, more than 70% of, respectively, the then
outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally
in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Common Stock and Company
Voting Securities immediately prior to such acquisition in
substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding
Common Stock and Company Voting Securities, as the case
may be; or
(ii) Individuals who constitute the Board as of the date of
this Agreement (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the date of this Agreement whose election or
nomination for election by the Company was approved by a
vote of at least a majority of the directors then
comprising the Incumbent Board or was approved by a
stockholder beneficially owning in excess of 40% of the
Outstanding Common Stock at the date hereof and at the
date of such nomination or election (unless such
nomination or election (a) was at the request of an
unrelated third party who has taken steps reasonably
calculated to effect a Change in Control, or (b) otherwise
arose in connection with or in anticipation of the Change
in Control) shall be considered as though such individual
were a member of the Incumbent Board; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, unless, following
such reorganization, merger or consolidation, all or
substantially all of the individuals and entities who were
the respective beneficial owners of the Outstanding Common
Stock and Company Voting Securities immediately prior to
such reorganization, merger or consolidation, following
such reorganization, merger or consolidation beneficially
own, directly or indirectly, more than 70% of,
respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding
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voting securities entitled to vote generally in the
election of directors, as the case may be, of the
corporation resulting from such reorganization, merger or
consolidation in substantially the same proportion as
their ownership of the Outstanding Common Stock and
Company Voting Securities immediately prior to such
reorganization, merger or consolidation, as the case may
be; or
(iv) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii)
a sale or other disposition of 60% or more by value of the
assets of the Company other than to a corporation with
respect to which, following such sale or disposition, more
than 70% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally
in the election of directors is then owned beneficially,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Common Stock and Company
Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their
ownership of the Outstanding Common Stock and Company
Voting Securities, as the case may be, immediately prior
to such sale or disposition.
(e) "Company Voting Securities" shall mean the combined voting power
of all outstanding voting securities of the Company entitled to
vote generally in the election of directors for the Board.
(f) "Effective Date of Termination" shall mean the date on which the
Executive's employment terminates in a circumstance in which
Section 2.1 provides for Severance Benefits (as defined in
Section 2.1).
(g) "Good Reason" shall mean, without the Executive's express
written consent, the occurrence of any one or more of the
following:
(i) A material diminution of the Executive's authorities,
duties, responsibilities, and status (including offices,
titles, and reporting requirements) as an employee of the
Company from those in effect as of one hundred eighty
(180) days prior to the Change in Control, other than an
insubstantial and inadvertent act that is remedied by the
Company promptly after receipt of notice thereof given by
the Executive, and other than any such alteration which is
consented to by the Executive in writing;
(ii) The Company's requiring the Executive to be based at a
location in excess of thirty-five (35) miles from the
location of the Executive's principal job location or
office immediately prior to the Change in Control, except
for required travel on the Company's business to an extent
substantially consistent with the Executive's present
business obligations;
(iii) A reduction in the Executive's base salary or any material
reduction by the Company of the Executive's other
compensation or benefits from that in effect immediately
before the Change in Control occurred;
(iv) The failure of the Company to obtain a satisfactory
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agreement from any successor to the Company to assume and
agree to perform the Company's obligations under this
Agreement, as contemplated in Article 5 herein; and
(v) Any purported termination by the Company of the
Executive's employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of
Section 2.4 herein, and for purposes of this Agreement, no
such purported termination shall be effective.
The Executive's right to terminate employment for Good Reason
shall not be affected by the Executive's (A) incapacity due to
physical or mental illness or (B) continued employment following
the occurrence of any event constituting Good Reason herein.
Article 2. Severance Benefits
2.1. Right to Severance Benefits. The Executive shall be entitled to
receive from the Company the severance benefits as described in Section 2.2
("Severance Benefits") if a Change in Control shall occur and within two years
after the Change in Control either of the following shall occur:
(i) an involuntary termination of the Executive's employment
with the Company without Cause; or
(ii) a voluntary termination of the Executive's employment with
the Company for Good Reason.
2.2. Severance Benefits. In the event that the Executive becomes
entitled to receive Severance Benefits, as provided in Section 2.1, the Company
shall provide the Executive with total Severance Benefits as follows (but
subject to Sections 2.5 and 2.6):
(a) The Executive shall receive a single lump sum payment within
thirty (30) days of the Effective Date of Termination in an
amount equal to 2.99 times the sum of (i) the highest rate of
the Executive's monthly Base Salary in effect during the twelve
(12) month period prior to the Change in Control at any time up
to and including the Effective Date of Termination and (ii) the
Executive's average annual bonus earned over the most recent
three (3) full bonus plan years ending prior to the Effective
Date of Termination.
(b) The Executive shall receive an amount, paid within thirty (30)
days of the Effective Date of Termination, equal to the
Executive's unpaid Base Salary, accrued but unused vacation pay
and earned but unpaid bonuses and all other cash entitlements
through the Effective Date of Termination plus an amount equal
to the aggregate amount of matching contributions that would be
credited to the Executive under the Fansteel Savings and Profit
Sharing Plan for the three years following the Effective Date of
Termination if (i) the Executive were to continue to participate
and make the maximum permissible contribution thereunder and
(ii) the applicable rate of matching contributions during such
period were to equal the average rate of match under the plan
for the three years immediately prior to the Effective Date of
Termination.
