Exhibit 10
AMENDMENT NUMBER ONE
TO
EMPLOYMENT AGREEMENT
Xxxxxx Industries, Inc., a Missouri corporation (hereinafter
referred to as "Employer") and Xxxxxx X. Xxxxxxxxx (hereinafter referred to
as "Employee") entered into an Employment Agreement, effective December 30,
1997. The parties hereby agree to amend that Employment Agreement, effective
July 27, 1999, as follows:
1. The last sentence of Section 1 is deleted and the following is
substituted in its place:
This Agreement except for Sections 6, 7, 8, 9, 10, 11, 17, 18, and 20
hereof which shall survive the termination of this Agreement, may be
terminated in accordance with the provisions of 11.1, 11.2, 11.3 and
11.4 hereof.
2. Section 18 is deleted in its entirety and the following is substituted
in its place:
18. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL.
18.1 DEFINITIONS RELATING TO TERMINATION OF EMPLOYMENT FOLLOWING
A CHANGE IN CONTROL.
a) CERTAIN PERMITTED TERMINATIONS. In the event of a Change in
Control, the Employee's employment may be terminated during the term
of employment hereunder and the Employee shall not be entitled to
Severance Compensation as defined herein, in the following events (the
"Permitted Terminations"):
(i) The Employee's death provided there has been no
Constructive Termination;
(ii) If the Employee shall become permanently disabled
within the meaning of, and begins to receive disability benefits
pursuant to the long-term disability plan in effect for senior
executives of the Employer immediately before the date of Change
in Control or such other long term disability plan in effect at
the time of disability;
(iii) If the Employee retires or terminates his employment
more than twelve (12) months after the date of Change in Control;
or
(iv) For "Cause", which for purposes of this Agreement shall
mean that, within six (6) months prior to any termination the
Employee shall have committed any of the elements of "cause" set
forth in Section 11.1 hereof.
48
b) For purposes of this Section 18, a "Change in Control" shall
occur if at any time any of the following events shall occur (other
than as a consequence of an acquisition or other similar transaction
initiated by Employer of an operating company or significant portion
thereof):
(i) If any offer (other than an offer by the Employer and
other than an offer by an underwriter, acting as an underwriter,
in connection with the Employer's public sale of securities) to
purchase or otherwise acquire Common Stock, other voting stock or
assets of the Employer for cash securities of another corporation
or some combination thereof results in the purchase or
acquisition by the offeror of at least twenty percent (20%) of
the outstanding Common Stock or other voting stock of the
Employer or assets of the Employer with a fair market value of at
least forty percent (40%) of the total fair market value of the
Employer's assets (with the fair market value of assets
determined as of the date of the offer);
(ii) The Employer is merged, consolidated or reorganized
into or with another corporation or other legal entity, and as a
result of such merger, consolidation or reorganization forty
percent (40%) of its Common Stock or other voting stock is
exchanged, transferred, reissued or acquired pursuant to such
merger, consolidation, or reorganization;
(iii) More than fifty percent (50%) of the members of the
Employer's Board of Directors are elected to the Employer's Board
of Directors in any one (1) calendar year period and such members
comprising fifty percent (50%) of the members of the Board of
Directors were not immediately prior to such election, serving as
members of the Employer's Board of Directors; or
(iv) Unless otherwise set forth herein, the date of a Change
in Control shall be the closing date of such sale, acquisition,
merger, reorganization or consolidation.
During the period that there is a final offer or solicitation to
purchase or otherwise acquire (including, but not limited to, offers
to merge, reorganize or consolidate) at least forty percent (40%) of
the Common Stock, other voting stock or assets of the Employer, this
Agreement shall be operative beginning with the date on which such
offer is made or solicitation occurs and shall remain operative until
(i) the closing date of such a sale, acquisition, merger,
reorganization or consolidation or (ii) abandonment or termination of
such offer, and the Employee shall be entitled to all benefits during
such offering period, including any provision for Severance
Compensation payable hereunder; provided, however, that the only event
which shall constitute a Constructive Termination prior to the date
set forth in the earlier of (i) or (ii) above shall be the involuntary
termination of employment of the Employee not for Cause which occurs
prior to the date set forth in the earlier of (i)
49
or (ii) above. In the event that the pending offer or solicitation
results in a Change in Control, this Agreement shall remain operative
according to its terms and provisions. In the event the pending offer
or solicitation does not result in a Change in Control, the Employee
shall continue to receive any Severance Compensation to which he
became entitled by reason of his Constructive Termination prior to the
earliest of the dates set forth in (i) or (ii) above.
