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EXHIBIT 10(E)
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of __________, is
made and entered by and between MPW Industrial Services Group, Inc., an Ohio
corporation (the "Company"), and ____________________ (the "Executive").
WITNESSETH:
WHEREAS, the Executive is a senior executive of the Company and has made
and is expected to continue to make major contributions to the short-term and
long-term profitability, growth and financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most publicly
held companies, the possibility of a Change in Control (as defined below)
exists;
WHEREAS, the Company desires to assure itself of both present and future
continuity of management and desires to establish certain minimum severance
benefits for certain of its senior executives, including the Executive,
applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior executives are not
practically disabled from discharging their duties in respect of a proposed or
actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional inducement for the
Executive to continue to remain in the ongoing employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Certain Defined Terms. In addition to terms defined elsewhere herein,
the following terms have the following meanings when used in this Agreement:
(a) "Base Pay" means the Executive's annual base salary at a rate
not less than the Executive's annual fixed or base compensation as in
effect for Executive immediately prior to the occurrence of a Change in
Control or such higher rate as may be determined thereafter from time to
time by the Board or a committee thereof.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means that, prior to any termination pursuant to Section
3(b), the Executive shall have committed:
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment with
the Company or any Subsidiary;
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(ii) intentional wrongful damage to property of the Company or
any Subsidiary;
(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any Subsidiary; or
(iv) intentional wrongful engagement in any Competitive
Activity;
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act or failure to act on the part of the
Executive shall be deemed "intentional" if it was due primarily to an
error in judgment or negligence, but shall be deemed "intentional" only
if done or omitted to be done by the Executive not in good faith and
without reasonable belief that his action or omission was in the best
interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for "Cause" hereunder unless
and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three
quarters of the Board then in office at a meeting of the Board called and
held for such purpose, after reasonable notice to the Executive and an
opportunity for the Executive, together with his counsel (if the
Executive chooses to have counsel present at such meeting), to be heard
before the Board, finding that, in the good faith opinion of the Board,
the Executive had committed an act constituting "Cause" as herein defined
and specifying the particulars thereof in detail. Nothing herein will
limit the right of the Executive or his beneficiaries to contest the
validity or propriety of any such determination.
(d) "Change in Control" means the occurrence during the Term of any
of the following events:
(i) The Company is merged, consolidated or reorganized into or
with another corporation or other legal person, and as a result of
such merger, consolidation or reorganization less than a majority
of the combined voting power of the then-outstanding Voting Stock
of such corporation or person immediately after such transaction
are held in the aggregate by the holders of Voting Stock of the
Company immediately prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other
legal person, and as a result of such sale or transfer less than a
majority of the combined voting power of the then-outstanding
Voting Stock of such corporation or person immediately after such
sale or transfer is held in the aggregate by the holders of Voting
Stock of the Company immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as
promulgated pursuant to the Exchange Act, disclosing that any
person (as the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act), other than Xxxxx X. Xxxxx or
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members of his immediate family, has become the beneficial owner (as
the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act) of
securities representing 20% or more of the combined voting power of
the then-outstanding Voting Stock of the Company;
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in control of
the Company has occurred or will occur in the future pursuant to any
then-existing contract or transaction; or
(v) If, during any period of two consecutive years, individuals
who at the beginning of any such period constitute the Directors of
the Company cease for any reason to constitute at least a majority
thereof; provided, however, that for purposes of this clause (v) each
Director who is first elected, or first nominated for election by the
Company's stockholders, by a vote of at least two-thirds of the
Directors of the Company (or a committee thereof) then still in
office who were Directors of the Company at the beginning of any such
period will be deemed to have been a Director of the Company at the
beginning of such period.
Notwithstanding the foregoing provisions of Section 1(d)(iii) or 1(d)(iv),
unless otherwise determined in a specific case by majority vote of the Board, a
"Change in Control" shall not be deemed to have occurred for purposes of
Section 1(d)(iii) or 1(d)(iv) solely because (A) the Company, (B) a Subsidiary,
or (C) any Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company or any Subsidiary either files or becomes
obligated to file a report or a proxy statement under or in response to
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act disclosing
beneficial ownership by it of shares of Voting Stock, whether in excess of 20%
or otherwise, or because the Company reports that a change in control of the
Company has occurred or will occur in the future by reason of such beneficial
ownership.
