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Exhibit 10.25
MANAGEMENT AGREEMENT
(INVOLUNTARY AND CONSTRUCTIVE DISCHARGE FORM)
AGREEMENT entered into as of February 5, 1996 by and between FSI
International, Inc., a Minnesota corporation (the "Company"), and Xxxxxxx
Xxxxxxx (the "Employee").
WITNESSETH:
WHEREAS, the Employee is a key member of the management of the Company and
has devoted and/or is expected to devote substantial skill and effort to the
affairs of the Company, and the Board of Directors of the Company desires to
recognize the significant personal contribution that the Employee has made
and/or is expected to make to further the best interests of the Company and its
stockholders; and
WHEREAS, it is desirable and in the best interests of the Company and its
stockholders to obtain or maintain the benefits of the Employee's services and
attention to the affairs of the Company; and
WHEREAS, it is desirable and in the best interests of the Company and its
stockholders to provide inducement for the Employee (A) to remain in the
service of the Company in the event of any proposed or anticipated change in
control of the Company and (B) to remain in the service of the Company in order
to facilitate an orderly transition in the event of a change in control of the
Company; and
WHEREAS, it is desirable and in the best interests of the Company and its
stockholders that the Employee be in a position to make judgments and advise
the Company with respect to proposed changes in control of the Company without
regard to the possibility that Employee's employment may be terminated without
compensation in the event of certain changes in control of the Company; and
WHEREAS, the Employee desires to be protected in the event of certain
changes in control of the Company; and
WHEREAS, for the reasons set forth above, the Company and the Employee
desire to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the Company and the Employee agree as follows:
1. Employment. The Employee shall remain in the employ of the Company for
the term of this Agreement as defined in Paragraph 14 (the "Term"), and during
the Term the Employee shall have such title, duties, responsibilities and
authority, and receive such
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remuneration and fringe benefits, as the Board of Directors of the Company
or its Committees shall from time to time provide for the Employee; provided,
however, that either the Employee or the Company may terminate the employment
of the Employee at any time prior to the expiration of the Term, with or
without Cause and for any reason whatever, subject to the right of the Employee
to receive any payment and other benefits that may be due pursuant to the terms
and conditions of Paragraph 3 of this Agreement or, except as provided in
Paragraph 3(B) or Paragraph 4, the terms of any other written employment
agreement relating to the employment of Employee by the Company.
2. Occurrence of an Event. For purposes of this Agreement, an
"Event" shall be deemed to have occurred if:
(A) a majority of the directors of the Company shall be persons
other than persons
(i) for whose election proxies shall have been solicited by
the Board of Directors of the Company or
(ii) who are then serving as directors appointed by the Board
of Directors to fill vacancies on the Board of Directors
caused by death or resignation (but not by removal) or to
fill newly-created directorships, but excluding, for this
purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened
election contest which was (or, if threatened, would have
been) subject to Rule 14a-11 of the Securities Exchange
Act of 1934, as amended, (the "Exchange Act") or any
successor rule thereto.
(B) 30% or more of the then outstanding common or voting stock of
the Company is acquired or beneficially owned (as defined in
Exchange Act Rule 13d-3) by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act), provided, however, that the following
acquisitions and beneficial ownership shall not constitute
Events pursuant to this Paragraph 2(B):
(i) any acquisition or beneficial ownership by the Company or
a subsidiary of the Company (if a majority of the
outstanding voting power of the outstanding shares
entitled to vote generally in an election of directors of
the subsidiary are beneficially owned directly or
indirectly by the Company ("Subsidiary")), or
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(ii) any acquisition or beneficial ownership by any employee
benefit plan (or related trust) sponsored or maintained
by the Company or one or more of its Subsidiaries,
(iii) any acquisition or beneficial ownership by the Employee
or any group that includes the Employee, or
(iv) any acquisition or beneficial ownership by a parent
corporation or its wholly-owned subsidiaries, as long as
they shall remain wholly-owned subsidiaries, of 100% of
the outstanding common stock and voting stock of the
Company as a result of a merger or statutory share
exchange which complies with Paragraph 2(C)(i)(2) or the
exception in Paragraph 2(C)(ii) hereof in all respects.
