OWOSSO CORPORATION
EXECUTIVE SALARY CONTINUATION AGREEMENT
EXECUTIVE SALARY CONTINUATION AGREEMENT
This Executive Salary Continuation Agreement ("Agreement") is made
effective this 24th day of August, 2001 between Owosso Corporation, a
Pennsylvania corporation (the "Company"), and the employee identified on the
signature page hereof (the "Employee").
WHEREAS, the Employee is presently employed by the Company and serves
as an officer and key member of the Company's management team; and
WHEREAS, the Company considers it essential to xxxxxx the employment
and retention of key management personnel; and
WHEREAS, the board of directors of the Company recognizes that a change
in control of the Company may occur, and that such possibility, and the
uncertainty that may arise among management as a result thereof, may cause the
departure or distraction of key management personnel to the detriment of the
Company; and
WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from a change in control of the Company;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
Section 1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings specified in this Section unless the context
clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(b) "Base Salary" shall mean the total cash remuneration (excluding
bonus payments, incentive compensation and any amounts payable under this
Agreement) earned by the Employee on an annualized basis in all capacities with
the Company and its Subsidiaries and/or Affiliates determined as of the date on
which this Agreement requires any payment of Base Salary to be calculated and
paid to the Employee hereunder.
(c) "Board" shall mean the board of directors of the Company.
(d) "Cause" shall mean:
(i) commission of any criminal offense involving dishonesty or
breach of trust or any felony or any crime of moral turpitude;
(ii) commission of an act of fraud upon or materially evidencing
bad faith toward the Company;
(iii) willful refusal to perform duties reasonably assigned by the
Company; and
(iv) willful violation of any state or federal law or corporate
policy relating to employment discrimination, other than an isolated,
non-recurring violation arising from his performance of his normal duties.
(e) "Change of Control" shall be deemed to have taken place if any
Person (except the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, any Person organized,
appointed or established by the Company for or pursuant to the terms of any such
employee benefit plan, together with all Affiliates and Associates of such
Person, and any Person on the date hereof owning directly or beneficially twenty
percent (20%) or more of the outstanding Common Stock of the Company and
permitted transferees of such Persons, but not their transferees) shall become
the direct or beneficial owner in the aggregate of fifty percent (50%) or more
of the Common Stock of the Company then outstanding. For purposes hereof,
"permitted transferees" shall be limited to ancestors, lineal descendents,
spouses or spouses of ancestors or lineal descendents, or a trust for the
primary benefit of any of the foregoing permitted transferees.
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(f) "Change of Control Period" shall mean the two (2) year period
following any Change of Control that takes place during the term hereof.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) " "Person" shall mean any individual, firm, corporation,
partnership, sole proprietorship, limited liability company, joint venture,
trust, association, organization or entity of any other type, whether or not for
profit.
(j) "Release" means that portion of this Agreement to which reference
is made in Section 18 hereof.
(k) "Securities Act" shall mean the Securities Act of 1933, as amended.
(l) "Subsidiary" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
(m) "Termination of Employment" shall mean the termination of the
Employee's employment with the Company either:
(v) initiated by the Company, other than for (A) a disability which
qualifies the Employee for benefits under the Company's long term disability
plan or (B) Cause; or
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(vi) initiated by the Employee following one or more of the
following occurrences:
(A) material reduction by the Company of the authority, duties
or responsibilities of the Employee;
(B) any removal of the Employee from the officer and/or
management positions with the Company and its Subsidiaries held by the Employee,
if the effect thereof is to reduce any of the Employee's rights under or
compensation opportunities or levels with respect to, or participation in, any
bonus, compensation, retirement or other compensatory or benefit plan of the
Company;
(C) a reduction by the Company in the Employee's Base Salary;
(D) a transfer of the Employee, without the Employee's express
written consent, to a location which would require the Employee to commute a
one-way distance to such new location from the Employee's principal residence
greater than the longer of (i) 30 miles and (ii) one hundred twenty five percent
(125%) of the one-way distance being traveled by the Employee immediately prior
to such transfer; or
(E) any breach by the Company of any provision hereof,
including any failure of the Company to comply with and satisfy Section 12 of
this Agreement, after demand by Employee and failure to cure.