(e) "Competitive Activity" means the Executive's participation,
without the written consent of an officer of the Company, in the
management of any business enterprise if such enterprise engages in
substantial and direct competition with the Company and such enterprise's
sales of any product or service competitive with any product or service of
the Company amounted to 10% of such enterprise's net sales for its most
recently completed fiscal year and if the Company's net sales of said
product or service amounted to 10% of the Company's net sales for its most
recently completed fiscal year. "Competitive Activity" will not include
(i) the mere ownership of securities in any such enterprise and the
exercise of rights appurtenant thereto or (ii) participation in the
management of any such enterprise other than in connection with the
competitive operations of such enterprise.
(f) "Employee Benefits" means the perquisites, benefits and service
credit for benefits as provided under any and all employee retirement
income and welfare benefit
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policies, plans, programs or arrangements in which Executive is entitled
to participate, including without limitation any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement, or other retirement income or welfare benefit, deferred
compensation, incentive compensation, group or other life, health,
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company or a Subsidiary), disability, salary
continuation, expense reimbursement and other employee benefit policies,
plans, programs or arrangements that may now exist or any equivalent
successor policies, plans, programs or arrangements that may be adopted
hereafter by the Company or a Subsidiary, providing perquisites, benefits
and service credit for benefits at least as great in the aggregate as are
payable thereunder prior to a Change in Control.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Incentive Pay" means an annual amount equal to not less than the
highest aggregate annual bonus, incentive or other payments of cash
compensation, in addition to Base Pay, made or to be made in regard to
services rendered in any calendar year during the three calendar years
immediately preceding the year in which the Change in Control occurred
pursuant to any bonus, incentive, profit-sharing, performance,
discretionary pay or similar agreement, policy, plan, program or
arrangement (whether or not funded) of the Company or a Subsidiary, or any
successor thereto providing benefits at least as great as the benefits
payable thereunder prior to a Change in Control.
(i) "Severance Period" means the period of time commencing on the
date of the first occurrence of a Change in Control and continuing until
the earlier of (i) the third anniversary of the occurrence of the Change
in Control or (ii) the Executive's death; provided, however, that
commencing on each anniversary of the Change in Control, the Severance
Period will automatically be extended for an additional year unless, not
later than 90 calendar days prior to such anniversary date, either the
Company or the Executive shall have given written notice to the other that
the Severance Period is not to be so extended.
(j) "Subsidiary" means an entity in which the Company directly or
indirectly beneficially owns 50% or more of the outstanding Voting Stock.
(k) "Term" means the period commencing as of the date hereof and
expiring as of the later of (i) the close of business on December 31,
2002, or (ii) the expiration of the Severance Period; provided, however,
that (A) commencing on January 1, 2005 and each January 1 thereafter, the
term of this Agreement will automatically be extended for an additional
year unless, not later than September 30 of the immediately preceding
year, the Company or the Executive shall have given notice that it or the
Executive, as the case may be, does not wish to have the Term extended and
(B) subject to the last sentence of Section 9, if, prior to a Change in
Control, the Executive ceases for any reason to be an employee of the
Company and any Subsidiary, thereupon without further action the Term
shall be deemed to have expired and this Agreement will immediately
terminate and be of no further effect. For purposes of this Section 1(k),
the Executive shall not be deemed to
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have ceased to be an employee of the Company and any Subsidiary by reason
of the transfer of Executive's employment between the Company and any
Subsidiary, or among any Subsidiaries.
(l) "Termination Date" means the date on which the Executive's
employment is terminated (the effective date of which shall be the date of
termination, or such other date that may be specified by the Executive if
the termination is pursuant to Section 3(b).
(m) "Voting Stock" means securities entitled to vote generally in the
election of directors.