(C) the shareholders of the Company approve a definitive agreement
or plan to
(i) merge or consolidate the Company with or into another
corporation (other than (1) a merger or consolidation
with a Subsidiary of the Company or (2) a merger in which
(a) the Company is the surviving corporation,
(b) no outstanding voting stock of the Company (other
than fractional shares) held by shareholders
immediately prior to the merger is converted into
cash, securities, or other property (except (I)
voting stock of a parent corporation owning
directly, or indirectly through wholly-owned
subsidiaries, both beneficially and of record 100%
of the voting stock of the Company immediately
after the merger or (II) cash upon the exercise by
holders of voting stock of the Company of statutory
dissenters' rights),
(c) the persons who were the beneficial owners,
respectively, of the outstanding common stock and
outstanding voting stock of the Company immediately
prior to such merger beneficially own, directly or
indirectly, immediately after the merger, more than
70% of, respectively, the then outstanding common
stock and the then outstanding voting stock of the
surviving corporation or its parent corporation,
and
(d) if voting stock of the parent corporation is
exchanged for voting stock of the Company in the
merger, all holders of
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any class or series of voting stock of the Company
immediately prior to the merger have the right to
receive substantially the same per share
consideration in exchange for their voting stock
of the Company as all other holders of such class
or series),
(ii) exchange, pursuant to a statutory exchange of shares of
voting stock of the Company held by shareholders of the
Company immediately prior to the exchange, shares of one
or more classes or series of voting stock of the Company
for cash, securities or other property, except for (a)
voting stock of a parent corporation of the Company
owning directly, or indirectly through wholly-owned
subsidiaries, both beneficially and of record 100% of
the voting stock of the Company immediately after the
statutory share exchange if (I) the persons who were the
beneficial owners, respectively, of the outstanding
common stock and outstanding voting stock of the Company
immediately prior to such statutory share exchange own,
directly or indirectly, immediately after the statutory
share exchange more than 70% of, respectively, the then
outstanding common stock and the then outstanding voting
stock of such parent corporation, and (II) all holders
of any class or series of voting stock of the Company
immediately prior to the statutory share exchange have
the right to receive substantially the same per share
consideration in exchange for their voting stock of the
Company as all other holders of such class or series or
(b) cash with respect to fractional shares of voting
stock of the Company or payable as a result of the
exercise by holders of voting stock of the Company of
statutory dissenters' rights,
(iii) sell or otherwise dispose of all or substantially all
of the assets of the Company (in one transaction or a
series of transactions), or
(iv) liquidate or dissolve the Company,
unless a majority of the voting stock (or the voting equity
interest) of the surviving corporation or its parent
corporation or of any corporation (or other entity) acquiring
all or substantially all of the assets of the Company (in the
case of a merger, consolidation or disposition of assets) or
the Company or its parent corporation (in the case of a
statutory share exchange) is, immediately following the
merger, consolidation, statutory share exchange or disposition
of assets, beneficially owned by the
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Employee or a group of persons, including the Employee,
acting in concert, or
(D)(i) the Company enters into an agreement in principle or a
definitive agreement relating to an Event described in
clause (A), (B) or (C) above which ultimately results
in such an Event described in clause (A), (B) or (C)
hereof,
(ii) a tender or exchange offer or proxy contest is
commenced which ultimately results in an
Event described in clause (A) or (B) hereof, or
(iii) there shall be an involuntary termination of the
employment of Employee or any of the events which
constitute a Constructive Involuntary Termination of
employment of Employee occur, and Employee reasonably
demonstrates that such event (x) was requested by a
third party that has previously taken other steps
reasonably calculated to result in an Event described
in clause (A), (B) or (C) above and which ultimately
results in an Event described in clause (A), (B) or (C)
hereof or (y) otherwise arose in connection with or in
anticipation of an Event described in clause (A), (B)
or (C) above that ultimately occurs.
