BOARD OF DIRECTORS
CHANGE OF CONTROL AGREEMENT
SENIOR EXECUTIVE SEVERANCE AGREEMENT
AGREEMENT between CANISCO RESOURCES, INC., a Delaware corporation (the
"Corporation") and Xxxxxxx X. Xxxxx, (the "Executive").
W I T N E S S E T H:
WHEREAS, the Board of Directors (the "Board") of the Corporation has
determined that it is in the best interests of the Corporation to enter into
severance agreements with key executives of the Corporation; and
WHEREAS, the Board has authorized Management put in place a Change of
Control Agreement with certain Senior Executives; and
WHEREAS, the Executive is a key executive of the Corporation and has
been selected by the Board to enter into a severance agreement with the
Corporation; and
WHEREAS, the Corporation recognizes that the Executive is an integral
part of the management of the Corporation and has made and is expected to
continue to make major contributions to its profitability, growth and financial
strength; and
WHEREAS, the Corporation considers that the provision of financial
security to the Executive in the event of a change in control of the Corporation
will enable Executive to serve the Corporation on an objective and impartial
basis and without conflict of interest in the evaluation of and response to any
attempt to effect such a change in control, and will, in addition, serve as
compensation for the Executive's direct responsibility for the Corporation's
success (which success may prompt an attempt by others to effect such a change
in control); and
WHEREAS, should the Corporation receive any such proposals, in addition
to the Executive's regular duties, he may be called upon to assist in the
assessment of such proposals, advise management and the Board as to whether such
proposals would be in the best interests of the Corporation and its
shareholders, and to take such other actions as the Board might determine to be
appropriate;
NOW, THEREFORE, in consideration of the above and the covenants and
agreements contained herein, and for other good and valuable consideration, the
Corporation and the Executive agree as follows:
1. TERMINATION AFTER CHANGE OF CONTROL. The following payments
and benefits will be provided to the Executive by the Corporation in the event
of a Termination of Employment (as hereinafter defined) of the Executive within
three (3) years after a Change of Control (as hereinafter defined) of the
Corporation.
1.1 LUMP SUM CASH PAYMENT. On or before the Executive's
last day of employment with the Corporation, the Corporation will pay to the
Executive as compensation for services rendered to the Corporation a lump sum
cash amount (subject to any applicable payroll or other taxes required to be
withheld) equal to three (3) times the highest Annual Total Compensation (as
hereinafter defined) paid or payable to the Executive by the Corporation during
the thirty six (36) months immediately preceding the date of Termination of
Employment of the Executive.
1.2 PROFIT SHARING AND RETIREMENT PLANS. All rights and
accrued benefits of the Executive under the profit sharing, pension and other
retirement plans of the Corporation, including, without limitation, any deferred
compensation plans of the Corporation, immediately shall vest in full and the
Executive shall be entitled to payment of benefits in accordance with the terms
of the applicable plan. To the extent, if any, that any such plan permits
accelerated vesting as provided in the foregoing sentence, the Executive will be
paid supplementary by the Corporation the amount of additional benefits that
would have been payable if such full vesting had taken place as of the date of
Termination of Employment. All such payments shall be made at the same time and
on the same basis as payments under the plan. All supplemental payments provided
for herein are provided on an unfunded basis, are not intended to meet the
qualification requirements of Section 401 of the Internal Revenue Code and shall
be payable solely from the general assets of the Corporation.
1.3 OTHER PROVISIONS.
(i) INSURANCE AND OTHER SPECIAL BENEFITS. The
Executive's participation in the life, accident and health insurance and other
employee welfare benefit plans (as defined in the Employee Retirement Income
Security Act of 1974), and in other fringe benefits, provided to the Executive
prior to the Change of Control or the Termination of Employment, shall be
continued, or equivalent benefits provided, by the Corporation, at no cost to
the Executive, for a period of thirty six (36) months from the date of the
Termination of Employment (or until his normal retirement date, whichever is
sooner).