2. Operation of Agreement. This Agreement will be effective and binding
immediately upon its execution and the effective registration of a class of the
Company's equity securities pursuant to Section 12 of the Exchange Act, but,
anything in this Agreement to the contrary notwithstanding, this Agreement will
not be operative unless and until a Change in Control occurs. Upon the
occurrence of a Change in Control at any time during the Term, without further
action, this Agreement shall become immediately operative.
3. Termination Following a Change in Control.
(a) In the event of the occurrence of a Change in Control, or in the
event substantial discussions with a third party are occurring that
ultimately result in a Change of Control, the Executive's employment may
be terminated by the Company or a Subsidiary during the Severance Period
and the Executive shall be entitled to the benefits provided by Section 4
unless such termination is the result of the occurrence of one or more of
the following events:
(i) The Executive's death;
(ii) If the Executive becomes permanently disabled within the
meaning of, and begins actually to receive disability benefits
pursuant to, the long-term disability plan in effect for, or
applicable to, Executive immediately prior to the Change in Control
or as otherwise provided in Executive's employment contract; or
(iii) Cause.
If, during the Severance Period, the Executive's employment is terminated
by the Company or any Subsidiary other than pursuant to Section 3(a)(i),
3(a)(ii) or 3(a)(iii), the Executive will be entitled to the benefits
provided by Section 4 hereof.
(b) In the event of the occurrence of a Change in Control, the
Executive may terminate employment with the Company and any Subsidiary
during the Severance Period with the right to severance compensation as
provided in Section 4 upon the occurrence of one or more of the following
events (regardless of whether any other reason, other than
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Cause as hereinabove provided, for such termination exists or has
occurred, including without limitation other employment):
(i) Failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or a substantially
equivalent office or position, of or with the Company and/or a
Subsidiary, as the case may be, which the Executive held immediately
prior to a Change in Control, or the removal of the Executive as a
Director of the Company and/or a Subsidiary (or any successor
thereto) if the Executive shall have been a Director of the Company
and/or a Subsidiary immediately prior to the Change in Control;
(ii) (A) A significant adverse change in the nature or scope of
the authorities, powers, functions, responsibilities or duties
attached to the position with the Company and any Subsidiary which
the Executive held immediately prior to the Change in Control, (B) a
reduction in the aggregate of the Executive's Base Pay and Incentive
Pay received from the Company and any Subsidiary, or (C) the
termination or denial of the Executive's rights to Employee Benefits
or a reduction in the scope or value thereof, any of which is not
remedied by the Company within 10 calendar days after receipt by the
Company of written notice from the Executive of such change,
reduction or termination, as the case may be;
(iii) A determination by the Executive (which determination will
be conclusive and binding upon the parties hereto provided it has
been made in good faith and in all events will be presumed to have
been made in good faith unless otherwise shown by the Company by
clear and convincing evidence) that a change in circumstances has
occurred following a Change in Control, including, without
limitation, a change in the scope of the business or other activities
for which the Executive was responsible immediately prior to the
Change in Control, which has rendered the Executive substantially
unable to carry out, has substantially hindered Executive's
performance of, or has caused Executive to suffer a substantial
reduction in, any of the authorities, powers, functions,
responsibilities or duties attached to the position held by the
Executive immediately prior to the Change in Control, which situation
is not remedied within 10 calendar days after written notice to the
Company from the Executive of such determination;
(iv) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or substantially all
of its business and/or assets, unless the successor or successors (by
liquidation, merger, consolidation, reorganization, transfer or
otherwise) to which all or substantially all of its business and/or
assets have been transferred (directly or by operation of law)
assumed all duties and obligations of the Company under this
Agreement pursuant to Section 11(a);
(v) The Company relocates its principal executive offices, or
requires the Executive to have his principal location of work
changed, to any location that is in excess of 25 miles from the
location thereof immediately prior to the Change in
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Control, or requires the Executive to travel away from his office in
the course of discharging his responsibilities or duties hereunder at
least 20% more (in terms of aggregate days in any calendar year or in
any calendar quarter when annualized for purposes of comparison to
any prior year) than was required of Executive in any of the three
full years immediately prior to the Change in Control without, in
either case, his prior written consent; or
(vi) Without limiting the generality or effect of the foregoing,
any material breach of this Agreement by the Company or any successor
thereto.