c) CONSTRUCTIVE TERMINATION. In the event of a Change in Control
followed by (or simultaneous with) a Constructive Termination within
twelve (12) months of the Change in Control and during the term of
employment hereunder, the Employee shall be entitled to the Severance
Compensation as defined in Section 18.2. A Constructive Termination
shall occur in any of the following events:
(i) Failure to elect, reelect or otherwise maintain the
Employee in the office or position in the Employer which the
Employee held immediately before a Change in Control;
(ii) A significant adverse change in the nature or scope of
the authorities, powers, functions, responsibilities or duties
attached to the position with the Employer which the Employee
held immediately before the Change in Control; or a reduction in
the aggregate of the Employee's Base Pay and method of
calculation of the bonus to be received from the Employer; or the
termination of the Employee's rights to any substantial employee
benefits to which he was entitled immediately before the Change
in Control or a substantial reduction in scope or value thereof
without the prior written consent of the Employee, any of which
is not remedied within ten (10) calendar days after receipt by
the Employer of written notice from the Employee of such change,
reduction or termination, as the case may be; provided that
neither the termination of the Employee's position as a member of
the Board of Directors, if applicable, nor a general change in
benefits payable and applicable to substantially all employees of
the Employer shall of itself be considered a Constructive
Termination if the Employee is entitled to the same benefits
provided to substantially all employees or to benefits of equal
or greater value.
(iii) If, as a result of a Change in Control and a change in
circumstances thereafter significantly affecting his position,
the Employee has been rendered substantially unable to carry out,
has been substantially hindered in the performance of, or has
suffered a substantial reduction in any of the authorities,
powers, functions, responsibilities or duties attached to the
position held by the Employee immediately before the Change in
Control, which situation is not remedied within ten (10) calendar
days after written notice to the Employer from the Employee of
such determination;
(iv) The liquidation, dissolution, merger, consolidation or
reorganization of the Employer or transfer of all or more than
40% of its
50
business and/or assets, unless the successor or successors
(by liquidation, merger, consolidation, reorganization or
otherwise) of the Employer shall have assumed all duties and
obligations of the Employer under this Agreement;
(v) The Employer shall relocate its principal executive
offices, or require the Employee to have his principal location
of work changed to any location which is in excess of twenty-five
(25) miles from the location thereof immediately before the
Change in Control or the Employer shall require the Employee to
travel away from his office in the course of discharging his
responsibilities or duties hereunder significantly more (in terms
of either consecutive days or aggregate days in any calendar
year) than was required of him before the Change in Control
without, in either case, his prior written consent;
(vi) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Employer
or any successor thereto and failure to cure the same within any
time period specified; or
(vii) The Employee shall retire or terminate his employment
within twelve (12) months from the date of Change in Control.
18.2 SEVERANCE COMPENSATION. In the event of a Constructive
Termination within twelve (12) months of a Change in Control during
the term of employment hereunder, the Employee shall be entitled to
the following rights and the Employer shall pay to the Employee the
following amounts (which, together with payments under Sections 18.3
and 19.6, shall be the Employee's "Severance Compensation") after the
date (the "Termination Date") that the Employee's employment is
terminated:
a) The Employer shall pay the Employee in cash a lump sum
payment (the "Lump Sum Payment") in an amount equal to (i) 2.99
multiplied by (ii) an amount equal to one full year's aggregate
base pay under Section 3.1 and the Employee's average incentive
cash bonus ("Average Incentive Cash Bonus"). The Average
Incentive Cash Bonus will be equal to (i) the average percentage
of compensation the Employee received as a cash incentive bonus
for the three calendar years prior to his termination of
employment, multiplied by (ii) the Employee's compensation for
the calendar year in which his employment terminates. For
purposes of this paragraph, the Employee's "compensation" shall
be his base pay. In determining the Employee's compensation for
the year in which his employment terminates, the Employee shall
be treated as if he remained employed and continued to receive
compensation through the end of the calendar year in which his
employment terminates. This cash payment shall be made within 30
days after the Employee's termination of employment; and Employee
shall not be entitled to the grant of additional incentive under
51
the LTIP after the termination of employment. In addition, the
Employer shall pay an amount necessary to reimburse the Employee
for any federal excise tax imposed on him under Section 4999(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), or
any successor section of the Code as a result of the Employee's
receipt of the Lump Sum Payment (the "Excise Tax Reimbursement
Payment"); however, such Excise Tax Reimbursement Payment shall
not reimburse Employee for (i) any other federal or state income
tax payable as a result of the receipt of the Lump Sum Payment or
the Excise Tax Reimbursement Payment or (ii) any federal excise
tax imposed as a result of the Employee's receipt of the Excise
Tax Reimbursement Payment. Such Lump Sum Payment and Excise Tax
Reimbursement Payment shall be payable within ten (10) business
days from the Termination Date; and
b) The Employer shall pay the Employee in cash a lump sum
payment (the "Additional Lump Sum Payment") in an amount equal to
all accrued and unused vacation and other time off allowances.
