Exhibit 10.10
Final Draft 5/15/96
PERSONAL AND CONFIDENTIAL
AGREEMENT
THIS AGREEMENT, dated as of May 1, 1996 (this "Agreement"), is made by
and between Spalding & Evenflo Companies, Inc., having its principal offices at
000 X. Xxxxxxx Xxxxxx Xxxx., Xxxxx 000, Xxxxx, Xxxxxxx 00000 (the "Company"),
and Mr. _________ ______, residing at
_____________________________________________ (the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its shareholders to xxxxxx the continued employment of key executive management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the possibility of a Change in Control (as defined in Section
1.3 below) of the Company exists from time to time and that such possibility,
and the uncertainty, instability and questions that it may raise for and among
key executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material detriment
of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce, focus and encourage the continued attention and dedication
of key members of the executive management of the Company and its subsidiaries,
including (without limitation) the Executive, to their assigned duties without
distraction in the face of potentially disturbing or unsettling circumstances
arising from the possibility of a Change in Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
1.1 "ANNUAL BASE SALARY" shall mean the Executive's rate of regular
base annual compensation (prior to any reduction under (i) a salary reduction
agreement pursuant to section 401(k) or section 125 of the Internal Revenue Code
of 1986, as amended from time to time (the "Code") or (ii) any plan or
arrangement deferring any base salary or bonus payments), and shall not include
(without limitation) cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
1.2 "CAUSE" shall mean:
(i) the willful and continued failure by the Executive
substantially to perform the Executive's duties with the Company, or a
subsidiary of the Company, as such duties may reasonably be defined from
time to time by the Board (or a duly authorized committee thereof) or to
abide by the reasonable written policies of the Company or of the
Executive's primary employer (other than any such failure resulting from
the Executive's incapacity due to physical or mental illness) after a
written demand for substantial performance is delivered to the Executive by
the Board, which demand specifically identifies the manner in which the
Board believes that the Executive has not substantially performed the
Executive's duties or has not abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company or
its subsidiaries, monetarily or otherwise; or
(iii) the Executive's conviction of, or plea of no contest to, a
felony.
For purposes of clauses (i) and (ii) of this definition, no act, or failure to
act, on the Executive's part shall be deemed "willful" unless done, or omitted
to be done, by the Executive in bad faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of the Company or
its subsidiaries. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or upon the instructions of
the Board (or a committee thereof), the Company's chief executive officer or
other duly authorized senior officer of the Company (as appropriate) or based
upon the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of employment of
the Executive shall not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice of any such meeting is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, (a) the Executive
has acted in a manner described in clause (i) or (ii) above, and specifying the
particulars thereof in detail, or (b) one of the events set forth in (iii) has
occurred.
1.3 "CHANGE IN CONTROL" shall mean and be deemed to have occurred if:
(i) any Person is or becomes, after the date of this
Agreement, the Beneficial Owner (as that term is defined in Rule 13d-3
under the Securities Exchange Act of 1934 (the "Exchange Act")),
directly or indirectly, of securities of the Company (not including in
the securities beneficially owned by such Person any securities
acquired directly from the Company) representing
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more than fifty percent (50%) or more of the combined voting power of the
Company's then outstanding securities; or
(ii) during any period of twenty-four (24) consecutive
months (not including any period prior to May 1, 1996), individuals
who at the beginning of such period constitute the Board and any new
director (other than a director designated by a Person who has entered
into an agreement with the Company to effect a transaction described
in clause (i), (iii) or (iv) of this definition or any such individual
whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a reorganization,
merger or consolidation with respect to which all or substantially all
of the individuals and entities who were Beneficial Owners,
immediately prior to such reorganization, merger or consolidation, of
the combined voting power of the Company's then outstanding securities
beneficially own, directly or indirectly, immediately after such
reorganization, merger or consolidation, more then fifty-one percent
(51%) of the combined voting power of the securities of the
corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization, merger
or consolidation, of the combined voting power of the Company's
securities; or
(iv) the shareholders of the Company approve (a) the sale
or disposition by the Company (other than to a subsidiary of the
Company) of all or substantially all of the assets of the Company (or
any such sale or disposition is effected through condemnation
proceedings), or (b) a complete liquidation or dissolution of the
Company; provided, however, that shareholder approval, or closing, of
the sale or disposition by the Company of all of the voting securities
of Evenflo shall be deemed to be a sale of substantially all of the
assets of the Company.
Notwithstanding the foregoing, a Change in Control shall not include any event,
circumstance or transaction which results from the action (excluding the
Executive's employment activities with the Company, or its subsidiaries) of any
Person or group of Persons which includes, is
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directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company or its subsidiaries and in which the Executive
actively participates.