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Section 2. Severance Compensation in the Event of a Termination of
Employment During a Change of Control Period. In the event of a Termination of
Employment at any time during a Change of Control Period, the Company shall pay
to the Employee in a lump sum, within thirty (30) days after the date of
Termination of Employment, an amount equal to one year's Base Salary (the date
on which such payment is made, if sooner than the expiration of such 30-day
period, or the 30th day following the date of Termination of Employment,
whichever first occurs, is herein referred to as the "Section 2 Payment Date").
Section 3. Other Payments and Obligations of the Company in the Event
of a Termination of Employment During a Change of Control Period. In the event
of a Termination of Employment during a Change of Control Period, the Company
shall also:
(a) pay to the Employee within thirty (30) days after the date of
Termination of Employment:
(i) unless the Employee has exercised such options, an amount equal
to the excess, if any, of the aggregate fair market value of the Company's
Common Shares subject to all stock options outstanding and unexercised as of the
date of Termination of Employment, whether vested or unvested, granted to the
Employee, over the aggregate exercise price of all such stock options in respect
of which the fair market value exceeds the exercise price. For purposes of this
paragraph, fair market value shall mean the highest of (A) the closing price of
the Company's Common Shares on the business day immediately preceding the date
of Termination of Employment, if such Common Shares are publicly traded at such
date, (B) if such Common Shares are not publicly traded at the date of
Termination of Employment, the value determined by an independent appraiser,
such appraiser to be selected by the Employee and to be reasonably satisfactory
to the Company (the fees and expenses of such appraiser to be borne by the
Company), or (C) the highest per share price of the Company's Common Shares paid
(in connection with the Change of Control or at any time thereafter) by the
Person or group whose acquisition of the Company's Common Shares has given rise
to a Change of Control; and
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(ii) an amount equal to the Employee's unused vacation days valued
in accordance with the Company's historic basis of compensating terminated
executive employees for unused vacation days; and
(iii) a lump sum amount equal to the highest bonus amount and
incentive awards actually paid to the Employee in any of the three fiscal years
prior to the date of Termination of Employment; and
(b) continue or cause to be continued for eighteen (18) whole months
after the date of Termination of Employment, medical, dental, life, disability,
automobile and other benefits substantially equivalent in all material respects
to those presently furnished by the Company and its Subsidiaries to the
Employee, which benefits are listed on Schedule 3-b hereto, together with such
other benefits as may hereafter be afforded to employees of the Company
generally; provided, however, that the obligation of the Company to provide such
benefits shall cease at such time as the Employee is employed on a full time
basis by a Person not owned or controlled by the Employee that provides the
Employee, on substantially the same cost-sharing basis between the Company and
the Employee in effect immediately prior to the Change of Control, with medical,
dental, life, disability and other benefits substantially equivalent in all
material respects to those furnished by the Company and its Subsidiaries to the
Employee immediately prior to the Change of Control; and provided further that
if the Company is prohibited from continuing such benefits for the Employee for
any reason, the Company shall reimburse the Employee for the Employee's cost of
obtaining comparable benefits coverage for such period; and
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(c) on the Section 2 Payment Date, pay to the Employee in a lump sum an
additional amount to fully compensate for any taxes payable by the Employee as a
result of any of the benefits paid or provided to or obtained by the Employee
under Section 3(b) hereof, if and to the extent that such benefits are currently
provided by the Company on a tax-free basis to the Employee, computed at the
highest applicable marginal rate of federal income taxation for the calendar
year in which the benefit to which such taxes are attributable is received or
deemed to have been received.
Section 4. Salary Continuation and Retention Bonus Compensation.