3. Rights to Payments Following An Event. If any Event shall
occur during the Term of this Agreement, then the Employee shall be entitled
to receive from the Company or its successor (which term as used herein shall
include any person acquiring all or substantially all of the assets of the
Company) a cash payment and other benefits on the following basis (unless the
Employee's employment by the Company is terminated voluntarily or involuntarily
prior to the occurrence of the earliest Event to occur (the "First Event"), in
which case the Employee shall be entitled to no payment or benefits under this
Paragraph 3):
(A) If at the time of, or at any time after, the
occurrence of the First Event and prior to the end of the
Transition Period, the employment of the Employee with the
Company is voluntarily or involuntarily terminated for any
reason
(unless such termination is a voluntary termination by the
Employee other than a Constructive Involuntary Termination,
is on account of the death or Disability of the Employee, or
is a termination by the Company for Cause), the Employee (or
the Employee's legal representative, as the case may be),
subject to the limitations set forth in Xxxxxxxxx 0,
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(x) xxxxx xx entitled to receive from the Company or its
successor, upon such termination of employment with the
Company or its successor, (a) in the event of an
involuntary termination, at least 30 days prior written
notice of termination and compensation at the Employee's
regular rate of compensation for the 30-day period
following receipt of notice of termination of employment
without regard to whether Employee is required to perform
services during such period and (b) a lump sum cash
payment in an amount equal to (x) one times the highest
annual rate of the Employee's base salary (without
reduction for any salary reduction or other deferral
contribution to any employee benefit plan sponsored by
the Company) in effect at any time during the period
commencing as of twelve months prior to the First Event
and up to the date of termination, plus (y) the amount of
bonus that is payable in accordance with the terms of any
bonus plan or plans from time to time in effect at the
"Plan" level (100% of the relevant financial goal
(divisional and/or corporate) for the year to which the
bonus relates) or, in the absence of any such plan, a
bonus equal to 35% of the compensation payable pursuant
to clause (x) above, in a lump sum at the time of such
termination of employment; and
(ii) shall be entitled until the end of the Transition Period
to participate in any health, disability and life
insurance plan or program in which the Employee was
entitled to participate immediately prior to the First
Event as if he or she were an employee of the Company
until the end of the Transition Period (except, (a) with
respect to health, disability, or life insurance
coverage, for those portions remaining until the end of
the Transition Period that duplicate health, disability
or life insurance coverage that is in place for the
Employee under any other policy provided at the expense
of another employer of Employee and (b) with respect to
life insurance coverage, for any coverage pursuant to a
split dollar insurance agreement between the Employee and
Company, which split dollar insurance agreement contains
separate provisions applicable upon termination of
employment); provided however, that in the event that the
Employee's participation in any such health, disability
or life insurance plan or program is barred, the Company,
at its sole cost and expense, shall arrange to provide
the Employee with benefits substantially similar to those
which the Employee is entitled to receive under such plan
or program; and
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(iii) shall be entitled to professional outplacement services
by a third party retained by the Company and reasonably
acceptable to the Employee and to secretarial support
and office space for up to twelve months after
termination of employment at a location, designated by
the Company and reasonably acceptable to the Employee,
within 35 miles of the location where the Employee was
employed immediately prior to the First Event, at a cost
to the Company or the successor to the Company which in
the aggregate shall not exceed $15,000.
(B) The payments provided for in this Paragraph 3 shall be in
addition to any salary or other remuneration otherwise payable
to the Employee on account of employment by the Company or one
or more of its subsidiaries or its successor (including any
amounts received prior to such termination of employment for
personal services rendered after the occurrence of the First
Event) but shall be reduced by any severance pay which the
Employee receives from the Company, its subsidiaries or its
successor under any other policy or agreement of the Company in
the event of involuntary termination of Employee's employment.
(C) The Company also shall pay to the Employee all legal fees and
expenses incurred by the Employee as a result of such
termination, including, but not limited to, all such fees and
expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement
(D) In the event that at any time from the date of the First Event
until the end of the Transition Period,
(i) the Employee does not have substantially equivalent or
greater title, duties, responsibilities and authority as
compared with the Employee's status immediately prior to
the First Event, other than for Cause or on account of
Disability;
(ii) the Company shall have failed to continue in effect at
the equivalent or greater level, the Employee's base
salary and other remuneration and fringe benefits in
which Employee participates immediately prior to the
Change in Control other than for Cause or on account of
Disability or shall have failed to pay Employee any
amounts due thereunder;
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(iii) the Company shall have failed to continue to provide
Employee with benefits substantially similar to those
enjoyed by Employee under any of the Company's life,
medical, health, dental, accident, or disability
insurance plans in which Employee was participating at
the time of the Change in Control, or has taken any
action that would, directly or indirectly, materially
reduce any of such benefits or deprive Employee of any
material fringe benefit enjoyed by Employee at the time
of the Change in Control, or the failure by the Company
to provide Employee with the number of paid vacation days
to which Employee is entitled on the basis of years of
service with the Company's normal vacation policy in
effect at the time of the Change in Control, other than
for Cause or on account of Disability;
(iv) the Company shall have failed to obtain assumption of
this Agreement by any successor as contemplated by
Paragraph 6(B) hereof,
(v) the Company shall require the Employee to relocate to any
place other than a location within twenty-five miles of
the location at which the Employee performed his duties
immediately prior to the First Event or, if the Employee
performed such duties at the Company's principal
executive offices, the Company shall relocate its
principal executive offices to any location other than a
location within twenty-five miles of the location of the
principal executive offices immediately prior to the
First Event, or
(vi) the Company shall require that the Employee travel on
Company business to a substantially greater extent than
required immediately prior to the First Event,
a termination of employment with the Company by the Employee
thereafter shall constitute a Constructive Involuntary Termination.