1.4 "COMPANY" shall include Spalding & Evenflo Companies, Inc., and
any successor to its business and/or assets which assumes (either expressly, by
operation of law or otherwise) and/or agrees to perform this Agreement by
operation of law or otherwise (except in determining, under Section 1.3 hereof,
whether or not any Change in Control has occurred in connection with such
succession).
1.5 "DISABILITY" shall mean and be deemed the reason for the
termination by the Company or Evenflo of the Executive's employment, if, as a
result of the Executive's incapacity due to physical or mental illness, (i) the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company or Evenflo for a period of six (6)
consecutive months, (ii) the Company or Evenflo gives the Executive a Notice of
Termination for Disability, and (iii) within thirty (30) days after such Notice
of Termination is given, the Executive does not return to the full-time
performance of the Executive's duties.
1.6 "EMPLOYMENT PERIOD" shall mean the period commencing on the date
of any Change in Control until the earliest to occur of (i) the date which is
thirty-six (36) months from the date of any such Change in Control, (ii) the
date of termination by the Executive of the Executive's employment for Good
Reason, or (iii) the termination by the Company or Evenflo of the Executive's
employment for any reason.
1.7 "GOOD REASON" shall mean the occurrence (without the Executive's
express written consent) of any one of the following acts, or failures to act,
unless, in the case of any act or failure to act described in clauses (i), (iv),
(v) or (vi) below, such act or failure to act is corrected by the Company or
Evenflo prior to the Date of Termination specified in the Notice of Termination
given by the Executive in respect thereof not later than six (6) months after
the occurrence of the event that serves as the basis for the Notice of
Termination:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section 3.2
below or with the Executive's position(s) or status (including,
without limitation, offices, titles, and reporting relationships) as
an executive officer of Evenflo or a substantial adverse alteration in
the nature of the Executive's authority, duties, responsibilities,
position or status from those described in Section 3.2 below or
otherwise;
(ii) a reduction in the Executive's Annual Base Salary or
annual bonus opportunity as in effect on the date of this Agreement or
as the same may be increased at any time thereafter and from time to
time;
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(iii) the relocation of Evenflo's principal _____ offices
to a location more than fifty (50) miles from its location on the date
of this Agreement (or, if different, more than fifty (50) miles from
where such offices are located immediately prior to any Potential
Change in Control) or Evenflo's requiring the Executive to be based
anywhere other than Evenflo's principal _____ offices except for
required travel on the Company's business to an extent substantially
consistent with the Executive's business travel obligations as of the
date of this Agreement;
(iv) the failure by the Company or a subsidiary to continue
in effect any pension benefit or deferred compensation plan in which
the Executive participates immediately prior to any Potential Change
in Control which is material to the Executive's total compensation,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan or arrangement) has been made with respect to such
plan, or the failure by the Company or a subsidiary to continue the
Executive's participation therein (or in such substitute or
alternative plan or arrangement) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the
level of the Executive's participation relative to other participants,
as existed at the time of the Potential Change in Control;
(v) the failure by the Company or a subsidiary to continue
to provide the Executive with health and welfare benefits
substantially similar to those enjoyed by the Executive under any of
the Company's or a subsidiary's retirement, life insurance, medical,
health and accident, or disability or similar plans in which the
Executive was participating at the time of any Potential Change in
Control, the taking of any action by the Company or a subsidiary which
would directly or indirectly materially reduce any of such benefits or
deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of the Potential Change in Control, or the
failure by the Company or a subsidiary to provide the Executive with
the greater number of paid vacation days to which the Executive is
entitled pursuant to the terms of the Executive's employment agreement
or in accordance with the Company's or a subsidiary's normal vacation
policy, in either case, as in effect at the time of the Potential
Change in Control;
(vi) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 7.1; and/or
(vii) the failure of the Company to obtain a written agreement
reasonably satisfactory to the Executive from any successor to the Company
(as described in Section 9.1) to perform this Agreement.
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1.8 "PERSON" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified, applied and used in Sections 13(d) and
14(d) thereof; PROVIDED, HOWEVER, a Person shall not include (i) the Company or
any of its subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its subsidiaries (in its
capacity as such), (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
character and proportions as their ownership of stock of the Company.
1.9 "POTENTIAL CHANGE IN CONTROL" shall mean and be deemed to have
occurred if:
(i) the Company or a subsidiary enters into an agreement,
the consummation of which would result in the occurrence of a Change
in Control; and/or
(ii) the Company or a subsidiary publicly announces an
intention to take actions which, if consummated, would constitute a
Change in Control.
