CHANGE IN CONTROL AGREEMENT
Exhibit 10.2
THIS CHANGE IN CONTROL AGREEMENT (the “Agreement”), dated as of the 1st day of August 2016, is entered into by and between Xxxxx Corporation, a New York corporation (the “Company”), and Xxxxxx X. Xxxxxxxxx III (the “Executive”).
WHEREAS, the Board has authorized the Company to enter into this Agreement.
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(a) any natural person or entity (a “Person”), as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”) (other than (i) the Company and/or its wholly owned subsidiaries; (ii) any employee benefit plan of the Company and any trustee or other fiduciary in such capacity holding securities under such plan; (iii) any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company; or (iv) any other Person, who, within the one (1) year prior to the event which would otherwise be a Change in Control, was an executive officer of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d- 3 under the Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities. For purposes hereof, the term “Independent Director” shall be determined under the rules of The NASDAQ Stock Market;
(b) during any two (2) year period the following persons shall cease for any reason to constitute at least a majority of the Board: (i) directors of the Company in office at the beginning of such period; and (ii) any new director whose election by the Board, or whose nomination for election, was approved by a vote of at least two-thirds of the directors still in office who were directors at the beginning of the two (2) year period or who themselves were nominated by persons described in this clause (ii); provided, however, any new director shall not include a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in subsections (a) or (c) hereof;
(c) the consummation of a consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or otherwise does not have control over the combined entity or pursuant to which the common stock of the Company (the “Common Stock”) would be converted into cash, securities, and/or other property, other than a merger of the Company in which holders of Common Stock immediately prior to the merger have the same proportionate ownership of voting securities of the surviving corporation immediately after the merger as they had in the Common Stock immediately before;
(d) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets or earning power of the Company; or
(e) the Company’s shareholders or the Board approve(s) the liquidation or dissolution
of the Company.
(a) the Company will pay to the Executive within ten (10) days of the date of the Qualifying Termination (or on such earlier date as is required by applicable law), (i) any accrued but unpaid base salary amounts payable to the Executive through the date of termination (determined based on the Executive’s annual rate of base salary in effect on the date of the Qualifying Termination or, if higher, the rate in effect immediately prior to the date of the Change in Control (the “Base Salary”)), (ii) any earned but unpaid annual performance award for the prior fiscal year, (iii) any accrued but unused vacation pay through the date of the Qualifying Termination, and (iv) any unreimbursed business expenses incurred by the Executive prior to the date of the Qualifying Termination;
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(b) the Company will pay to the Executive in a cash lump sum on the fifty-fifth (55th) day following the date of the Qualifying Termination an amount equal to the sum of (i) two (2) times the Executive's Base Salary, and (ii) two (2) times the amount of annual performance award, if any, paid (or payable pursuant to Section 3(a)(ii) above) to the Executive for the fiscal year preceding the Change in Control (with the amount of such annual performance award extrapolated to a full year amount in the event the Executive was not a full- time employee of the Company for the entirety of the preceding fiscal year); provided, however, that, if such Change in Control does not constitute a "change in control event" under Treas. Reg. § 1.409A-3 (i)(5)(i) (applying for such purpose the minimal thresholds permitted to be used under Treas. Reg. §§1.409A-3(i)(5)(v), (vi) and (vii) for a change in control event to occur), the amount in Section 3(b)(i) above shall be provided in the form of salary continuation, payable in accordance with the normal payroll practices of the Company, with the first payment made on the Company's next regular payday for its executives following the expiration of the sixty (60) day period following the date of the Qualifying Termination (which first payment shall be retroactive to the date of the Qualifying Termination);
(c) subject to the Executive’s election of continuation coverage under COBRA, the Company shall permit the Executive (and his dependents) to continue to participate, at the Company’s expense, in the Company’s group health plan for a period of two (2) years after the date of the Qualifying Termination;
(d) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any employee benefit plan, program or policy of the Company through the date of the Qualifying Termination or as a result of the termination of the Executive’s employment, such benefits to be paid or provided in accordance with the terms of the applicable plan, program or policy in effect from time to time; and
(e) to the extent not theretofore already vested, one hundred percent (100%) of the Executive’s then-outstanding and unvested Equity Awards (as defined below) will become vested in full. If, however, an outstanding Equity Award is to vest and/or the amount of the award to vest is to be determined based on the achievement of performance criteria, then the Equity Award will vest as to one hundred percent (100%) of the amount of the Equity Award assuming the performance criteria had been achieved at target levels for the relevant performance period(s).