(c) A termination by the Company pursuant to Section 3(a) or by the
Executive pursuant to Section 3(b) will not affect any rights that the
Executive may have pursuant to any agreement, policy, plan, program or
arrangement of the Company or Subsidiary providing Employee Benefits,
which rights shall be governed by the terms thereof.
4. Severance Compensation.
(a) If, following the occurrence of a Change in Control, the Company
or Subsidiary terminates the Executive's employment during the Severance
Period other than pursuant to Section 3(a)(i), 3(a)(ii) or 3(a)(iii), or
if the Executive terminates his employment pursuant to Section 3(b) the
Company will pay to the Executive the following amounts within five
business days after the Termination Date and continue to provide to the
Executive the following benefits:
(i) A lump sum payment in an amount equal to three times the sum
of (A) Base Pay, plus (B) Incentive Pay (determined in accordance
with the standards set forth in Section 1(f)).
(ii) For a period of thirty-six months following the Termination
Date (the "Continuation Period"), the Company will arrange to provide
the Executive with Employee Benefits that are welfare benefits (but
not stock option, stock purchase, stock appreciation or similar
compensatory benefits) substantially similar to those that the
Executive was receiving or entitled to receive immediately prior to
the Termination Date (or, if greater, immediately prior to the
reduction, termination, or denial described in Section 3(b)(ii)),
except that the level of any such Employee Benefits to be provided to
the Executive may be reduced in the event of a corresponding
reduction generally applicable to all recipients of or participants
in such Employee Benefits, and (B) such Continuation Period will be
considered service with the Company for the purpose of determining
service credits and benefits due and payable to the Executive under
the retirement income, supplemental executive retirement and other
benefit plans of the Company or Subsidiary applicable to the
Executive, his dependents or his beneficiaries immediately prior to
the Termination Date (or, if greater, immediately prior to the
reduction, termination or denial described in Section 3(b)(ii)). If
and to the extent that any benefit described in subsection (A) or (B)
of this Section 4(a)(ii) is not or cannot be paid or provided under
any policy, plan, program or arrangement of the Company or any
Subsidiary, as the case may be, then the Company will itself pay or
provide for the payment to the Executive, his dependents and
beneficiaries, of such Employee Benefits along with, in the case of
any benefit described in subsection (A) of this Section 4(a)(ii)
which is subject to tax because it is not or
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cannot be paid or provided under any such policy, plan, program or
arrangement of the Company or any Subsidiary, an additional amount
such that after payment by the Executive, or his dependents or
beneficiaries, as the case may be, of all taxes so imposed, the
recipient retains an amount equal to such taxes. Without otherwise
limiting the purposes or effect of Section 5, Employee Benefits
otherwise receivable by the Executive pursuant to subsection (A) of
this Section 4(a)(ii) will be reduced to the extent comparable
welfare benefits are actually received by the Executive from another
employer during the Continuation Period following the Executive's
Termination Date, and any such benefits actually received by the
Executive shall be reported by the Executive to the Company.
(b) Without limiting the rights of the Executive at law or in equity,
if the Company fails to make any payment or provide any benefit required
to be made or provided hereunder on a timely basis, the Company will pay
interest on the amount or value thereof at an annualized rate of interest
equal to the so-called composite "prime rate" as quoted from time to time
during the relevant period in The Wall Street Journal. Such interest will
be payable as it accrues on demand. Any change in such prime rate will be
effective on and as of the date of such change.
(c) Notwithstanding any provision of this Agreement to the contrary,
the parties' respective rights and obligations under this Section 4 and
under Sections 5 and 7 will survive any termination or expiration of this
Agreement or the termination of the Executive's employment following a
Change in Control for any reason whatsoever.
5. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, but
subject to Section 5(h), in the event that this Agreement shall become
operative and it shall be determined (as hereafter provided) that any
payment (other than the Gross-Up payments provided for in this Section 5)
or distribution by the Company or any of its affiliates to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise
pursuant to or by reason of any other agreement, policy, plan, program or
arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision thereto) by reason of being considered "contingent on
a change in ownership or control" of the Company, within the meaning of
Section 280G of the Code (or any successor provision thereto) or to any
similar tax imposed by state or local law, or any interest or penalties
with respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter
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collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment or payments (collectively, a "Gross-Up Payment");
provided, however, that no Gross-up Payment shall be made with respect to
the Excise Tax, if any, attributable to (i) any incentive stock option, as
defined by Section 422 of the Code ("ISO") granted prior to the execution
of this Agreement, or (ii) any stock appreciation or similar right,
whether or not limited, granted in tandem with any ISO described in clause
(i). The Gross-Up Payment shall be 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 Payment.
(b) Subject to the provisions of Section 5(f), all determinations
required to be made under this Section 5, including whether an Excise Tax
is payable by the Executive and the amount of such Excise Tax and whether
a Gross-Up Payment is required to be paid by the Company to the Executive
and the amount of such Gross-Up Payment, if any, shall be made by a
nationally recognized accounting firm (the "Accounting Firm") selected by
the Executive in his sole discretion. The Executive shall direct the
Accounting Firm to submit its determination and detailed supporting
calculations to both the Company and the Executive within 30 calendar days
after the Termination Date, if applicable, and any such other time or
times as may be requested by the Company or the Executive. If the
Accounting Firm determines that any Excise Tax is payable by the
Executive, the Company shall pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination
and calculations with respect to any Payment to the Executive. If the
Accounting Firm determines that no Excise Tax is payable by the Executive,
it shall, at the same time as it makes such determination, furnish the
Company and the Executive an opinion that the Executive has substantial
authority not to report any Excise Tax on his federal, state or local
income or other tax return. As a result of the uncertainty in the
application of Section 4999 of the Code (or any successor provision
thereto) and the possibility of similar uncertainty regarding applicable
state or local tax law at the time of any determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the
event that the Company exhausts or fails to pursue its remedies pursuant
to Section 5(f) and the Executive thereafter is required to make a payment
of any Excise Tax, the Executive shall direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and to submit
its determination and detailed supporting calculations to both the Company
and the Executive as promptly as possible. Any such Underpayment shall be
promptly paid by the Company to, or for the benefit of, the Executive
within five business days after receipt of such determination and
calculations.
(c) The Company and the Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determinations and calculations contemplated by Section
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5(b). Any determination by the Accounting Firm as to the amount of the
Gross-Up Payment shall be binding upon the Company and the Executive.
(d) The federal, state and local income or other tax returns filed by
the Executive shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax
payable by the Executive. The Executive shall make proper payment of the
amount of any Excise Payment, and at the request of the Company, provide
to the Company true and correct copies (with any amendments) of his
federal income tax return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed with the
applicable taxing authority, and such other documents reasonably requested
by the Company, evidencing such payment. If prior to the filing of the
Executive's federal income tax return, or corresponding state or local tax
return, if relevant, the Accounting Firm determines that the amount of the
Gross-Up Payment should be reduced, the Executive shall within five
business days pay to the Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by
Section 5(b) shall be borne by the Company. If such fees and expenses are
initially paid by the Executive, the Company shall reimburse the Executive
the full amount of such fees and expenses within five business days after
receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(f) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up
Payment. Such notification shall be given as promptly as practicable but
no later than 10 business days after the Executive actually receives
notice of such claim and the Executive shall further apprise the Company
of the nature of such claim and the date on which such claim is requested
to be paid (in each case, to the extent known by the Executive). The
Executive shall not pay such claim prior to the earlier of (i) the
expiration of the 30-calendar-day period following the date on which he
gives such notice to the Company and (ii) the date that any payment of
amount with respect to such claim is due. If the Company notifies the
Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:
(i) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the
Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
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(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of
this Section 5(f), the Company shall control all proceedings taken in
connection with the contest of any claim contemplated by this Section 5(f) and,
at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim (provided, however, that the Executive may participate therein at
his own cost and expense) and may, at its option, either direct the Executive
to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
the tax claimed and xxx for a refund, the Company shall advance the amount of
such payment to the Executive on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income or other tax, including interest or penalties with respect thereto,
imposed with respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of any such contested claim shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 5(f), the Executive receives any refund
with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 5(f)) promptly pay to the
Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 5(f), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial or
refund prior to the expiration of 30 calendar days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of any such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid by
the Company to the Executive pursuant to this Section 5.