(E) The Company's and any successor's obligation to make the
payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company or its successor may have
against the Employee or others.
(F) The Employee shall not be required to mitigate the amount of
any payment or other benefit provided for in Paragraph 3 by
seeking other employment
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or otherwise, nor (except as specifically provided in
Paragraph 3(A)(ii)) shall the amount of any payment or other
benefit provided for in Paragraph 3 be reduced by any
compensation earned by the Employee as the result of
employment by another employer after termination, or otherwise.
(G) The obligations of the Company under this
Paragraph 3 shall survive the termination of this Agreement.
4. Internal Revenue Code Section 280G Limitation. Notwithstanding
any provision to the contrary contained herein except the last sentence of this
Paragraph 4, if the lump sum cash payment due and the other benefits to which
the Employee shall become entitled under Paragraph 3(A) hereof, either alone or
together with other payments in the nature of compensation to the Employee
which are contingent on a change in the ownership or effective control of the
Company or in the ownership of a substantial portion of the assets of the
Company or otherwise, would constitute a "parachute payment" as defined in
Section 280G of the Internal Revenue Code of 1986 (the "Code") or any successor
provision thereto, such lump sum payment and/or such other benefits and
payments shall be reduced (but not below zero) to the largest aggregate amount
as will result in no portion thereof being subject to the excise tax imposed
under Section 4999 of the Code (or any successor provision thereto) or being
non-deductible to the Company for Federal Income Tax purposes pursuant to
Section 280G of the Code (or any successor provision thereto). The Employee in
good faith shall determine the amount of any reduction to be made pursuant to
this Paragraph 4 and shall select from among the foregoing benefits and
payments those which shall be reduced. No modification of, or successor
provision to, Section 280G or Section 4999 subsequent to the date of this
Agreement shall, however, reduce the benefits to which the Employee would be
entitled under this Agreement in the absence of this Section 4 to a greater
extent than they would have been reduced if Section 280G and Section 4999 had
not been modified or superseded subsequent to the date of this Agreement,
notwithstanding anything to the contrary provided in the first sentence of this
Paragraph 4.
5. Definition of Certain Terms.
(A) As used herein, the term "person" shall mean an
individual, partnership, corporation, estate, trust or other
entity.
(B) As used herein, the term "Cause" shall mean, and
be limited to, (i) willful and gross neglect of duties by the
Employee or (ii) an act or acts committed by the Employee
constituting a felony and substantially detrimental to the
Company or its reputation.
(C) As used herein, the term "Disability" shall mean
the Employee's absence from his duties with the Company on a
full time basis for 180 consecutive business days, as a result
of the Employee's incapacity due to physical or
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mental illness, unless within 30 days after written notice
pursuant to Paragraph 1 hereof is given following such absence,
the Employee shall have returned to the full time performance
of his duties.
(D) As used herein, the term "voting stock" shall mean all
outstanding shares of capital stock entitled to vote generally
in the election of directors, considered for purposes of this
Agreement as one class, and all references to percentages of
the voting stock shall be deemed to be references to
percentages of the total voting power of the voting stock.
(E) As used herein, the term "Transition Period" shall mean the
two-year period commencing on the date of the earliest to occur
of an Event described in clause (A), (B) or (C) of Paragraph 2
hereof (the "Commencement Date") and ending on the second
anniversary of the Commencement Date.
6. Successors and Assigns.
(A) This Agreement shall be binding upon and inure to the benefit
of the successors, legal representatives and assigns of the
parties hereto; provided, however, that the Employee shall not
have any right to assign, pledge or otherwise dispose of or
transfer any interest in this Agreement or any payments
hereunder, whether directly or indirectly or in whole or in
part, without the written consent of the Company or its
successor.
