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EXHIBIT 10.07
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of 1997, by and between (the
"Employee") and ST. XXX CORPORATION, a Florida corporation (the "Company").
1. TERM OF AGREEMENT.
This Agreement shall remain in effect from the date hereof until:
a) The date when the Company has met all of its obligations under
this Agreement following a termination of the Employee's
employment with the Company for a reason described in Section
5.
2. DEFINITION OF CHANGE IN CONTROL,
For all purposes under this Agreement, "Change In Control" shall mean the
occurrence of any of the following events after the date of this Agreement:
a) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate
reorganization, if 50% or more of the combined voting power,
directly or indirectly, of the continuing or surviving
entity's securities outstanding immediately after such merger,
consolidation or other reorganization is owned by persons who
are not stockholders of the Company immediately prior to such
merger, consolidation or other reorganization;
b) The sale, transfer, exchange or other disposition of all or
substantially all of the Company's assets;
c) A change in the composition of the Board, as a result of which
fewer than two-thirds of the incumbent directors are directors
who either (i) had been directors of the Company on the date
24 months prior to the date of the event that may constitute a
Change in Control (the "original directors") or (ii) were
elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the aggregate of
the original directors who were still in office at the time of
the election or nomination and the directors whose election
or nomination was previously so approved;
d) The liquidation or dissolution of the Company; or
e) Any transaction as a result of which any person is the
"beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Company
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representing at 25% of the total voting power represented by
the Company's then outstanding voting securities. For purposes
of this Paragraph (e), the term "person" shall have the same
meaning as when used in sections 13(d) and 14(d) of such Act
but shall exclude (i) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a
parent or subsidiary of the Company, (ii) a corporation owned
directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the
common stock of the Company, (iii) the Xxxxxx X. xxXxxx
Testamentary Trust and (iv) the Nemours Foundation.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
3. DEFINITION OF GOOD REASON.
For all purposes under this Agreement, "Good Reason" shall mean that the
Employee:
a) Has experienced a demotion in title with the Company from that
in effect immediately prior to the Change in Control which
demotion results in a substantial and material reduction in
responsibilities with the Company from those in effect
immediately prior to the Change in Control;
b) Has incurred a reduction in his total compensation as an
employee of the Company (consisting of base salary and maximum
bonus potential);
c) Has been notified that his principal place of work as an
employee of the Company will be relocated outside the
Jacksonville, Florida area; or
d) Is employed by a successor to the Company that has failed to
comply with Section 10(a).
4. DEFINITION OF CONTINUATION PERIOD.
For all purposes under this Agreement, "Continuation Period" shall mean
the period commencing on the date when the termination of the Employee's
employment under Section 5 is effective and ending on the earlier of:
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a) The later of (i) the date 36 months after the date
when the employment termination was effective or (ii)
________; or
b) The date of the Employee's death.
5. ENTITLEMENT TO SEVERANCE PAY AND BENEFITS.
The Employee shall be entitled to receive the severance pay described
in Section 6 and the benefits in sections 7 and 8 from the Company if, and only
if, one of the following events occurs:
a) Within the period which is the last six months of the first
year after the occurrence of a Change in Control, the Employee
voluntarily resigns the Employee's employment for any reason;
b) Within the first 36 month period after the occurrence of a
Change in Control, the Employee voluntarily resigns the
Employee's employment for Good Reason; or
c) Within the first 36 month period after the occurrence of a
Change in Control, the Company terminates the Employee's
employment for any reason.
The determination of whether the Employee's employment has terminated shall be
made without regard to whether the Employee continues to provide services to the
Company as a member of its Board of Directors or otherwise in the capacity of an
independent contractor. A transfer of the Employee's employment from the Company
to a successor of the company shall not be considered a termination of
employment, if such successor complies with the requirements of Section 10(a).