(a) Notwithstanding anything herein to the contrary, the Employee shall
be entitled to receive and the Company shall pay a retention bonus in an amount
equal to six (6) months' Base Salary payable to the Employee in a lump sum on
October 18, 2001 if the Employee remains in continuous employment with the
Company from the date hereof through October 18, 2001, provided, however, that
such amount shall be paid earlier upon the first to occur of either of the
following events: (i) upon a notice of termination of the Employee other than
for Cause at any time prior to October 18, 2001; or (ii) upon a Change of
Control at any time prior to October 18. 2001. The retention bonus provided
herein above shall be in addition to any other benefit, payment or entitlement
under this Agreement or otherwise.
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(b) In addition to the lump sum retention bonus payable as provided
above, upon any notice of termination of the Employee other than for Cause,
whether prior to, on or after October 18, 2001, the Company shall: (i) continue
to pay the Employee's Base Salary for nine (9) whole months after such notice of
termination if such termination does not constitute a Termination of Employment
during a Change of Control Period in respect of which the Employee receives the
lump sum payment pursuant to Section 2; and (ii) if not a Termination of
Employment during a Change of Control Period, continue or cause to be continued
for twelve (12) whole months after such notice of termination medical, dental,
life, disability, automobile and other benefits substantially equivalent in all
material respects to those furnished by the Company and its Subsidiaries to the
Employee immediately prior to the notice of termination; provided, however, that
the obligation of the Company to provide such benefits shall cease at such time
as the Employee is employed on a full time basis by a Person not owned or
controlled by the Employee that provides the Employee, on substantially the same
cost-sharing basis between the Company and the Employee in effect immediately
prior to the notice of termination, with medical, dental, life, disability and
other benefits substantially equivalent in all material respects to those
furnished by the Company and its Subsidiaries to the Employee immediately prior
to the notice of termination; and provided further that if the Company is
prohibited from continuing such benefits for the Employee for any reason, the
Company shall reimburse the Employee for the Employee's cost of obtaining
comparable benefits coverage for such period; and (iii) whether or not such
termination constitutes a Termination of Employment during a Change of Control
Period, procure and provide out-placement services for Employee, at a cost to
the Company not to exceed $15,000.
Section 5. Agreement to Provide Services; Right To Terminate. Nothing
in this Agreement shall be construed as giving the Employee any right to be
retained in the employ of the Company. The Company or the Employee may terminate
the Employee's employment at any time, subject to the Company's irrevocable and
unconditional obligation to provide the benefits set forth in this Agreement.
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Section 6. Enforcement.
(a) In the event that the Company shall fail or refuse to make payment
of any amounts due or payable to the Employee under this Agreement within the
respective time periods provided herein, or shall fail or refuse to make payment
of any amounts due or payable to the Employee otherwise than under this
Agreement, the Company shall pay to the Employee, in addition to the payment of
any other sums provided in this Agreement, interest, compounded daily, on any
amount remaining unpaid from the date payment is required until paid in full to
the Employee, at the rate from time to time announced by First Union National
Bank as its "prime rate" plus two percent (2%), each change in such rate to take
effect on the effective date of the change in such prime rate.
(b) It is the intent of the parties that the Employee not be required
to incur any expenses associated with the enforcement of his or her rights under
this Agreement by arbitration, litigation or other legal action because the cost
and expense thereof would substantially detract from the benefits intended to be
extended to the Employee hereunder. Accordingly, the Company shall pay the
employee on demand the amount necessary to reimburse the Employee in full for
all expenses (including all attorneys' fees and legal expenses) incurred by the
Employee in enforcing any of the obligations of the Company under this
Agreement, plus interest as provided in (a) above from the date such expense is
incurred by the Employee until the Employee is reimbursed in full.
Section 7. No Mitigation. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise.
Section 8. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company or any of its Subsidiaries or Affiliates and for which the Employee may
qualify.
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Section 9. No Set-Off. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right or
claim that the Company or any of its Subsidiaries may have against the Employee
or others.
Section 10. Parachute Payments.