(B) The Company will require any successor (whether direct or
indirect, by purchase of a majority of the outstanding voting
stock of the Company or all or substantially all of the assets
of the Company, or by merger, consolidation or otherwise), by
agreement in form and substance satisfactory to the Employee,
to assume expressly 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 (other than in the case of
a merger or consolidation) shall be a breach of this Agreement
and shall entitle the Employee to compensation from the Company
in the same amount and on the same terms as the Employee would
be entitled hereunder if the Employee terminated his employment
on account of a Constructive Involuntary Termination, except
that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the
date of termination. 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 is
required to execute and deliver the agreement
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provided for in this Paragraph 6(B) or which otherwise becomes
bound by all the terms and provisions of this Agreement by
operation of law.
7. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Minnesota.
8. Notices. All notices, requests and demands given to or made
pursuant hereto shall be in writing and shall be delivered or mailed to any
such party at its address which:
(A) In the case of the Company shall be:
FSI International, Inc.
000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
(B) In the case of the Employee shall be:
Xxxxxxx Xxxxxxx
___________________________
___________________________
___________________________
Either party may, by notice hereunder, designate a changed address. Any
notice, if mailed properly addressed, postage prepaid, registered or certified
mail, shall be deemed to have been given on the registered date or that date
stamped on the certified mail receipt.
9. Severability; Severance. In the event that any portion of this
Agreement is held to be invalid or unenforceable for any reason, it is hereby
agreed that such invalidity or unenforceability shall not affect the other
portions of this Agreement and that the remaining covenants, terms and
conditions or portions hereof shall remain in full force and effect, and any
court of competent jurisdiction may so modify the objectionable provision as to
make it valid, reasonable and enforceable. In the event that any benefits to
the Employee provided in this Agreement are held to be unavailable to the
Employee as a matter of law, the Employee shall be entitled to severance
benefits from the Employer, in the event of an involuntary termination or
Constructive Involuntary Termination of employment of the Employee (other than
a termination on account of the death or Disability of the Employee or a
termination for Cause) during the term of this Agreement occurring at the time
of or following the occurrence of an Event, at least as favorable to the
Employee (when taken together with the benefits under this Agreement that are
actually received by the Employee) as the most advantageous benefits made
available by the Employer to employees of comparable position and seniority to
the Employee during the two-year period prior to the First Event.
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10. Employment Tax Withholding. The Company may withhold from any
compensation or benefits payable under this Agreement all federal, state, city
or other income and employment taxes that are required to be withheld pursuant
to any law or governmental regulation or ruling.
11. Assignment. Employee may not encumber or dispose of any
payment under this Agreement, which payments and the rights to such payments are
expressly declared nonassignable or nontransferable, except as otherwise
specifically provided in this Agreement.
12. Titles. The titles and headings preceding the text of the
paragraphs of this Agreement have been inserted solely for convenience of
reference and do not constitute a part of this Agreement or affect its meaning,
interpretation or effect.
13. Waiver. The failure of either party to insist in any one or
more instances upon performance of any terms or conditions of this Agreement
will not be construed as a waiver of future performance of any such term,
covenant, or condition and the obligations of either party with respect
to such term, covenant or condition will continue in full force and effect.
14. Term. This Agreement shall commence on the date of this
Agreement and shall terminate, and the Term of this Agreement shall end, on the
later of (A) December 31, 1996, provided that such period shall be
automatically extended for one year and from year to year thereafter until
notice of termination is given by the Employer or the Employee to the
other party hereto at least 90 days prior to December 31, 1996 or the one-year
extension period then in effect, as the case may be, or (B) if the Commencement
Date occurs prior to December 31, 1996 (or prior to the end of the extension
year then in effect as provided for in clause (A) hereof), the second
anniversary of the Commencement Date.
15. Entire Agreement. This Agreement contains the entire
understanding of the Company and Employee regarding compensation to be paid by
the Company to Employee in the event of a change-in-control involving the
Company and supercedes all prior agreements and understandings, written or
oral, between Employee and Company regarding such compensation including the
Management Agreement between Employee and Company dated as of January 25, 1993.
No provision hereof may be altered, amended, modified or waived in any way
whatsoever, except by written agreement executed by both the Company and
Employee.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
FSI International, Inc.
By: /s/ Xxxxxxx X. Xxxxx
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/s/ Xxxxxxx Xxxxxxx Its: Executive Vice President Quality
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Xxxxxxx Xxxxxxx and Human Resources
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