1.10 "RETIREMENT" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such employment is
terminated upon or after normal retirement age pursuant to the pension plan of
the Company, not including any early retirement or so-called "window period"
retirements, generally applicable to its officers, as in effect immediately
prior to any Potential Change in Control or a subsidiary of the Company.
1.11 "EVENFLO" shall include Evenflo Company and any Successor to its
business and/or assets which assumes (either expressly, by operation of law or
otherwise) and/or agrees to perform this Agreement by operation of law or
otherwise (except in determining, under Section 1.3 hereof, whether or not any
Change in Control has occurred in connection with such succession).
2. TERM OF THIS AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through April 30, 1997; PROVIDED, HOWEVER,
that if on April 30, 1997 discussions with a third party are being engaged in on
a reasonably continuous and ongoing basis for the purpose of entering into an
agreement which, if consummated or closed, would result in a Change in Control,
the term of this Agreement shall automatically be extended until the earliest to
occur of (i) the date immediately succeeding the date on which there occurs any
such Change in Control pursuant to any such agreement, (ii) the termination of
any such discussions if no such agreement is entered into (or the announcement
by the Company (or an affiliate of the Company) and/or by such third party that
either or both has no intention of continuing any such discussions), or (iii)
the termination of any such agreement in accordance with its terms or due to a
breach thereof by such third party;
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PROVIDED, FURTHER, HOWEVER, that if a Change in Control shall have occurred
during the term of this Agreement, this Agreement shall continue in effect for a
period of not less than twenty-four (24) months beyond the month in which such
Change in Control occurred or, if later, eighteen (18) months after the
consummation of all or a substantial portion of the transaction that produced
the Change in Control (the "Term"). Notwithstanding the foregoing provisions of
this Section 2, the Term shall terminate upon achievement of normal retirement
age as defined in the pension plan of the Company or a subsidiary of the
Company.
3. COMPANY'S COVENANTS.
3.1 SEVERANCE PAYMENTS. In order to induce the Executive to remain
in the employ of the Company and/or one or more of its subsidiaries and in
consideration of the Executive's covenants set forth in Section 4 below, the
Company agrees, under the terms and conditions described herein and in addition
to the amounts payable to the Executive under Section 5 below, to pay the
Executive the "Severance Payments" described in Section 6.1 below and the other
payments and benefits described herein in the event the Executive's employment
is terminated during the Employment Period or under the other circumstances set
forth in Section 6.1 below.
3.2 POSITION AND DUTIES. During the Employment Period, (a) the
Executive's position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control, and (b)
the Executive's services shall be performed at the location where the Executive
was employed immediately preceding any such Potential Change in Control, or any
office or location less than thirty (30) miles from such location.
3.3 BASE SALARY. During the Employment Period, the Executive shall
receive Annual Base Salary at least equal to twenty-six (26) times the highest
bi-weekly base salary paid or payable, including (without limitation) any base
salary which has been earned but deferred, to the Executive by the Company and
its affiliated companies in respect of the twelve (12) month period immediately
preceding the month in which any related Potential Change in Control occurs. In
addition, Annual Base Salary shall not be reduced after the occurrence of a
Potential Change in Control. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
3.4 ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending within the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the target annual
bonus incentive award under the Company's Management Incentive Compensation Plan
(Guideline Bonus), or any other annual incentive bonus plan maintained by the
Company from time to time (the "Bonus Plan"), for the fiscal year in which
occurs the Change in Control. Each Annual Bonus shall be paid no
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later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus in accordance with rules
established by the Company for that purpose.
3.5 INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment
Period, the Executive (in addition to the Bonus Plan) shall be entitled to
participate in all other incentive, savings and retirement plans, practices,
policies and programs applicable generally to other peer executives of the
Company and its subsidiaries, but in no event shall such plans, practices,
policies and programs provide the Executive with incentive opportunities
(measured with respect to both regular and special incentive opportunities, to
the extent, if any, that such distinction is applicable), savings opportunities
and retirement benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices, policies and
programs as in effect at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or if more
favorable to the Executive, those provided generally at any time thereafter to
other peer executives of the Company and its affiliated companies.
3.6 WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be entitled
to participate in and shall receive all benefits under all of the health and
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent (and at the same
cost, excluding increases in the employee contribution amounts which are
consistent with and equivalent to the historical rates of increase imposed by
the Company in respect thereof) applicable generally to other peer executives of
the Company and its subsidiaries, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits that are less
favorable, in the aggregate, than the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time during the one
hundred eighty (180) day period immediately preceding any related Potential
Change in Control or, if more favorable to the Executive, those provided
generally at any time thereafter to other peer executives of the Company and its
affiliated companies.