4. CERTAIN DEFINED TERMS. For purposes of this Agreement, the following definitions shall apply:
(a) “Cause” shall mean and be limited to: (i) the conviction of the Executive for committing an act of fraud, embezzlement, theft or other act constituting a felony, or the guilty or nolo contendere plea of the Executive to such a felony; (ii) fraud, embezzlement, theft or other misappropriation by the Executive of funds or property of the Company or any of its subsidiaries; (iii) material neglect, or refusal by the Executive to discharge, perform or observe the Executive’s job duties and responsibilities, provided the Executive has been given written notice of such neglect or refusal, and has not cured such neglect or refusal within ten (10) business days thereafter; or (iv) a material breach of the Executive’s obligations under this Agreement or any other written agreement with the Company, including (without limitation) any of the covenants set forth in Section 9 of this Agreement.
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(b) “Equity Awards” shall mean the Executive’s outstanding stock options, stock appreciation rights, restricted stock units, performance shares, performance stock units and any other Company equity compensation awards.
(c) “Good R xxxxx ” shall mean the occurrence of any of the following events without the Executive’s written consent: (i) the material diminution of the Executive’s duties, responsibilities and authorities, or any other action by the Company which results in a material diminution in such authority, duties or responsibilities (excluding for this purpose an isolated and insubstantial action not taken in bad faith); (ii) the Company reduces the Executive’s Base Salary below the level of the Base Salary for the period immediately preceding the Change in Control; (iii) the Company requires the Executive to relocate to a location that is more than fifty (50) miles from the Company’s Port Washington, New York headquarters; or (iv) a material breach of the Company’s obligations under this Agreement or any other written agreement with the Executive. Notwithstanding the foregoing, (1) the Executive is required to provide notice of any such condition to the Company within forty-five (45) days after the Executive becomes aware of, or should reasonably be aware of, a condition that gives the Executive the right to terminate his employment with the Company for Good Reason, and the Company will then have ten (10) business days to cure and/or remedy such condition, prior to the existence of such condition being deemed to be “Good Reason,” and (2) the Executive’s termination for Good Reason must occur within one hundred eighty (180) days after the Executive becomes aware of a condition that gives the Executive the right to terminate his employment with the Company for Good Reason.
(a) | paid or allowed in full; or |
(b) | reduced (but not below zero) to the Reduced Amount, |
whichever of the foregoing amounts, taking into account the applicable federal, state and local income, employment and excise taxes (including, without limitation, the excise tax imposed upon the Executive under Section 4999 of the Code) results in the Executive’s receipt on an after-tax basis of the greatest amount of Payments. For purposes of this section, the “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of all Payments without causing any Payment to be nondeductible by the Company because of Section 280G or subjecting the Executive to an excise tax under Section 4999 of the Code. The Company may elect which and how much of the Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount) and shall notify the Executive promptly of such election.
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Unless the Company and the Executive otherwise agree in writing, any determination required under this Section 5 will be made in writing by the Company’s independent public accountants immediately prior to a Change of Control or such other person or entity to which the parties mutually agree (the “Firm”), whose determination will be conclusive and binding upon the Executive and the Company. For purposes of making the calculations required by this Section 5, the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Executive will furnish to the Firm such information and documents as the Firm may reasonably request in order to make a determination under this Section. The Company will bear all costs the Firm may incur in connection with any calculations contemplated by this Section 5.
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(f) Non-Solicitation. During the Restricted Period, the Executive shall not, directly or indirectly, (i) induce or attempt to induce or aid others in inducing anyone working at or providing services to the Company or any subsidiary of the Company to cease working at the Company or any such subsidiary, or in any way interfere with the relationship between the Company or any subsidiary of the Company and anyone working at or providing services to the Company or any such subsidiary except in the proper exercise of the Executive’s authority or (ii) in any way interfere with the relationship between the Company or any subsidiary of the Company, on the one hand, and any customer, supplier, licensee or other business relation of the Company or any subsidiary of the Company, on the other hand.
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(i) Survival; No Defense. This Section 9 shall survive any termination or expiration of this Agreement or the Employment Term. The existence or assertion of any claim of or by the Executive, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants contained in this Section 9.
(j) Reasonableness; Injunction. The Executive acknowledges and agrees that (i) the Executive has had an opportunity to seek advice of counsel in connection with this Agreement, (ii) the Restrictive Covenants are reasonable in scope and in all other respects, (iii) any violation of the Restrictive Covenants will result in irreparable injury to the Company, (iv) money damages would be an inadequate remedy at law for the Company in the event of a breach or threatened breach of any of the Restrictive Covenants by the Executive, and (v) specific performance in the form of injunctive relief would be an adequate remedy for the Company. If the Executive breaches or threatens to breach a Restrictive Covenant, the Company shall be entitled, in addition to all other remedies, to seek an injunction restraining any such breach, without any bond or other security being required and without the necessity of showing actual damages.