6. AMOUNT OF SEVERANCE PAY.
Within five business days after the termination of the Employee's
employment under Section 5, the Company shall pay the Employee a lump sum equal
to the product of three times the sum of:
a) The Employee's base compensation at the greater of (i) the
annual rate in effect on the date when the termination of the
Employee's employment with the Company is effective or (ii)
the annual rate in effect on the date of the Change in
Control; plus
b) The greater of (i) the Employee's annual bonus for the most
recent year completed prior to the date when the termination
of the Employee's employment with the Company is effective or
(ii) the amount of the Employee's maximum bonus potential then
in effect, provided, however, that
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if the employee has earned a bonus for any three completed years
prior to the date when termination of the Employee's employment
with the Company is effective, then this paragraph (B) shall be
the average of the three most recent completed years for which a
bonus was earned.
7. SUPPLEMENTAL PENSION BENEFIT.
a) PAYMENT OF BENEFIT. In the event of an employment termination
described in section 5, in lieu of accruing additional pension
benefits under the Company's Salaried Employees Pension Plan
and any other funded or unfunded defined-benefit pension plans
now or hereafter maintained by the Company (collectively, the
"Pension Plans") during the Continuation Period, the Employee
shall be entitled to receive an unfunded supplemental pension
benefit under this Agreement (the "Supplemental Benefit"). The
Supplemental Benefit shall be calculated under Subsection (b)
below and shall be paid in a lump sum within five business
days after a termination of the Employee's employment under
Section 5.
b) CALCULATION OF BENEFIT. The Supplemental Benefit shall be the
actuarial equivalent of a monthly pension benefit equal to the
difference between:
(i) The amount of the hypothetical monthly pension
benefit that would be payable to the employee as a
single-life annuity under the Pension Plans had the
Employee (A) continued to be employed as an employee
of the Company during the Continuation Period and (B)
received compensation equal to the amount described
in Section 6(b) during the Continuation Period;
minus
(ii) the amount of the actual monthly pension benefit
payable to the Employee as a single-life annuity
under the Pension Plans.
For purposes of this subsection (b), actuarial equivalence shall be determined
by applying the actuarial assumptions then set forth in the Company's principal
funded pension plan for salaried employees used to determine lump sum payments.
8. STOCK, BONUS, GROUP INSURANCE AND OUTPLACEMENT SERVICES.
a) STOCK OPTIONS AND STOCK SUBJECT TO REPURCHASE. In the event of
a Change in Control, (i) all stock options granted to the
Employee by the Company before or after the date of this
Agreement shall immediately become exercisable in full
(regardless of whether such stock options previously were
vested) and (ii) any right of the Company to repurchase shares
of its Common Stock from employee shall immediately lapse in
full. Following a termination of the Employee's
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employment under Section 5, the Employee shall remain entitled
to exercise each stock option granted to the Employee by the
Company before or after the date of this Agreement until the
earlier of (i) the first anniversary of the employment
termination date or (ii) the date when such option would have
expired by its terms if the Employee's employment had not
terminated. If the Company and the other party to the
transaction constituting a Change in Control agree that the
transaction is to be treated as a "pooling of interests" for
financial reporting purposes, and if the transaction in fact
is so treated, then the acceleration of exercisability and/or
the extended exercise period will not occur to the extent that
the surviving entity's independent public accountants
determine in good faith that the acceleration would preclude
the use of "pooling of interests" accounting.
b) BONUS. In the event of an employment termination described in
Section 5, the Company shall pay the Employee a bonus for the
year in which such termination occurs. Such bonus shall not be
less than the greater of (i) the Employee's annual bonus for
the most recent year completed prior to the date when the
termination of the Employee's employment with the Company is
effective or (ii) the amount of the Employee's maximum bonus
potential then in effect, in either case prorated to reflect
the portion of such year during which the Employee was
employed by the Company.
c) GROUP INSURANCE. During the Continuation Period, the Employee
(and, where applicable, the Employee's dependents) shall be
entitled to continue participation in the group insurance
plans maintained by the Company, including life, disability
and health insurance programs, at the Company's expense. Where
applicable, the Employee's salary for purposes of such plans
shall be determined at the greater of (i) the annual rate in
effect on the date when the termination of the Employee's
employment with the company is effective or (ii) the annual
rate in effect on the date of the Change in Control. To the
extent that the Company finds it impossible to cover the
Employee under its group insurance policies during the
Continuation Period, the Company shall provide the Employee
with individual policies which offer at least the same level
of coverage and which impose not more than the same costs on
the Employee. The foregoing notwithstanding, in the event that
the Employee becomes eligible for comparable group insurance
coverage in connection with new employment, the coverage
provided by the Company under this Subsection (c) shall
terminate immediately. Any group health continuation coverage
that the Company is required to offer under the Consolidate
Omnibus Budget Reconciliation Act of 1986 shall commence when
coverage under this Subsection (c) terminates.