(a) The payments under this Agreement ("Agreement Payments") will be
made without regard to whether the deductibility of such payments (considered
together with any other entitlements or payments otherwise paid or due to the
Employee) would be limited or precluded by Section 280G of the Code and without
regard to whether such payments would subject Employee to an excise tax under
Section 4999 of the Code (or any similar tax that may hereafter be imposed) (the
"Excise Tax"). If payment of the Agreement Payments results in the imposition of
the Excise Tax, the Company shall promptly determine and pay Employee an
additional amount (the "Additional Payment") such that, after the payment of all
federal and state income, employment and excise taxes on both the Agreement
Payments and the Additional Payment made pursuant to this Section 10, Employee
will be in the same after-tax position as if no Excise Tax had been imposed.
(b) The Company shall reimburse the Employee, on a current basis, for
all legal and accounting fees and related expenses incurred by the Employee in
connection with the determination of the Additional Payment under this Section,
regardless of whether the Employee's claim for such Additional Payment is upheld
by a court of competent jurisdiction.
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Section 11. Term of Agreement. The term of this Agreement shall be for
two (2) years from the date hereof, provided, however, that after a Termination
of Employment at any time during a Change of Control Period, this Agreement
shall remain in effect until all of the obligations of the parties hereunder are
satisfied or have expired.
Section 12. Successor Company. The Company shall require any immediate
successor or successors (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 the
Employee, to acknowledge expressly that this Agreement is binding upon and
enforceable against the Company in accordance with the terms hereof, and to
become jointly and severally obligated with the Company to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession or successions 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. As used in this
Agreement. the Company shall mean the Company as hereinbefore defined and any
such immediate successor or successors to its business and/or assets, jointly
and severally.
Section 13. Notice. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:
If to the Company, to:
Owosso Corporation
0000 Xxxxxxxxxxx Xxxx.
Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
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If to the Employee, to:
To the address set forth on
the signature page hereof.
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, five (5) days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
Section 14. Governing Law. This Agreement shall be governed by and
interpreted under the laws of the Commonwealth of Pennsylvania without giving
effect to any conflict of laws provisions.
Section 15. Contents of Agreement, Amendment and Assignment.
(a) This Agreement supersedes all prior agreements and sets forth the
entire understanding between the parties hereto with respect to the subject
matter hereof (but not as to any bonus. compensation. retirement or other plans
of the Company) and cannot be changed. modified, extended or terminated except
upon written amendment executed by the Employee and approved by the Board and
executed on the Company's behalf by a duly authorized officer. The provisions of
this Agreement may provide for payments to the Employee under compensation,
retirement or bonus plans under circumstances where such plans would not provide
for payment thereof. It is the specific intention of the parties that the
provisions of this Agreement shall supersede any provisions to the contrary in
such plans, and such plans shall be deemed to have been amended to correspond
with this Agreement without further action by the Company or the Board.
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(b) All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
representatives, successors and assigns of the parties hereto.
Section 16. Severability. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined by
a court of competent jurisdiction to be invalid or unenforceable, such
invalidity or enforceability shall not affect any other provisions or
applications of this Agreement which can be given effect without the invalid or
unenforceable provision or application, and it is the desire and intent of the
parties that the court modify any such provision so determined to be invalid or
unenforceable so as to make such provision valid and enforceable in accordance
with applicable law.
Section 17. Remedies Cumulative; No Waiver. No right conferred upon the
Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in exercising
any right, remedy or power hereunder or existing at law or in equity shall be
considered as a waiver thereof.
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Section 18. Release.