Such Additional Lump Sum Payment shall be payable within ten (10)
business days from the Termination Date; and
c) The Employer shall provide, to the extent permitted by
any applicable plan and applicable law (e.g., COBRA), the
Employee at the Employer's expense with medical and life
insurance benefits in the same or substantially similar amounts
as were in effect before the Change in Control or in such amounts
as have been agreed to in writing by the Employee since the
Change in Control for a period of up to three (3) years following
the Termination Date or the date the Employee becomes reemployed
in a position in which his salary and benefits are substantially
similar to those in effect on the Termination Date, whichever is
earliest. Alternatively, the Employer may make cash payments to
the Employee equal to the cost to the Employee of purchasing
similar medical and life insurance coverage from a source other
than the Employer's employee benefit plans, taking into account
the Employee's age, health, and other particular circumstances.
These cash payments shall be made monthly unless the Employee and
Employer agree that payments will be made more frequently or less
frequently. In the event the Employee becomes re-employed during
the three-year period following the Termination Date, the
Employer's obligations to maintain medical and life insurance
under this Subsection 18.2(c) (or make further cash payments in
lieu of providing that coverage) shall cease and terminate upon
such reemployment; and
d) The Employer shall pay the Employee in cash a lump sum
payment equal to three times the Average Employer's Matching
Contribution for Employee (currently, limited to four percent of
annual compensation at the date of this Amendment) to the
Employer's 401(k) Plan. For purposes of this paragraph, the
"Average Employer's Matching
52
Contribution," shall be calculated as the sum of actual
Employer's matching contribution for Employee for each of the
three calendar years prior to his termination of employment
divided by three. This cash payment shall be made within 30 days
after the Employee's termination of employment; and
e) The Employer shall pay to the Employee in cash a lump sum
payment equal to three times the average percentage of annual
compensation allocated to the Employee's ESOP Account under the
Xxxxxx Industries, Inc. Employee Stock Ownership Plan for the
three plan years ending prior to the Employee's termination of
employment, multiplied by (ii) the Employee's annual compensation
in effect for the plan year in which the Employee's employment
terminates. For this purpose, "annual compensation" shall have
the meaning given that term in the ESOP, as if the Employee
remained employed and continued to receive compensation through
the end of the plan year in which his employment terminates. This
cash payment shall be made within 30 days after the Employee's
termination of employment; and
f) The Employee shall be treated for purposes of his
Deferred Compensation Agreement as if he were employed for an
additional thirty-six (36) months following his actual
termination of employment. As a consequence, the Employee, at the
end of this 36 month period, shall be treated as having an
additional thirty-six (36) months of service for purposes of
vesting, calculating his benefit (including the numerator of the
fraction used to calculate his benefit), and satisfying any
requirement that he work to age 55 to be eligible for an early
retirement benefit. In calculating the Employee's benefit under
his Deferred Compensation Agreement, the Employee shall be
treated as if he continued to receive for the thirty-six (36)
months his annual compensation in effect for the calendar year in
which his employment terminated (that is, the annual compensation
he would have received for that calendar year had he remained
employed through the end of that year). As soon as practicable
after adoption of Amendment Number One to this Employment
Agreement, the Employer shall amend the Employee's Deferred
Compensation Agreement to reflect the provisions set forth in
this paragraph.
At the end of the term of employment, as defined in Section 1 herein,
the provisions for Severance Compensation upon a Constructive
Termination under this Agreement shall lapse and the Employee shall
not be entitled to Severance Compensation under this Agreement (other
than Severance Compensation payable by reason of a Constructive
Termination occurring at or prior to the end of the term of
employment).
18.3 ADDITIONAL PAYMENTS. In addition to the Severance Compensation
set forth above in Section 18.2, the Employee shall be entitled to a pro
rata portion of any earned incentive compensation or bonus in effect during
the year that a
53
Constructive Termination occurs and such pro rata portion shall be based on
the number of days of employment in such year up to the Termination Date.
