[GROUP A EXECUTIVES]
Re: RETENTION PROGRAM
Dear [Executive]:
XxxXxxxxx.xxx, Inc. (the "COMPANY") has approved a Retention Program (the
"PROGRAM") for its executives and other key employees in connection with a
possible "Change of Control" (as defined below). You have been selected to
participate in the Program as an employee whose continued performance and
contributions to the Company are critical to the ongoing effective management of
the Company's business and the potential success of a Change of Control.
This letter agreement is in addition to, and not in substitution for, any
other agreements between you and the Company or any of its subsidiaries and any
other pay or benefits which you are eligible to earn PROVIDED, HOWEVER, that
after the occurrence of a Change of Control, the rights set forth in Section II
of this Agreement supersede your right to receive severance payments pursuant to
Section __ of the employment agreement, dated _____________, between you and the
Company (the "Employment Agreement").
The details of the Program are set forth below.
I. RETENTION PAYMENT
Subject to the terms and conditions described below, should there be a
Change of Control of the Company, you will be eligible to receive a payment
equal to one hundred percent (100%) of your 2004 base salary (the "RETENTION
PAYMENT").
The Retention Payment is subject to all applicable tax withholding
requirements, as determined by the Company.
The Retention Payment will be paid in a lump sum in cash on the date which
is thirty (30) days after the occurrence of a Change of Control (the "RETENTION
PAYMENT DATE") or such later date as is required by Section 409A(a)(2)(B)(i) of
the Internal Revenue Code of 1986, as amended (the "Code").
II. TERMINATION PAYMENTS
Subject to the terms and conditions described below, in the event your
employment should be terminated by the Company or its successor without "Cause"
(as defined below) or by you for "Good Reason" (as defined below) within
eighteen (18) months following a Change of Control, you will receive the
following payments (collectively, the "Termination Payments"):
(i) a termination payment equal to 100% of your 2004 base salary;
(ii) a supplemental termination payment in the amount of 5% of the
termination payment in paragraph (i) above; and
(iii) continuation of group life, disability, sickness, hospitalization and
accident insurance benefits equivalent to the coverages in effect immediately
prior to your termination for a twelve (12) month period following the date of
your termination.
The foregoing payments are subject to all applicable tax withholding
requirements, as determined by the Company or its successor.
The payments in paragraphs (i) and (ii) above will be payable in a lump sum
in cash within 30 days of your termination or such later date as is required by
Code Section 409A(a)(2)(B)(i).
You shall have no duty to seek other employment or otherwise mitigate the
amount of any payments to be made by the Company pursuant to this Agreement.
III. TERMS AND CONDITIONS
In order to receive the Retention Payment or the Termination Payments, as
the case may be, you must fully comply with each of the following terms and
conditions:
1. In order to receive the Retention Payment, you must continue your
active employment with the Company until the 30th day following the occurrence
of the Change of Control. In the event of the termination of your employment by
the Company without Cause or by you for Good Reason prior to the 30th day
following the occurrence of the Change of Control, you shall be entitled to
receive the Retention Payment as if your employment had continued until such
date.
If you die, retire or elect to terminate your employment for any reason
other than Good Reason, or if the Company terminates your employment for Cause,
in any such case prior to the 30th day following the occurrence of the Change of
Control, you will not receive a Retention Payment.
2. In order to receive the Termination Payments, you must execute and
deliver to the Company a release substantially in the form attached hereto as
Exhibit A (the "Release") and the seven (7) day revocation period described in
the Release must have expired without revocation of such Release.
3. You will assist the Company in all of its efforts to complete a possible
Change of Control. In performing these functions you will maintain
confidentiality about a possible Change of Control (except to the extent you are
requested by the Company's management to communicate with a potential
purchaser), and represent the Company's interests in completing a possible
Change of Control.
4. Except to the extent publicly disclosed by the Company or as required by
law or legal process, you will keep confidential the existence and terms of your
agreement under the Program and will not discuss it with anyone other than your
financial advisor, your attorney, members of your immediate family, and the
General Counsel and Chief Financial Officer of the Company.
IV. DEFINITIONS
1. For purposes of this Program, "Cause" means:
(a) your willful misconduct or gross negligence in the performance of
your obligations to the Company or one of its subsidiaries,
(b) dishonesty or misappropriation relating to the Company or one of
its subsidiaries or any funds, properties, or other assets of the Company or any
such subsidiary,
(c) inexcusable repeated or prolonged absence from work (other than
as a result of, or in connection with, a disability or illness),
(d) any unauthorized disclosure by you of confidential or proprietary
information of the Company or one of its subsidiaries which is reasonably likely
to result in material harm to the Company or such subsidiary,
(e) a conviction of you (including entry of a guilty or nolo
contendere plea) involving fraud, dishonesty, or moral turpitude, or involving a
violation of federal or state securities laws, or
(f) your failure to perform faithfully your duties to the Company or
one of its subsidiaries following written notice and a reasonable opportunity to
cure.