(h) Notwithstanding any provision of this Agreement to the contrary,
if (i) but for this sentence, the Company would be obligated to make a
Gross-Up Payment to the Executive, (ii) the aggregate "present value" of
the "parachute payments" to be paid or
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provided to the Executive under this Agreement or otherwise does not
exceed 1.15 multiplied by three times the Executive's "base amount," and
(iii) but for this sentence, the net after-tax benefit to the Executive of
the Gross-Up Payment would not exceed $50,000 (taking into account both
income taxes and any Excise Tax) as compared to the maximum net after-tax
benefit to the Executive of parachute payments the present value of which
is not equal to or greater than three times the Executive's base amount],
then the payments and benefits to be paid or provided under this Agreement
will be reduced to the minimum extent necessary (but in no event to less
than zero) so that no portion of any payment or benefit to the Executive,
as so reduced, constitutes an "excess parachute payment." For purposes of
this Section 5(h), the terms "excess parachute payment," "present value,"
"parachute payment," and "base amount" will have the meanings assigned to
them by Section 280G of the Code. The determination of whether any
reduction in such payments or benefits to be provided under this Agreement
is required pursuant to the preceding sentence will be made at the expense
of the Company, if requested by the Executive or the Company, by the
Accounting Firm. The fact that the Executive's right to payments or
benefits may be reduced by reason of the limitations contained in this
Section 5(h) will not of itself limit or otherwise affect any other rights
of the Executive other than pursuant to this Agreement. In the event that
any payment or benefit intended to be provided under this Agreement or
otherwise is required to be reduced pursuant to this Section 5(h), the
Executive will be entitled to designate the payments and/or benefits to be
so reduced in order to give effect to this Section 5(h). The Company will
provide the Executive with all information reasonably requested by the
Executive to permit the Executive to make such designation. In the event
that the Executive fails to make such designation within 10 business days
of the Termination Date, the Company may effect such reduction in any
manner it deems appropriate.
6. No Mitigation Obligation. The Company hereby acknowledges that it will
be difficult and may be impossible for the Executive to find reasonably
comparable employment following the Termination Date and that the
non-competition covenant contained in Section 8 will further limit the
employment opportunities for the Executive. In addition, the Company
acknowledges that its severance pay plans applicable in general to its salaried
employees do not provide for mitigation, offset or reduction of any severance
payment received thereunder. Accordingly, the payment of the severance
compensation by the Company to the Executive in accordance with the terms of
this Agreement is hereby acknowledged by the Company to be reasonable, and the
Executive will not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever create
any mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise, except as expressly provided in the last
sentence of Section 4(a)(ii).
7. Legal Fees and Expenses.
(a) It is the intent of the Company that the Executive not be
required to incur legal fees and the related expenses associated with the
interpretation, enforcement or defense of Executive's rights under this
Agreement by litigation or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be
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extended to the Executive hereunder. Accordingly, if it should appear to
the Executive that the Company has failed to comply with any of its
obligations under this Agreement or in the event that the Company or any
other person takes or threatens to take any action to declare this
Agreement void or unenforceable, or institutes any litigation or other
action or proceeding designed to deny, or to recover from, the Executive
the benefits provided or intended to be provided to the Executive
hereunder, the Company irrevocably authorizes the Executive from time to
time to retain counsel of Executive's choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other
legal action, whether by or against the Company or any Director, officer,
stockholder or other person affiliated with the Company, in any
jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Executive's entering into an attorney-client relationship
with such counsel, and in that connection the Company and the Executive
agree that a confidential relationship shall exist between the Executive
and such counsel. Without respect to whether the Executive prevails, in
whole or in part, in connection with any of the foregoing, the Company
will pay and be solely financially responsible for any and all attorneys'
and related fees and expenses incurred by the Executive in connection with
any of the foregoing.