(c) All welfare benefits, including medical, dental, vision, life
and disability benefits pursuant to plans under which the
Executive and/or the Executive's family is eligible to receive
benefits and/or coverage shall be continued for a period of
eighteen (18) months after the Effective Date of Termination.
Such benefits shall be provided to the Executive at no less than
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the same coverage level as in effect as of the date of the
Change in Control. The Company shall pay the full cost of such
continued benefits, except that the Executive shall bear any
portion of such cost as was required to be borne by key
executives of the Company generally at the date of the Change in
Control. Notwithstanding the foregoing, the benefits described
in this Section 2.2(c) may be discontinued prior to the end of
the periods provided in this Section to the extent, but only to
the extent, that the Executive receives substantially similar
benefits from a subsequent employer.
2.3. Termination for any other Reason. If the Executive's employment
with the Company is terminated under any circumstances other than those set
forth in Section 2.1, including without limitation by reason of retirement,
death, disability, discharge for Cause or resignation without Good Reason, or
any termination for any reason that occurs prior to a Change in Control or after
two years following a Change in Control, the Executive shall have no right to
receive the Severance Benefits under this Agreement or to receive any payments
in respect of this Agreement. In such event Executive's benefits, if any, in
respect of such termination shall be determined in accordance with the Company's
retirement, survivor's benefits, insurance, and other applicable plans,
programs, policies and practices then in effect. Anything in this Agreement to
the contrary notwithstanding, if the Executive's employment with the Company is
terminated prior to the date on which a Change in Control occurs either (i) by
the Company other than for Cause or (ii) by the Executive for Good Reason, and
it is reasonably demonstrated that termination of employment (a) was at the
request of an unrelated third party who has taken steps reasonably calculated to
effect a Change in Control, or (b) otherwise arose in connection with or in
anticipation of the Change in Control, then for all purposes of this Agreement
the termination shall be deemed to have occurred upon a Change in Control and
the Executive will be entitled to Severance Benefits as provided in Section 2.2
hereof.
2.4. Notice of Termination. Any termination by the Company for Cause
or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon, and shall 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.
2.5. Withholding of Taxes. The Company shall withhold from any
amounts payable under this Agreement all Federal, state, local, or other taxes
as legally shall be required to be withheld.
2.6. Certain Limitations on Payments by the Company. Notwithstanding
the foregoing or any other provision of this Agreement to the contrary, if tax
counsel selected by the Company and reasonably acceptable to the Executive
determines that any portion of any payment under this Agreement would constitute
an "excess parachute payment" under Section 280G of the Internal Revenue Code,
then the payments to be made to the Executive under this Agreement shall be
reduced (but not below zero) such that the value of the aggregate payments that
the Executive is entitled to receive under this Agreement and any other
agreement or plan or program of the Company shall be one dollar ($1) less than
the maximum amount of payments which the Executive may receive without becoming
subject to the tax imposed by Section 4999 of the Internal Revenue Code.
Article 3. The Company's Payment Obligation
3.1. Payment Obligations Absolute. Except as otherwise provided in
the last sentence of Section 2.2(a) and the last sentence of Section 2.2(c), the
Company's obligation to make the payments and the arrangements provided for
herein shall be absolute and unconditional, and shall not be affected by any
circumstances, including, without limitation, any offset, counterclaim,
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recoupment, defense, or other right which the Company may have against the
Executive or any other party. All amounts payable by the Company hereunder
shall be paid without notice or demand. Each and every payment made hereunder
by the Company shall be final, and the Company shall not seek to recover all or
any part of such payment from the Executive or from whomsoever may be entitled
thereto, for any reasons whatsoever.
Notwithstanding any other provisions of this Agreement to the contrary, the
Company shall have no obligation to make any payment to the Executive hereunder
to the extent, but only to the extent, that such payment is prohibited by the
terms of any final order of a Federal or state court or regulatory agency of
competent jurisdiction; provided, however, that such an order shall not affect,
impair, or invalidate any provision of this Agreement not expressly subject to
such order.
3.2. Contractual Rights to Benefits. This Agreement establishes and
vests in the Executive a contractual right to the benefits to which he is
entitled hereunder. Nothing herein contained shall require or be deemed to
require, or prohibit or be deemed to prohibit, the Company to segregate,
earmark, or otherwise set aside any funds or other assets, in trust or
otherwise, to provide for any payments to be made or required hereunder. The
Executive shall not be obligated to seek other employment in mitigation of the
amounts payable or arrangements made under any provision of this Agreement, and
the obtaining of any such other employment shall in no event effect any
reduction of the Company's obligations to make the payments and arrangements
required to be made under this Agreement, except to the extent provided in the
last sentence of Section 2.2(c).
