EXHIBIT 10.9
AMENDED AND RESTATED
SEVERANCE PAY AGREEMENT
This Agreement is made as of the 21st day of October, 1997, between
Fourth Shift Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (such corporation, together with its
subsidiaries, hereinafter called the "Company") and ▇. ▇. ▇▇▇▇▇▇▇▇
(hereinafter called "Executive"), residing at ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH THAT:
WHEREAS, it is the purpose of this Agreement to specify the financial
arrangements that the Company will provide to the Executive upon Executive's
separation from employment with the Company under the circumstances described
herein; and
WHEREAS, this Agreement is adopted in the belief that it is in the best
interests of the Company and its shareholders to provide stable conditions of
employment for Executive, thereby minimizing personnel turnover and enhancing
the Company's ability to recruit highly qualified people; and
WHEREAS, Executive is a party to that certain Severance Pay Agreement
dated as of April 16, 1996 (the "Prior Agreement") and the Company wishes to
revise and restate such Agreement to ensure the continued attention of
Executive in the event of a Change of Control of the Company, as defined
herein.
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of Executive notwithstanding the possibility, threat or occurrence
of a bid to take over control of the Company, and to induce Executive to
remain in the employ of the Company, and for other good and valuable
consideration, the Company and Executive agree as follows:
1. RESTATEMENT/TERM OF AGREEMENT.
This Agreement restates and replaces the Prior Agreement effective as of
the date hereof. This Agreement shall be for a two-year term commencing on
the date hereof and shall be automatically renewed for additional two-year
terms thereafter unless canceled in writing by either party hereto at least
60 days prior to expiration of the initial or any renewal term; provided that
this Agreement shall continue for at least two years after a Change of
Control that occurs during the term of this Agreement.
2. TERMINATION OF EMPLOYMENT.
(i) If a Change in Control (as defined in Section 3(i) hereof) occurs
during the term of this Agreement and any of the following events occur
within two years after such Change of Control, (x) all stock options in the
Company (or its successor as a result of the Change of Control) held by the
terminated Executive shall be accelerated so that they are fully exercisable
by the terminated Executive for the period after termination specified in
such stock options and (y) the terminated Executive shall be entitled to
receive the cash payment provided in Section 4 hereof:
(a) the Company shall have exercised its right to terminate the
Executive without cause; or
-1-
(b) the Executive shall have voluntarily exercised his option to
terminate his employment for Good Reason (as defined in Section 3(ii)
hereof). Notice of election of this option must identify the Executive
who desires to terminate his employment and set forth in reasonable detail
the facts and circumstances claimed to constitute Good Reason.
(ii) From and after the date of a Change in Control, the Company shall
have the right to terminate Executive from employment at any time during the
term of this Agreement for Cause (as defined in Section 3(iii) hereof), by
written notice to the Executive, specifying the particulars of the conduct of
Executive forming the basis for such termination, and Executive shall not be
entitled to any payment pursuant to Section 4 for termination for Cause.
(iii) From and after the date of a Change in Control during the term of
this Agreement, Executive shall not be removed from employment with the
Company except as provided in Section 2(i) or (ii) hereof or as a result of
Executive's Disability (as defined in Section 3(iv) hereof) or his death.
Executive's rights upon termination of employment prior to a Change in
Control or after the expiration of the term of this Agreement shall be
governed by the standard employment termination policy applicable to
Executive in effect at the time of termination.
Any notice given by Executive pursuant to this Section 2 shall be
effective ten (10) business days after the date it is given by Executive.
3. DEFINITIONS
(i) A "Change in Control" shall mean the occurrence of any of the
following events as a result of a transaction or series of transactions:
(a) a change in control of the Company of a nature required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"), whether or not the Company is then subject to such
reporting requirement;
(b) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding
securities;
(c) individuals who at the date hereof constitute the Board of
Directors of the Company cease to constitute a majority thereof,
PROVIDED THAT such change is the direct or indirect result of a proxy
fight and contested election for positions on the Board; or
(d) the Board of Directors of the Company determines, in its
sole and absolute discretion, that there has been a change in control
of the Company.