(b) Without limiting the generality or effect of Section 7(a), in
order to ensure the benefits intended to be provided to the Executive
under Section 7(a), the Company will promptly use its best efforts
following written notice to the Company by the Executive to secure an
irrevocable standby letter of credit (the "Letter of Credit"), issued by
Bank One, N.A. or another bank having combined capital and surplus in
excess of $500 million (the "Bank") for the benefit of the Executive and
providing that the fees and expenses of counsel selected from time to time
by the Executive pursuant to this Section 7 shall be paid, or reimbursed
to the Executive if paid by the Executive, on a regular, periodic basis
upon presentation by the Executive to the Bank of a statement or
statements prepared by such counsel in accordance with its customary
practices. The Company shall pay all amounts and take all action
necessary to maintain the Letter of Credit during the Severance Period and
for two years thereafter and if, notwithstanding the Company's complete
discharge of such obligations, such Letter of Credit shall be terminated
or not renewed, the Company shall obtain a replacement irrevocable clean
letter of credit drawn upon a commercial bank selected by the Company and
reasonably acceptable to the Executive, upon substantially the same terms
and conditions as contained in the Letter of Credit, or any similar
arrangement which, in any case, assures the Executive the benefits of this
Agreement without incurring any cost or expense in connection therewith.
8. Competitive Activity. During a period ending one year following the
Termination Date, if the Executive shall have received or shall be receiving
benefits under Section 4, and, if applicable, Section 5, the Executive shall
not, without the prior written consent of the Company, which consent shall not
be unreasonably withheld, engage in any Competitive Activity.
9. Employment Rights. Nothing expressed or implied in this Agreement will
create any right or duty on the part of the Company or the Executive to have
the Executive remain in the
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employment of the Company or any Subsidiary prior to or following any Change in
Control. Any termination of employment of the Executive or the removal of the
Executive from the office or position in the Company or any Subsidiary
following the commencement of any discussion with a third person that
ultimately results in a Change in Control shall be deemed to be a termination
or removal of the Executive after a Change in Control for purposes of this
Agreement.
10. Withholding of Taxes. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as the
Company is required to withhold pursuant to any law or government regulation or
ruling.
11. Successors and Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise)
to all or substantially all of the business or assets of the Company, by
agreement in form and substance satisfactory to the Executive, expressly
to assume and agree to perform this Agreement in the same manner and to
the same extent the Company would be required to perform if no such
succession had taken place. This Agreement will be binding upon and inure
to the benefit of the Company and any successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but will not otherwise be assignable, transferable or
delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 11(a) and 11(b). Without limiting the
generality or effect of the foregoing, the Executive's right to receive
payments hereunder will not be assignable, transferable or delegable,
whether by pledge, creation of a security interest, or otherwise, other
than by a transfer by Executive's will or by the laws of descent and
distribution and, in the event of any attempted assignment or transfer
contrary to this Section 11(c), the Company shall have no liability to pay
any amount so attempted to be assigned, transferred or delegated.
12. Notices. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to
have been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been
sent by a nationally recognized overnight courier service such as Federal
Express or UPS, addressed to the Company
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(to the attention of the Secretary of the Company) at its principal executive
office and to the Executive at his principal residence, or to such other
address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
13. Governing Law. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Ohio, without giving effect to the
principles of conflict of laws of such State.
14. Validity. If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
15. Miscellaneous. No provision 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 the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other
party will be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. References to Sections are to references to
Sections of this Agreement.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
MPW INDUSTRIAL SERVICES GROUP, INC.
By: __________________________________________
Name: ________________________________________
Title: _______________________________________
[EXECUTIVE]
______________________________________________
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