2. For purposes of this Program, "Good Reason" means:
(a) a reduction in your base salary,
(b) a significant reduction of your functions, duties or
responsibilities relative to your functions, duties or responsibilities in
effect immediately prior to such reduction, or
(c) your relocation by the Company or a successor thereto to a
location more than fifty (50) miles from the Company's current headquarters.
3. For purposes of this Agreement, a Change of Control shall be deemed to
have occurred in the event any of the following occurs (in each case interpreted
in a manner consistent with the requirements of Code Section 409A):
(a) the acquisition by any one person or more than one person acting
as a group (as defined in Q&A 12(b) of IRS Notice 2005-1) (other than the
Company and its subsidiaries as determined immediately prior to that date and
any of its or their employee benefit plans) of ownership of stock of the Company
that, together with stock held by such person or group, constitutes more than
fifty percent of the total fair market value or total voting power of the stock
of the Company if such person or group was not an owner of at least five percent
of the total fair market value or total voting power of the stock of the Company
immediately prior to the Company's initial public offering;
(b) a majority of the members of the Company's Board of Directors
being replaced during any 12-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Company's Board of
Directors prior to the date of the appointment or election;
(c) any one person or more than one person acting as a group (as
defined in Q&A 14(c) of IRS Notice 2005-1) acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person
or persons) assets from the Company that have a total gross fair market value
equal to or more than 40 percent of the total gross fair market value of all of
the assets of the Company immediately prior to such acquisition or acquisitions,
other than an acquisition of assets of the Company by (i) a shareholder of the
Company (immediately before the acquisition) in exchange for or with respect to
the Company's stock, (ii) an entity fifty percent or more of the total value or
voting power of which is owned, directly or indirectly, by the Company, (iii) a
person, or more than one person acting as a group, that owns, directly or
indirectly, fifty percent or more of the total value or voting power of all the
outstanding stock of the Company, or (iv) an entity at least fifty percent of
the total value or voting power of which is owned, directly or indirectly, by a
person described in clause (iii).
V. ADMINISTRATION
Prior to a Change of Control, the Retention Payment Program shall be
administered by the Compensation Committee of the Company's Board of Directors.
VI. ARBITRATION
Any dispute or controversy arising under, related to or in connection with
this Agreement shall be settled exclusively by arbitration before a single
arbitrator in New York, New York, in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. The arbitrator's award shall be
final and binding on all parties to this Agreement. Judgment may be entered on
an arbitrator's award in any court having competent jurisdiction.
VII. ASSIGNMENT
This Agreement is personal to you and may not be assigned by you other than
by will or the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by your legal representatives.
This Agreement shall inure to the benefit of and be binding upon the
Company and its successors. The Company shall require any successor to all or
substantially all of the business and/or assets of the Company, whether direct
or indirect, by purchase, merger, consolidation, acquisition of stock, or
otherwise, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent as the Company would be required to perform it if
no such succession had taken place.
VIII.GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
law of the State of New York without reference to principles of conflict of
laws.
IX. PARACHUTE PAYMENT LIMITATION
Anything in this Agreement to the contrary notwithstanding, in the event
that:
(a) the aggregate payments or benefits to be made or distributed by
the Company or its subsidiaries to or for the benefit of you (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise) which are deemed to be parachute payments as defined in Code
Section 280G or any successor thereto (the "Change of Control Benefits") would
be deemed to include an "excess parachute payment" under Code Section 280G; and
(b) if such Change of Control Benefits were reduced to an amount (the
"Non-Triggering Amount"), the value of which is one dollar ($1.00) less than an
amount equal to three (3) times your "base amount," as determined in accordance
with Code Section 280G and the Non-Triggering Amount less the product of the
marginal rate of any applicable state and federal income tax and the
Non-Triggering Amount would be greater than the aggregate value of the Change of
Control Benefits (without such reduction) minus (x) the amount of tax required
to be paid by you thereon by Code Section 4999 and further minus (y) the product
of the Change of Control Benefits and the marginal rate of any applicable state
and federal income tax, then the Change of Control Benefits shall be reduced to
the Non-Triggering Amount. The allocation of the reduction required hereby among
the Change of Control Benefits shall be determined by you.
X. TERMINATION OF PROGRAM
This Agreement and the Retention Payment Program shall automatically
terminate on December 31, 2005 if a Change of Control has not occurred on or
before that date, unless the Company extends such termination date.
Please indicate your acceptance of this Agreement by signing on the
appropriate space below.
Very truly yours,
By:
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AGREEMENT BY EXECUTIVE:
I have read, understand, and agree to participate in and comply with the
Retention Payment Program described above. Without limiting the foregoing, I
agree to the modification of Section __ of the Employment Agreement as described
above, notwithstanding anything in the Employment Agreement to the contrary.
This Agreement constitutes the full and complete understanding between me and
XxxXxxxxx.xxx, Inc. regarding the Retention Payment Program and may be amended
only in writing signed by both parties.
------------------------------- Date:
Signature of Executive -----------------------------------