(ii) "Good Reason" shall mean the occurrence of any of the following
events:
(a) the assignment to Executive of employment responsibilities
which are not of comparable responsibility and status as the
employment responsibilities held by Executive immediately prior to a
Change in Control;
-2-
(b) a reduction by the Company in Executive's compensation
(including targeted bonus compensation) as in effect immediately prior
to a Change in Control;
(c) the Company's requiring Executive to be based anywhere other
than within fifty (50) miles of Executive's office location
immediately prior to a Change in Control, except for requirements of
temporary travel on the Company's business to an extent substantially
consistent with Executive's business travel obligations immediately
prior to a Change in Control;
(d) except to the extent otherwise required by applicable law,
the failure by the Company to continue in effect any benefit or
compensation plan, stock ownership plan, stock purchase plan, bonus
plan, life insurance plan, health-and-accident plan or disability plan
in which Executive is participating immediately prior to a Change in
Control (or plans providing Executive with substantially similar
benefits), the taking of any action by the Company which would
adversely affect Executive's participation in, or materially reduce
Executive's benefits under, any of such plans or deprive Executive of
any material fringe benefit enjoyed by Executive immediately prior to
such Change in Control, or the failure by the Company to provide
Executive with the number of paid vacation days to which Executive is
entitled immediately prior to such Change in Control in accordance
with the Company's vacation policy as then in effect; or
(e) the failure by the Company to obtain, as specified in
Section 5(i) hereof an assumption of the obligations of the Company to
perform this Agreement by any successor to the Company.
Notwithstanding the foregoing, none of the forgoing events shall be
considered "Good Reason" if it occurs in connection with the Executive's
death or disability.
(iii) "Cause" shall mean termination by the Company of Executive's
employment based upon (a) the willful and continued failure by Executive
substantially to perform his duties and obligations (other than any such
failure resulting from his incapacity due to physical or mental illness) or
(b) the willful engaging by Executive in misconduct which is materially
injurious to the Company monetarily or otherwise. For purposes of this
paragraph, no act, or failure to act, on Executive's part shall be considered
"willful" unless done, or omitted to be done, by Executive in bad faith and
without his reasonable belief that his action or omission was in the best
interests of the Company.
(iv) "Disability" shall mean any physical or mental condition which
would qualify Executive for a disability benefit under the long-term
disability plan of the Company.
4. BENEFITS UPON TERMINATION UNDER SECTION 2(i)
Upon the termination of the employment of Executive pursuant to Section
2(i) hereof, Executive shall be entitled to receive the benefits specified in
this Section 4. The amounts due to Executive under subparagraphs (a) and (b)
of this Section 4 shall be paid to Executive not later than one business day
prior to the date that the termination of Executive's employment becomes
effective. Any payments due under this Agreement will be paid to Executive
or Oranco, as instructed by Executive, at Executive's sole discretion.
-3-
(a) The Company shall pay to Executive:
(i) the full base salary earned by him and unpaid through the
date that the termination of Executive's employment becomes effective, at
the rate in effect at the time written notice of termination (voluntary or
involuntary) was given;
(ii) any amount earned by Executive as a bonus with respect to
the fiscal year of the Company preceding the termination of his employment
if such bonus has not theretofore been paid to Executive;
(iii) an amount equal to a pro rata portion, based on number of
days elapsed, of the bonus Executive would have earned for the year in
which termination is effective, assuming for such purposes that the Company
achieves targeted performance; and
(iv) an amount representing credit for any vacation earned or
accrued by him but not taken.
(b) In lieu of any further base salary payments to Executive for
periods subsequent to the date that the termination of Executive's employment
becomes effective, the Company shall
(i) Pay as severance pay to Executive a lump-sum cash amount
equal to two (2) times Executive's average annualized cash and equivalent
compensation for the period consisting of the Executive's most recent five
taxable years ending before the date on which a Change in Control occurs
(or such portion of such period during which Executive performed services
for the Company);
(ii) Arrange to provide Executive and Executive's dependents (if
applicable) with welfare benefits (including, without limitation, medical,
life, and individual disability insurance coverage), perquisites and other
employee benefits, for the 36 months following such termination, that
provide substantially similar benefits, in terms of aggregate monetary
value, to Executive and Executive's dependents (if applicable) at
substantially similar costs to Executive as the welfare benefits,
perquisites and other employee benefits in effect immediately prior to the
Change in Control (or as in effect following the Change in Control, if
greater).
(c) The Company shall also pay to Executive all legal fees and expenses
incurred by Executive in seeking to obtain or enforce any right or benefit
provided to Executive by this Agreement, including any and all expenses of
arbitration in accordance with Section 11 below.
(d) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or
otherwise. Except as provided in Section 4(b)(ii), the amount of any payment
or benefit provided in this Section 4 shall not be reduced by any
compensation earned by Executive as a result of any employment by another
employer.