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d) OUTPLACEMENT SERVICES. If one of the events described in
Section 5 has occurred, the Employee shall be entitled to
senior-executive level outplacement services at the Company's
expense. Such services shall be provided by a firm selected by
the Employee from a list compiled by the Company.
9. EXCISE TAXES.
a) GROSS-UP PAYMENT. If it is determined that any payment or
distribution of any type to or for the benefit of the Employee
by the Company, any of its affiliates, any person who acquires
ownership or effective control of the Company or ownership of
a substantial portion of the Company's assets (within the
meaning of section 280G of the Internal Revenue Code of 1986,
as amended (the "Code"), and the regulations thereunder) or
any affiliate of such person, whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise (the "Total Payments"), would be
subject to the excise tax imposed by section 4999 of the Code
or any interest or penalties with respect to such excise tax
(such excise tax and any such interest or penalties are
collectively referred to as the "Excise Tax"), then the
Employee shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount calculated to ensure that
after payment by the Employee of all taxes (and any interest
or penalties imposed with respect to such taxes), including
any Excise Tax, imposed upon the Gross-Up Payment, the
Employee retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Total Payments. Payments under
this section are payable to the Employee, even if the Employee
is not eligible for employment termination benefits under this
Agreement.
b) DETERMINATION BY ACCOUNTANT. All determinations and
calculations required to be made under this Section 9 shall be
made by an independent accounting firm selected by the
Employee from among the largest six accounting firms in the
United States (the "Accounting Firm"), which shall provide its
determination (the "Determination"), together with detailed
supporting calculations regarding the amount of any Gross-Up
Payment and any other relevant matter, both to the company and
the Employee within five days of the termination of the
Employee's employment, if applicable, or such earlier time as
is requested by the Company or the Employee (if the Employee
reasonably believes that any of the Total Payments may be
subject to the Excise Tax). If the Accounting firm determines
that no Excise Tax is payable by the Employee, it shall
furnish the Employee with a written statement that such
Accounting Firm has concluded that no
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Excise Tax is payable (including the reasons therefor) and
that the Employee has substantial authority not to report any
Excise Tax on the Employee's federal income tax return. If a
gross-Up payment is determined to be payable, it shall be paid
to the Employee within five days after the Determination is
delivered to the Company or the Employee. Any determination by
the Accounting Firm shall be binding upon the Company and the
Employee, absent manifest error.
c) OVER- AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments not made by the Company should
have been made ("Underpayment"), or that Gross-Up Payments
will have been made by the Company which should not have been
made ("Overpayments"). In either such event, the Accounting
Firm shall determine the amount of the Underpayment or
Overpayment that has occurred. In the case of an Underpayment,
the amount of such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee. In the case of
an Overpayment, the Employee shall, at the direction and
expense of the Company, take such steps as are reasonably
necessary (including the filing of returns and claims for
refund), follow reasonable instructions from, and procedures
established by, the Company, and otherwise reasonably
cooperate with the Company to correct such Overpayment,
provided, however, that (i) the Employee shall in no event be
obligated to return to the Company an amount greater than the
net after-tax portion of the Overpayment that the Employee has
retained or has recovered as a refund from the applicable
taxing authorities and (ii) this provision shall be
interpreted in a manner consistent with the intent of
Subsection (a) above, which is to make the Employee whole, on
an after-tax basis, from the application of the Excise Tax, it
being understood that the correction of an Overpayment may
result in the Employee's repaying to the Company an amount
which is less that the Overpayment.
d) LIMITATION ON PARACHUTE PAYMENTS. Any other provision of this
Section 9 notwithstanding, if the Excise Tax could be avoided
by reducing the Total Payments by $50,000 or less, then the
Total Payments shall be reduced to the extent necessary to
avoid the Excise Tax and no Gross-Up Payment shall be made. If
the Accounting Firm determines that the total Payments are to
be reduced under the preceding sentence, then the Company
shall promptly give the Employee notice to that effect and a
copy of the detailed calculation thereof. The Employee may
then elect, in the Employee's sole discretion, which and how
much of the total Payments are to be eliminated or reduced (as
long as after such election no Excise Tax
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will be payable) and shall advise the Company in writing of
the Employee's election within 10 days of receipt of notice.