(ii) RELOCATION ASSISTANCE. Should the Executive
move his residence more than 25 miles (from its location just prior to
Termination of Employment) in order to pursue other business opportunities
within thirty six (36) months of the Termination of Employment, he will be
reimbursed for any expenses
incurred in that relocation (including taxes payable on the reimbursement) which
are not reimbursed by another employer. Benefits under this provision will
include the assistance in selling the Executive's home and all other assistance
and benefits which are provided by the Corporation under its relocation plan or
common practice as in effect immediately prior to the termination of the
Executive's employment.
(iii) INCENTIVE COMPENSATION. Any awards
previously made to the Executive under any incentive bonus plans of the
Corporation (including, without limitation, the 1990 Executive Compensation Plan
and other incentive plans adopted in the future) and not previously vested or
paid immediately shall vest on the date of Termination of Employment and shall
be paid on that date and included as compensation in the month paid.
(iv) STOCK OPTIONS. All stock options, stock
appreciation rights, stock purchase rights and other similar rights, if any,
which the Executive holds immediately shall, at the option of the Executive, (i)
become fully vested and shall be exercisable in full in accordance with the
terms of the applicable plan, (ii) provide for the purchase of the award upon
the participant's request for an amount of cash or other property that could
have been received upon the exercise or realization of the award had the award
been currently exercisable or payable, (iii) adjust the terms of the award in a
manner determined by the Compensation Committee to reflect the change in
control, (iv) cause the award to be assumed, or new rights substituted therefor,
by another entity, (v) provide for a cash equivalent that the original option
award was based upon with the addition of interest at a rate as specified in
paragraph 2.1, or (vi) make such other provision as the Compensation Committee
may consider equitable and in the best interests of both the Executive and the
Corporation.
(v) EXECUTIVE LOAN PROGRAM. All loans to the
Executive by the Corporation that are outstanding as of the time of Termination
of Employment (except borrowings at a time when the Executive had knowledge that
a Change of Control was being attempted) shall not be due until the expiration
of five (5) years from termination; provided, however, that the Executive shall
have the right to prepay such loans in full at any time or in part from time to
time.
1.4 SUBSTITUTE BENEFITS. To the extent the terms of any
benefit plans of the Corporation described under 1.3 do not permit continued
participation by the Executive after Termination of Employment on substantially
the same terms as when employed by the Company, the Corporation will arrange to
provide the Executive with benefits substantially similar to, and no less
favorable than, the benefits he would be entitled to receive under such benefit
plan.
1.5 DEFINITIONS.
(i) For the purpose of this Agreement, a "Change
of Control" shall be deemed to have taken place on the date of the earlier to
occur of any of the following events:
(a) The acquisition (other than from
the Corporation) by any person, entity or "group," within the meaning of Section
13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (excluding, for this purpose, the Corporation or its
subsidiaries, any employee benefit plan of the Corporation or its subsidiaries,
and the Executive or any such "group" of which the Executive is a member) of
beneficial ownership, within the meaning of Rule 13d-3 promulgated under the
Exchange Act, of 30% or more of either the then outstanding shares of common
stock of the Corporation or the combined voting power of the Corporation's then
outstanding voting securities entitled to vote generally in the election of
directors; or
(b) As a result of, or in connection
with, any cash tender offer, exchange offer, merger, share exchange,
consolidation, or actual or threatened election contest, or any combination of
the foregoing ("Transaction") individuals who, as of the date of the first
public announcement of such Transaction, constitute the Board of Directors cease
for any reason to constitute at least a majority of the Board of Directors; or
(c) Approval by the stockholders of the
Corporation of a reorganization, statutory share exchange, merger or
consolidation, in each case, with respect to which persons who were the
stockholders of the Corporation immediately prior to such reorganization, share
exchange merger or consolidation do not, immediately thereafter, own more than
51% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, or a liquidation or dissolution of the Corporation, or the
sale of all or substantially all of the assets of the Corporation; provided,
however, if the Executive is a participant in any transaction described in
subparagraph (b) or (c) above as an equity investor in the surviving or
resulting corporation, no Change in Control for purposes of this Agreement shall
be deemed to have taken place.
(ii) For purposes of this Agreement, "Annual
Total Compensation" shall mean the sum of the base salary and annual inventive
bonus paid to the Executive on account of the calendar year in question plus all
vested amounts credited to the Executive on account of such calendar year under
applicable incentive compensation plans (without regard to any accelerated
vesting caused by operation of Section 1.3 hereof).