Additionally, all stock options issued and outstanding in the name of the
Employee, notwithstanding anything in the agreement(s) evidencing such
stock options to the contrary, shall become fully vested and shall be
exercisable for ninety (90) calendar days after the Termination Date.
18.4 NO MITIGATION OBLIGATION. The Parties understand that it may be
difficult for the Employee to find reasonably comparable employment
following the Termination Date, Accordingly, the parties hereto agree that
the payment of the Severance Compensation by the Employer to the Employee
will be liquidated damages, and that the Employee shall not be required to
mitigate the amount of any payment provided for in this Agreement seeking
other employment or otherwise, nor shall any profits, income, earnings or
other benefits from any source whatsoever create any mitigation, offset,
reduction or any other obligation on the part of the Employee.
18.5 OTHER CHANGE IN CONTROL PROVISIONS. Whether or not the Employee
has a Constructive Termination or otherwise becomes entitled to Severance
Compensation, the provisions of this Section below shall apply in the event
of a Change in Control.
a) DEFERRED COMPENSATION FUNDING. Following a Change in Control,
the Employer shall maintain at all times in the trust used to fund the
Employee's Deferred Compensation Agreement life insurance for the
benefit of the Employee having a cash surrender value at least equal
to the present value of all the Employee's accrued benefits not yet
paid (whether or not vested) under the Employee's Deferred
Compensation Agreement (including the additional 36-month period
provided for in Section 18.2(f)). If, however, it is not possible to
maintain life insurance with a cash surrender value this large, the
Employer shall contribute cash amounts to the trust equal to the
difference between the cash surrender value required under this
subsection and the cash surrender value which it is possible to
maintain.
b) NONQUALIFIED DEFERRED COMPENSATION TRUST AGREEMENTS. As soon
as practical after the adoption of this Amendment, the Employer shall
modify the trust agreement that creates the trust used to fund the
Employee's Deferred Compensation Agreement, to provide that following
a Change in Control (i) the trustee must make decisions concerning the
Employee's entitlement to benefits independently, without direction
from the Employer, (ii) the trustee must at all times be a financial
institution independent of the Employer or any of its successors, and
(iii) the provisions of the trust agreement to be added under (i) and
(ii) may not be modified without the Employee's written consent.
54
c) STOCK OPTIONS. The provisions of this subsection shall apply
to any stock options not subject to a change in control provision
under the terms of the option or under the terms of the plan
associated with the option. The Employee shall become fully vested in
any such stock options granted by the Employer at the earlier of the
time (i) the Employer's Board of Directors accepts a Change in Control
offer, or (ii) a Change in Control transaction closes. If the Employer
no longer exists following a Change in Control, the Employer (or its
successor) shall pay the Employee a cash amount in exchange for
canceling any options the Employee did not exercise prior to the
Change in Control. This cash amount shall equal the spread under the
options at the time of the Change in Control. To the extent this
accelerated vesting or the cash payment would require shareholder
approval, the Employer (or its successor) shall, in lieu thereof, make
a cash payment to the Employee as soon as practicable following the
Change in Control in an amount necessary to put the Employee in a
financial position similar to the financial position he would have
enjoyed had the vesting or cash payments requiring shareholder
approval have been made. If this cash payment itself cannot be made
without shareholder approval (and without violating securities laws),
the Employer shall seek shareholder approval for making modifications
to the Employee's stock options consistent with the vesting and cash
payment provisions of this paragraph, and shall be required to seek
that approval as soon as practicable.
3. A new Section 20 is added as follows:
20. DEFERRED COMPENSATION AGREEMENT. As soon as practicable after the
adoption of this Amendment, the Employer shall amend the Employee's
Deferred Compensation Agreement (and any related trust agreement) to
prohibit any further amendment (or termination) of that agreement that
would reduce benefits already accrued by the Employee at the time of the
amendment (or termination), unless that reduction is agreed to in writing
by the Employee. In addition, as soon as practicable after the adoption of
this Amendment (and any related trust agreement), the Employer shall amend
the Employee's Deferred Compensation Agreement (and any related trust
agreement) to make clear that an acquirer under a Change in Control (or
other party effecting a Change in Control within the meaning of this
Agreement) shall be considered a successor employer bound by the terms of
the Employee's Deferred Compensation Agreement (and any related trust
agreement).
55
IN WITNESS WHEREOF, Employer and Employee have duly executed this
Amendment effective this 27th day of July, 1999.
XXXXXX INDUSTRIES, INC.
By:
-----------------------------------
Title:
-----------------------------------
EMPLOYEE
-----------------------------------
56