Article 4. Enforcement and Legal Remedies
4.1 Resolution of Differences Over Breaches of Agreement. In the
event of any controversy, dispute or claim arising out of, or relating to this
Agreement, or the breach thereof, or arising out of any other matter relating to
the Executive's employment with the Company or the termination of such
employment, the Company and the Executive agree that such underlying
controversy, dispute or claim shall be settled by arbitration conducted in
Chicago, Illinois in accordance with this Section 4.1 of the Agreement and the
Commercial Arbitration Rules of the American Arbitration Association ("AAA").
The matter shall be heard and decided, and award rendered by a panel of three
(3) arbitrators (the "Arbitration Panel"). The Company and the Executive shall
each select one arbitrator from the AAA National Panel of Commercial Arbitrators
(the "Commercial Panel") and AAA shall elect a third arbitrator from the
Commercial Panel. The award rendered by the Arbitration Panel shall be final
and binding as between the parties hereto and their heirs, executors,
administrators, successors and assigns, and judgment on the award may be entered
by any court having jurisdiction thereof.
4.2 Cost of Enforcement. In the event that it shall be necessary or
desirable for the Executive to retain legal counsel in connection with the
enforcement of any or all of his rights to Severance Benefits under Section 2.2
of this Agreement, and provided that the Executive substantially prevails in the
enforcement of such rights, the Company, as applicable, shall pay (or the
Executive shall be entitled to recover from the Company, as the case may be) the
Executive's reasonable attorneys' fees, costs and expenses in connection with
the enforcement of his rights.
Article 5. Binding Effect; Successors
The rights of the parties hereunder shall inure to the benefit of
their respective successors, assigns, nominees, or other legal representatives.
The Company shall require any successor (whether direct or indirect, by
purchase, merger, reorganization, consolidation, acquisition of property or
stock, liquidation, or otherwise) to all or a significant portion of the assets
of the Company, as the case may be, by agreement in form and substance satis-
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factory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company, as the
case may be, would be required to perform if no such succession had taken place.
Regardless of whether such agreement is executed, this Agreement shall be
binding upon any successor in accordance with the operation of law and such
successor shall be deemed the "Company", as the case may be, for purposes of
this Agreement.
Article 6. Term of Agreement
The term of this Agreement shall commence on the Effective Date and
shall continue in effect for three (3) full years. However, in the event a
Change in Control occurs during the term, this Agreement will remain in effect
for the longer of: (i) twenty-four (24) months beyond the month in which such
Change in Control occurred; or (ii) until all obligations of the Company
hereunder have been fulfilled, and until all benefits required hereunder have
been paid to the Executive or other party entitled thereto. The term of this
Agreement may be extended by written agreement of the parties.
Article 7. Miscellaneous
7.1. Employment Status. Neither this Agreement nor any provision
hereof shall be deemed to create or center upon the Executive any right to be
retained in the employ of the Company or any subsidiary or other affiliate
thereof.
7.2. Beneficiaries. The Executive may designate one or more persons
or entities as the primary and/or contingent Beneficiaries of any Severance
Benefits owing to the Executive under this Agreement. Such designation must be
in the form of a signed writing acceptable to the Board of Directors of the
Company. The Executive may make or change such designation at any time.
7.3. Entire Agreement. This Agreement contains the entire
understanding of the Company and the Executive with respect to the subject
matter hereof. The payments provided for under this Agreement in the event of
the Executive's termination of employment shall be in lieu of any severance
benefits payable under any severance plan, program, or policy of the Company to
which he might otherwise be entitled.
7.4. Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular, and the singular shall include the plural.
7.5. Notices. All notices, requests, demands, and other
communications hereunder must be in writing and shall be deemed to have been
duly given if delivered by hand or mailed within the continental United States
by first-class certified mail, return receipt requested, postage prepaid, to the
other party, addressed as follows:
(a) if to the Company:
Fansteel, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxx Xxxxxxx, XX 00000
Attn: Chairman of the Board
(b) if to Executive, to him or her at the address set forth at the
end of this Agreement. Addresses may be changed by written notice sent to the
other party at the last recorded address of that party.
7.6. Execution in Counterparts. This Agreement may be executed by
the parties hereto in counterparts, each of which shall be deemed to be
original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
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7.7. Severability. In the event any provision of this Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Agreement, and the Agreement shall
be construed and enforced as if the illegal or invalid provision had not been
included. Further, the captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.
7.8. Modification. No provision of this Agreement may be modified,
waived, or discharged unless such modification, waiver, or discharge is agreed
to in writing and signed by the Executive and on behalf of the Company.
7.9. Applicable Law. To the extent not preempted by the laws of the
United States, the laws of the State of Delaware, other than the conflict of law
provisions thereof, shall be the controlling law in all matters relating to this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
FANSTEEL, INC.
By:
Title:
EXECUTIVE
Xxxxxxx X. Xxxxxx
President and Chief Executive
Officer
R. Xxxxxxx XxXxxxx
Vice President, Chief Financial
Officer
Xxxxxxx X. Xxxxxxx
Vice President, Secretary and
General Counsel
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