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If to the Company to:
Aceto Corporation
0 Xxx Xxxxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxx 00000
Telephone: 000.000.0000
Facsimile: 516.478.9814
Attn: General Counsel
With a copy to:
Xxxxxxxxxx Xxxxxxx PC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000.000.0000
Facsimile: 973.597.2507
If to the Executive, to him at the offices of the Company with a copy to him at his home address, set forth in the records of the Company.
Any person named above may designate another address or fax number by giving notice in accordance with this Section to the other persons named above.
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(d) Governing Law; Jurisdiction. Any and all actions or controversies arising out of this Agreement shall be construed and enforced in accordance with the internal laws of the State of New York, without regard to any choice of law or conflicting provision or rule (whether of the State of New York or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of New York to be applied. Any and all actions arising out of this Agreement shall be brought and heard in the state and federal courts located in Nassau County, New York and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of any such courts. THE COMPANY AND THE EXECUTIVE HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR ANY AND ALL MATTERS ARISING DIRECTLY OR INDIRECTLY HEREFROM AND REPRESENT THAT THEY HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE OR HAVE CHOSEN VOLUNTARILY NOT TO DO SO SPECIFICALLY WITH RESPECT TO THIS WAIVER.
(f) Unfunded and Unsecured Status. To the extent that the Executive becomes entitled to receive any payments from the Company hereunder, such right shall be unfunded and unsecured and payable out of the general assets of the Company as and when such amounts are payable hereunder.
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(i) Counterparts. This Agreement may be executed in any number of counterparts and each such duplicate counterpart shall constitute an original, any one of which may be introduced in evidence or used for any other purpose without the production of its duplicate counterpart. Moreover, notwithstanding that any of the parties did not execute the same counterpart, each counterpart shall be deemed for all purposes to be an original, and all such counterparts shall constitute one and the same instrument, binding on all of the parties hereto.
(j) Advice of Counsel. Both parties hereto acknowledge that they have had the advice of counsel before entering into this Agreement, have fully read the Agreement and understand the meaning and import of all the terms hereof.
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XXXXX CORPORATION | ||||
By: | ||||
Name: | Xxxxxxxxx X. Xxxxxxxx | |||
Title: | Chief Executive Officer | |||
Xxxxxx X. Xxxxxxxxx III |
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Exhibit A Form
of Release
WHEREAS, ________ (the “Executive”) and Xxxxx Corporation, a New York corporation (the “Company”) are parties to a Change in Control Agreement, dated as of ______, 2015 (the “Agreement”), which provides for certain payments and benefits in the event of a Qualifying Termination following a Change in Control (as such terms are defined in the Agreement); and
1. Without prejudice to enforcement of the covenants, promises and/or rights reserved herein, the Executive (on his own behalf and on behalf of his heirs and legal representatives) hereby irrevocably and unconditionally releases, acquits and forever discharges the Company, each of its past, present and future direct and indirect affiliated entities, parents, subsidiaries, related companies and divisions (collectively, “Affiliates”)and each of their respective past, present and future stockholders, trustees, members, partners, employee benefit plans (and such plans’ fiduciaries, agents, administrators and insurers), directors, officers employees, agents and attorneys (individually and in their official capacities), as well as any predecessors, future successors and assigns or estates of any of the foregoing (collectively, “Releasees”), or any of them, from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, whether under federal, state, local or foreign law, rule, regulation or otherwise, arising out of the Agreement, Executive’s employment by the Company or its Affiliates, including, without limitation, under Title VII of the Civil Rights Act of 1964, as amended, the Equal Pay Act, the Xxxxx Xxxxxxxxx Fair Pay Act of 2009, the Federal Age Discrimination in Employment Act of 1967 (“ADEA”), as amended, the Employee Retirement Income Security Act (“ERISA”), as amended, the Civil Rights Act of 1991, as amended, the Rehabilitation Act of 1973, as amended, the Older Workers Benefit Protection Act (“OWBPA”), as amended, the Worker Adjustment Retraining and Notification Act (“WARN”), as amended, the Fair Labor Standards Act (“FLSA”), as amended, the Occupational Safety and Health Act of 1970 (“OSHA”), the Xxxxxxxx-Xxxxx Act of 2002, and the New York State Human Rights Law, New York Retaliatory Action by Employers Law, New York Wage and Labor Law and the New York Civil Rights Law, that the Executive now has, or has ever had, or ever will have, against each or any of the Releasees, by reason of any and all acts, omissions, events, circumstances or facts existing or occurring up through the date of the Executive’s execution and delivery hereof. Anything to the contrary notwithstanding, nothing herein shall release the Company or any other Releasees from any claims or damages based on (i) any right the Executive may have to enforce this Release, (ii) any right or claim that arises from acts, omissions, events, circumstances or facts which will exist or occur after the date this Release is executed, (iii) any right the Executive may have to vested benefits or entitlements under any applicable plan, agreement, program, award, policy or arrangement of the Company or its Affiliates; (iv) any right the Executive may have to coverage, indemnification and/or advancement of legal expenses in accordance with applicable laws and/or in any contract, corporate document, or otherwise, between the Company or its Affiliates and the Executive, or any Directors & Officers or other insurance plans or policies maintained by the Company or its Affiliates and applicable to the Executive; or (v) any right the Executive may have to obtain contribution as permitted by law in the event of entry of judgment against the Executive as a result of any act or failure to act for which the Executive, on the one hand, and the Company or any other Releasees, on the other hand, are jointly liable.