If no such election is made by the Employee within such 10 day
period, then the Company may elect which and how much of the
total Payments are to be eliminated or reduced (as long as
after such election no Excise Tax will be payable) and shall
notify the Employee promptly of such election.
10. SUCCESSORS.
a) COMPANY'S SUCCESSORS. The Company shall require any successor
(whether direct or indirect by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or
substantially all of the Company's business or assets, by an
agreement in substance and form satisfactory to the Employee,
to assume this Agreement and to agree expressly to perform
this Agreement in the same manner and to the same extent as
the Company would be required to perform it in the absence of
a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the business or
assets of the Company which executes and delivers the
assumption agreement described in this Subsection (a) or which
becomes bound by this Agreement by operation of law.
b) EMPLOYEE'S SUCCESSORS. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be
enforceable by, the Employee's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
11. MISCELLANEOUS PROVISIONS.
a) NOTICE. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by
U.S. registered or certified mail, return receipt requested
and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to the Employee at the home address
which the Employee most recently communicated to the Company
in writing. In the case of the Company, mailed notices shall
be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary.
b) WAIVER. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by the Employee
and by an authorized officer of the Company (other than the
Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this
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Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or
provision at another time.
c) OTHER AGREEMENTS; AMENDMENTS. This Agreement does not
supersede the Employment Agreement dated , 1997, between
the Employee and the company, except to the extent that the
severance pay and benefits provided in Sections 6, 7 and 8 of
this Agreement (and the related definitions) are greater than
the severance pay and benefits provided by such Employment
Agreement. In no event shall the Employee be entitled to
severance pay both under this Agreement and under such
Employment Agreement following a termination of employment.
This Agreement does not supersede any stock option or
restricted stock agreement between the Employee and the
Company, except to the extent that Section 8(a) of this
Agreement provides for earlier exercisability or vesting or a
longer post-termination exercise period than such stock option
or restricted stock agreement. This Agreement may be amended
only in writing, by an instrument executed by both parties.
d) NO SETOFF; WITHHOLDING TAXES. There shall be no right of
setoff or counterclaim, with respect to any claim, debt or
obligation, against payments to the Employee under this
Agreement. Except as provided in Section 9, all payments made
under this Agreement shall be subject to reduction to reflect
taxes required to be withheld by law. The payments received
under this Agreement shall be in lieu of, and not in addition
to, any payments received in connection with any Employment
Agreement by and between the Employee and the Company under
any Company's general severance plan covering all its
employees and should any payment be made under such Employment
Agreement or severance plan, the amounts payable hereunder
shall be reduced by such payments.
(e) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of Florida, except their choice-of-law provisions.
f) SEVERABILITY. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
g) ARBITRATION. Except as otherwise provided in Section 9, any
controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by
arbitration in Jacksonville, Florida,
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in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Arbitration shall be the
exclusive remedy for resolving disputes arising under this
Agreement. Discovery shall be permitted to the same extent as
in a proceeding under the Federal Rules of Civil Procedure.
Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. All fees
and expenses of the arbitrator and such Association shall be
paid as determined by the arbitrator
h) LEGAL FEES. In the event of any controversy or claim arising
out of or relating to this Agreement, or the breach thereof,
the company shall pay the reasonable fees and costs of the
Employee's attorneys attributable to such controversy or
claim, provided that the Employee prevails on at least one
material issue arising in such controversy or claim.
i) NO ASSIGNMENT. The rights of any person to payments or
benefits under this Agreement shall not be made subject to
option or assignment, either by voluntary or involuntary
assignment or by operation of law, including (without
limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this
Subsection (i) shall be void.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.
EMPLOYEE ST. XXX CORPORATION
By By
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Xxxxxxx X. Xxxxx
Title Title VP - HR and Administration
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Date Date , 1997
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