(a) In consideration for the promises and benefits set forth herein,
Employee (for himself and all dependents, heirs, executors, administrators,
legal representatives, assigns, and/or any others who have or may have a claim
by or through him) hereby irrevocably releases and discharges the Company from
any and all suits, causes of action, claims, demands, charges, complaints,
obligations and/or actions of any sort whatsoever, whether in law or equity,
direct or indirect, which Employee ever had, now has, or hereinafter can or may
have against the Company, from the beginning of time to the date of this
Release, including but not limited to any and all claims relating to or in any
way arising out of any aspect of Employee's employment relationship and/or his
separation from employment with the Company. This Release specifically includes,
but is not limited to, any and all claims for wrongful discharge, constructive
discharge, breach of contract (whether express or implied), claims for wages and
employee benefits and any and all forms of employment discrimination in
violation of any federal, state or local statute, ordinance, executive order, or
common law doctrine (including but not limited to claims for discrimination on
the basis of race, color, religion, sex, national origin, age and/or mental or
physical disability, whether asserted under the Civil Rights Act of 1991, Title
VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. ss. 2000e et seq, the
Civil Rights Act of 1870, 42 U.S.C. ss. 1981, The Age Discrimination in
Employment Act of 1967, as amended, 29 U.S.C. ss. 621 et seq, The Rehabilitation
Act of 1972, as amended, 29 U.S.C. ss. 701, et seq, and/or under any other
applicable federal, state or local antidiscrimination law), claims asserted
under the Family Medical Leave Act, 29 U.S.C. ss. 2611 et seq (and any
applicable leave statute), any and all claims asserted under the United States
Constitution, any and all suits in tort (including but not limited to, any
claims for misrepresentation, defamation, wrongful termination, interference
with contract or with prospective economic advantage, tortious infliction of
emotional distress and/or negligence) as well as any and all claims for
additional compensation or damages of whatsoever kind arising in connection with
Employee's employment relationship and/or separation from employment with the
Company. In addition, this Release specifically includes all claims for costs
and/or attorneys' fees, if any, incurred by Employee in connection with any
aspect of his employment relationship and/or his separation from employment with
the Company.
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(b) Employee understands that this Release extends to all of the
aforementioned actions, whether now known or unknown, suspected or unsuspected,
and that this constitutes an essential material term of this Agreement.
(c) Employee understands and acknowledges the significance and
consequence of this Release and of such specific waiver and expressly consents
that this Release shall be given full force and effect according to each and all
of its express terms and provisions, including those relating to unknown and
unsuspected claims, demands, obligations and causes of action, if any, as well
as those relating to any other claims, demands, obligations or causes of action
herein above-specified.
(d) All remedies at law or in equity shall be available for the
enforcement of the Release. This Release may be pleaded as a full bar to the
enforcement of any claim which Employee may have against the Company.
(e) Employee further agrees that neither he nor any person or entity
acting on his behalf will file, charge, claim, xxx or permit to be filed,
charged or claimed, any action for legal or equitable relief against the Company
involving any matter occurring at any time or related in any way whatsoever to
Employee's employment relationship with the Company or involving any continuing
effects of any acts which may have occurred during Employee's employment with
the Company.
(f) Employee hereby acknowledges that he is acting of his own free
will, that he has been afforded a period of not less than twenty-one (21) days
within which to read and consider the terms of this Release, that he has been
encouraged to seek the advice of counsel with respect hereto, and that he fully
understands all of the provisions and effects of this Release. In addition,
Employee hereby acknowledges that neither the Company nor any of its agents,
representatives or attorneys have made any representations concerning the terms
of this Release other than those contained herein.
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(g) Employee acknowledges that he is fully aware that he remains free
to revoke this Release for a period of seven (7) days following the execution by
him of this document by providing written notice to the Company of his intention
to revoke within the seven-day period in question. Employee further understands
that his Release shall not become effective or enforceable until the seven-day
revocation period has expired.
Section 19. Miscellaneous. All Section headings are for convenience
only. This Agreement may be executed in several counterparts, each of which is
an original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
this Agreement as of the date first above written.
Attest: OWOSSO CORPORATION
/s/ Xxxxxx X. Xxxxxx, Xx. By: /s/ Xxxx X. Xxxxx
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Secretary Title: Chairman of the Board
EMPLOYEE
/s/ Xxxxxx X. Xxxxxx, Xx. /s/ Xxxxx Holiday III
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Witness Name: XXXXX HOLIDAY III
Address:
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