3.7 EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in effect
for the Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
3.8 OFFICE SUPPORT; PERQUISITES. During the Employment Period, the
Executive shall be entitled to secretarial support and other facilities,
perquisites and programs
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to enable the Executive to be able to discharge the Executive's responsibilities
hereunder in accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for the Executive
at any time during the one hundred eighty (180) day period immediately preceding
any related Potential Change in Control or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
3.9 VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies, or pursuant
to the terms and provisions of any employment agreement, as in effect for the
Executive at any time during the one hundred eighty (180) day period immediately
preceding any related Potential Change in Control or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
4. THE EXECUTIVE'S COVENANTS.
4.1 EMPLOYMENT. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Change in Control during the
Term the Executive will remain in the employ of the Company or Evenflo during
any related Employment Period.
4.2 TIME AND ATTENTION. During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of Evenflo and to use the Executive's
reasonable best efforts to perform faithfully and efficiently the
responsibilities and duties assigned to the Executive hereunder. During the
Employment Period it shall not be a violation of this Agreement for the
Executive to (i) serve on corporate, civic or charitable boards or committees,
(ii) deliver lectures and fulfill speaking engagements and (iii) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company,
Evenflo or their subsidiaries in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the reinstatement or
conduct of activities similar in nature and scope thereto) subsequent to any
related Potential Change in Control shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company and its
subsidiaries.
4.3. NON-INTERFERENCE; CONFIDENTIAL INFORMATION; NON-COMPETITION
(a) NO INTERFERENCE. For so long as the Executive is employed by
Evenflo, and for a period of two (2) years thereafter, the Executive shall not,
whether for his own account or for the account of any other individual,
partnership, firm, corporation or other
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business organization (other than the Company or one of its affiliates),
intentionally solicit, endeavor to entice away from the Company (or any of its
affiliates), or otherwise interfere with the relationship of the Company (or any
of its affiliates) with, any person who is employed by or otherwise engaged to
perform services for the Company (or any of its affiliates) including, but not
limited to, any independent representatives or organizations, or any person or
entity that is a customer of the Company (or any of its affiliates). The
Executive understands and agrees that the rights and obligations set forth in
this Section 4.3(a) could extend beyond the Term.
(b) CONFIDENTIAL INFORMATION. The Executive covenants and agrees
with the Company that he will not at any time, during or after employment with
the Company or Evenflo, except in performance of the Executive's obligations to
the Company or Evenflo or with the prior express written consent of the Board of
Directors, directly or indirectly, intentionally or unintentionally, disclose
any Confidential Information that he may learn or has learned by reason of his
employment or association with the Company or any of its affiliates, or any
predecessors to its business, or use any such information for his own personal
benefit or gain. The term "Confidential Information" includes, without
limitation, information not previously disclosed to the public or to the trade
by the Company's management with respect to the products, facilities and
methods, trade secrets and other intellectual property, systems, procedures,
manuals, confidential reports, fee or rate information, customer lists,
financial information (including without limitation the revenues, costs or
profits associated with any of the Company's (or any of its affiliates')
activities or products), business plans, prospects, opportunities or other
information of the Company or any of its affiliates. Confidential Information
shall not include information which (i) is or becomes generally available to the
public other than as a result of disclosure by the Executive in violation of
this Section 4.3(b) or (ii) the Executive is required to disclose under any
applicable laws, regulations or directives of any government agency, tribunal or
authority having jurisdiction in the matter or under subpoena or other process
of law. The Executive understands and agrees that the rights and obligations
set forth in this Section 4.3 (b) shall extend beyond the Term.
(c) EXCLUSIVE PROPERTY. The Executive confirms that all Confidential
Information is and shall remain the exclusive property of the Company or any of
its affiliates. All business records, papers and documents kept or made by the
Executive relating to the business of the Company (or any of its affiliates) or
any Confidential Information shall be and remain the property of the Company
and/or any such affiliate. Upon termination of employment or upon the request
of the Company at any time, the Executive shall promptly deliver to the Company,
and shall not without the prior express written consent of the Company retain,
any and all copies of (i) any written materials not previously made available to
the public, or (ii) records and documents made by the Executive or coming into
his possession concerning any Confidential Information or the business or
affairs of the Company or any predecessors to its business, or any of its
affiliates. The Executive understands and agrees that the rights and
obligations set forth in this Section 4.3(c) shall extend beyond the Term.