(e) In the event Executive becomes entitled to payments under this
Section 4, the Company shall cause its independent auditors promptly to
review, at the Company's sole expense, the applicability of Section 4999 of
the Code to such payments. If such auditors shall determine that any payment
or distribution of any type by the Company to Executive or for Executive's
benefit, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (the "Total Payments"), would 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 Executive shall be entitled to receive an
additional
-4-
cash payment (a "Gross-Up Payment") within 30 days of such determination
equal to an amount such that after payment by 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, Executive would
retain an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Total Payments. For purposes of the foregoing determination, Executive's
tax rate shall be deemed to be the highest statutory marginal state and
Federal tax rate (on a combined basis) (including Executive's share of
F.I.C.A. and Medicare taxes) then in effect. If no determination by the
Company's auditors is made prior to the time a tax return reflecting the
Total Payments is required to be filed by Executive, Executive will be
entitled to receive a Gross-Up Payment calculated on the basis of the Total
Payments reported by Executive in such tax return, within 30 days of the
filing of such tax return. In all events, if any tax authority determines
that a greater Excise Tax should be imposed upon the Total Payments than is
determined by the Company's independent auditors or reflected in Executive's
tax return pursuant to this Section 6, Executive shall be entitled to receive
the full Gross-Up Payment calculated on the basis of the amount of Excise Tax
determined to be payable by such tax authority from the Company within 30
days of such determination.
5. SUCCESSORS; BINDING AGREEMENT; ASSIGNMENT.
(i) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise), to all or substantially all
of the business and/or assets of the Company, by agreement in form and
substance satisfactory to 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 had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle
Executive to compensation from the Company in the same amount and on the same
terms as Executive would be entitled hereunder if Executive terminated his
employment after a Change in Control for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Termination Date. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 5(i) or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation
of law.
(ii) This Agreement is personal to Executive and Executive may not
assign or transfer any part of his rights or duties hereunder, or any
compensation due to him hereunder, to any other person. Notwithstanding the
foregoing, this Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
heirs, distributees, devisees and legatees.
6. MODIFICATION; WAIVER. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge
is agreed to in a writing signed by Executive and such officer as may be
specifically designated by the Board of Directors of the Company. No waiver
by either party hereto at any time of any breach by the other party hereto
of, or compliance with, any condition or provision shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
7. NOTICE. All notices, requests, demands and all other
communications required or permitted by either party to the other party by
this Agreement (including, without limitation, any notice of termination of
employment) shall be in writing and shall be deemed to have been duly given
when
-5-
delivered personally or mailed by regular, certified or registered mail,
return receipt requested, at the address of the other party, as follows:
If to the Company, to:
Fourth Shift Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: Controller
If to Executive, to:
▇. ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Either party hereto may change its address for purposes of this Section 7 by
giving fifteen (15) days' prior notice to the other party hereto.
8. 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.
9. HEADINGS. The headings in this Agreement are inserted for
convenience or reference only and shall not be a part of or control or affect
the meaning of this Agreement.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11. GOVERNING LAW/ARBITRATION. This Agreement has been executed and
delivered in the State of Minnesota and shall in all respects be governed by,
and construed and enforced in accordance with, the laws of the State of
Minnesota, including all matters of construction, validity and performance.
Notwithstanding the foregoing, any dispute as to the occurrence of a "Change
of Control," or as to "Good Reason," shall be settled by final and binding
arbitration in accordance with the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes in effect as of the date of
this Agreement by a sole arbitrator. The arbitration shall be governed by
the United States Arbitration Act, 9 U.S.C. - 1-16, and judgment upon the
award rendered by the arbitrator may be entered by any court having
jurisdiction thereof. The place of arbitration shall be Minneapolis,
Minnesota. The arbitrator is empowered to award damages in excess of
compensatory damages.
12. ENTIRE AGREEMENT. This Agreement supersedes any and all other oral
or written agreements or policies made relating to the subject matter hereof,
including the Prior Agreement;
-6-
PROVIDED THAT, this Agreement shall not supersede or limit in any way
Executive's rights under any benefit plan, program or arrangements in
accordance with their terms.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in its name by a duly authorized officer, and Executive has hereunto set his
hand, all as of the date first written above.
Fourth Shift Corporation
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Its CEO
----------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇. ▇. ▇▇▇▇▇▇▇▇
-7-