(iii) For purposes of this Agreement, a
"Termination of Employment" shall be deemed to have taken place in the event
that the Executive's employment is terminated for any reason other than as a
consequence of his death or disability, his retirement at or after reaching his
normal retirement age under a retirement plan or current retirement practice of
the Corporation, or his voluntary resignation without just cause. The voluntary
resignation of the Executive shall be without just cause unless such resignation
shall have followed the occurrence of one or more of the following: (x) the
Executive is assigned any duties or responsibilities that are materially
inconsistent with his position, duties, responsibilities or status prior to the
Change of Control, or (y) the Executive's base compensation is reduced or he
experiences in any year a reduction in the ratio of his incentive compensation,
bonus, or other such payments to his base compensation in such year which is
greater than the average reduction in the ratio of incentive compensation, bonus
or other such payments to base compensation in such year experienced by all the
Corporation's officers.
2. GENERAL.
2.1 INDEMNIFICATION. If litigation shall be brought to
enforce or interpret any provision contained herein, the Corporation, to the
extent permitted by applicable law and the Corporation's Charter, hereby
indemnifies the Executive for his reasonable attorneys' fees and disbursements
incurred in such litigation only if the Executive is otherwise found to be owed
any amount in excess of payments already made under the agreement after the
Executive has made demand therefor.
2.2 PAYMENT OF OBLIGATIONS ABSOLUTE. The Corporation's
obligation to pay the Executive the compensation and to make the arrangements
provided herein shall be absolute and unconditional and shall not be affected by
any circumstances, including, without limitation, any offset, counterclaim,
recoupment, defense or other right which the Corporation may have against him or
anyone else. All amounts payable by the Corporation hereunder shall be paid
without notice or demand. Each and every payment made hereunder by the
Corporation shall be final and the Corporation will not seek to recover all or
any part of such payment from the Executive or from whosoever may be entitled
thereto for any reason whatsoever. The Executive shall not be obligated to seek
other employment in mitigation of the amounts payable or arrangements made under
any provision of this Agreement, and except as provided in Section 1.3(i) and
1.3(ii) of this Agreement, the obtaining of any such other employment shall in
no event effect any reduction of the Corporation's obligations to make the
payments and arrangements required to be made under this Agreement.
2.3 CONTINUING OBLIGATIONS. The Executive shall retain in
confidence any confidential information known to him concerning the Corporation
and its
subsidiaries and their respective businesses so long as such information is not
publicly disclosed or until ninety (90) days have lapsed since his termination.
2.4 SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the Executive and his estate, and the Corporation and
any successor of the Corporation, but neither this Agreement nor any rights
arising hereunder may be assigned or pledged by the Executive. All references in
this Agreement to the Corporation shall include its subsidiaries and affiliates
to the extent that compensation or other plans or benefits are provided by such
entities.
2.5 SEVERABILITY. Any provision in this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating or affecting the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
2.6 CONTROLLING LAW. This Agreement shall in all respects
be governed by, and construed in accordance with, the laws of the state of
Pennsylvania.
2.7 TERMINATION. This Agreement shall terminate if the
Board of Directors determines that the Executive is no longer a key executive to
be covered by this Agreement and so notifies the Executive in writing; EXCEPT
THAT such determination shall not be made, and if made shall have no effect, (i)
within three (3) years after a Change of Control or (ii) during any period of
time when the Board has knowledge that any third person has taken steps
reasonably calculated to effect a Change of Control until, in the opinion of the
Board, the third person has abandoned or terminated his efforts to effect a
Change of Control. Any decision by the Board that a third person has or has not
taken steps reasonably calculated to effect a Change of Control or that the
third person has abandoned or terminated his efforts to effect a Change of
Control shall be conclusive and binding on the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement on the 9
day of August, 1996.
EXECUTIVE
By: /s/ Xxxxxxx X. Xxxxx
--------------------------
CANISCO RESOURCES, INC.
BOARD OF DIRECTORS
COMPENSATION COMMITTEE
By: /s/ W. Xxxxxxxx Xxxxxxxx
-----------------------------
CHAIRPERSON
ATTEST:
/s/ Xxxxxx X. XxXxxxx
-------------------------------