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2. Subject to the Executive's execution and delivery of this Release within 55 days of a Qualifying Termination (as defined in the Agreement) and this Release becoming irrevocable during such 55-day period, the Company shall pay or provide (as applicable) to the Executive the payments and benefits payable or required to be provided under the Agreement in connection with a Qualifying Termination (other than such payments and benefits that are not conditioned on this Release).
3. The Executive understands that he has been given a period of 21 days1 to review and consider this Release before signing it pursuant to ADEA. The Executive further understands that he may use as much of this 21-day period as the Executive wishes prior to signing.
4. The Executive acknowledges and represents that he understands that he may revoke this Release within 7 days of signing this Release. Revocation can be made by delivering a written notice of revocation to each of the Company’s General Counsel and Director of Human Resources. For this revocation to be effective, written notice must be received no later than 11:59 p.m. on the seventh day after the Executive signs and delivers this Release to the Company. If the Executive revokes this Release, the Company shall have no obligations to the Executive for the amounts and benefits described in Section 2 above.
5. The Executive represents and acknowledges that in executing this Release he is not relying upon, and has not relied upon, any representation or statement not set forth herein made by any of the agents, representatives or attorneys of the Company with regard to the subject matter of this Release.
6. This Release shall not in any way be construed as an admission by the Company or any of the Releasees that it or they have acted wrongfully.
7. Executive and the Company acknowledge and agree that:
(i) This Release shall not affect the rights and responsibilities of the Equal Employment Opportunity Commission (the “EEOC”) or similar federal or state agency to enforce the ADEA or other applicable laws, and further acknowledge and agree that this Release shall not be used to justify interfering with the Executive’s protected right to file a charge or participate in an investigation or proceeding conducted by the EEOC or similar federal or state agency. Accordingly, nothing in this Release shall preclude the Executive from filing a charge with, or participating in any manner in an investigation, hearing or proceeding conducted by the EEOC or similar federal or state agency, provided that even though the Executive may file a charge or participate in an investigation or proceeding conducted by the EEOC or similar federal or state government agency, by executing this Release the Executive is waiving the Executive’s ability to obtain relief of any kind from the Releasees to the extent permitted by law; and
1 Substitute 45 days for 21 days if applicable in accordance with the ADEA or OWBPA
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(ii) Notwithstanding anything set forth in this Release to the contrary, nothing in this Release shall affect or be used to interfere with Executive’s protected right to test in any court, under the OWBPA, or like statute or regulation, the validity of the waiver of rights under ADEA set forth in this Release.
8. Should any provision hereof be invalid or otherwise unenforceable under any law, such provision affected will be curtailed and limited to the extent necessary to bring it within the requirements of such law, and the remaining provisions of this Release will remain in full force and effect and be fully valid and enforceable.
9. The Executive is hereby advised and encouraged by the Company to consult with his own independent counsel before signing this Release. The Executive represents and agrees (i) that the Executive has, to the extent he desires, discussed all aspects of this Release with his attorney, (ii) that the Executive has carefully read and fully understands all of the provisions of this Release and (iii) that the Executive is voluntarily entering into this Release.
10. This Release shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the conflict of laws principles thereof.
This Release is executed as of the ____ day of ____________, 20___.
[Executive] |
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