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(d) COVENANT NOT TO COMPETE. During the Term and for two (2) years
after termination of the Executive's employment for any reason, the Executive
shall not compete, directly or indirectly, with the Company or its affiliates
within fifty (50) miles of any geographic area in which the Company or its
affiliates conducts business at the time of the termination of the Executive's
employment. If it is judicially determined that this provision, or any portion
thereof, is unenforceable under applicable law(s) (statute, common law or
otherwise), then it is hereby agreed by the Executive and the Company that the
unenforceable portion shall be redrafted to the extent necessary to render it
enforceable, while leaving the remaining portions intact. By agreeing to this
contractual modification prospectively at this time, the parties intend to make
this provision enforceable under the law(s) of all applicable states so that the
entire agreement not to compete and/or this Agreement as prospectively modified
shall remain in full force and effect and shall not be rendered void or illegal.
Such modifications shall not affect the payments made to the Executive under
this Agreement. The Executive acknowledges that his skills are such that he can
be gainfully employed in noncompetitive employment and that the agreement not to
compete will in no way prevent him from earning a living. The Executive
understands and agrees that the rights and obligations set forth in this Section
4.3(d) shall extend beyond the Term.
(e) INJUNCTIVE RELIEF. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any of the
covenants contained in this Section 4.3 may result in material irreparable
injury to the Company or its affiliates for which there is no adequate remedy at
law, that it will not be possible to measure damages for such injuries precisely
and that, in the event of such a breach or threat thereof, the Company shall be
entitled to obtain a temporary restraining order and/or a preliminary or
permanent injunction restraining the Executive from engaging in activities
prohibited by this Section 4.3 or such other relief as may be required to
specifically enforce any of the covenants in this Section 4.3.
5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS.
5.1 DISABILITY. Following a Potential Change in Control and during
the Term, during any period that the Executive fails to perform the Executive's
full-time duties with Evenflo as a result of incapacity due to physical or
mental illness, the Executive's full salary shall be paid to the Executive at a
rate no less than the rate in effect at the commencement of any such disability
period, together with all compensation and benefits payable to the Executive
under the terms of any compensation or benefit plan, program or arrangement
maintained by the Company or its subsidiaries during such disability period,
until the Executive's employment is terminated by the Company or Evenflo for
Disability.
5.2 BASE SALARY. If the Executive's employment shall be terminated
for any reason following a Potential Change in Control and during the Term, the
Executive's full salary shall be paid to the Executive through the Date of
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Termination (as defined below in Section 7.2) at the rate in effect at the time
the Notice of Termination is given, together with all compensation and benefits
payable to or with respect to the Executive through the Date of Termination
under the terms of any compensation or benefit plan, program or arrangement
maintained by the Company or its subsidiaries during such period.
5.3 BENEFITS. If the Executive's employment shall be terminated for
any reason following a Potential Change in Control and during the Term, the
Executive's normal post-termination compensation and benefits shall be paid to
the Executive as such payments become due. Such post-termination compensation
and benefits shall be determined under, and paid in accordance with, the
retirement, health insurance, life insurance and other compensation (including
without limitation any bonus and/or incentive compensation) or benefit plans,
programs and arrangements maintained by the Company or its subsidiaries or
affiliates.
6. SEVERANCE PAYMENTS.
6.1 SEVERANCE. The Company shall pay the Executive the payments and
benefits described in Section 6.1(a), (b) and (c) (the "Severance Payments")
upon the termination of the Executive's employment following a Change in Control
and during the Term, in addition to the payments and benefits described in
Section 5 hereof, unless such termination is (i) by the Company or Evenflo for
Cause, (ii) by reason of Retirement, (iii) by the Executive without Good Reason,
(iv) due to death, or (v) due to Disability. In addition, the Executive's
employment shall be deemed to have been terminated following a Change in Control
by the Company dor Evenflo without Cause or by the Executive with Good Reason
(a) if the Executive reasonably demonstrates that the Executive's employment was
terminated prior to a Change in Control without Cause (1) at the request of a
Person who has entered into an agreement with the Company or Evenflo the
consummation of which will constitute a Change in Control (or who has taken
other steps reasonably calculated to effect a Change in Control) or (2)
otherwise in connection with, as a result of or in anticipation of a Change in
Control, or (b) if the Executive terminates his employment for Good Reason prior
to a Change in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1) at
the request of such Person or (2) otherwise in connection with, as a result of
or in anticipation of a Change in Control. The Executive's right to terminate
the Executive's employment for Good Reason shall not be affected by the
Executive's incapacity due to physical or mental illness. The Executive's
continued employment shall not constitute consent to, or a waiver of rights with
respect to, any act or failure to act constituting Good Reason hereunder. In
the event of Disability or death of the Executive after the Date of Termination
in respect of any termination without Cause or any termination for Good Reason,
payments and benefits shall be made to the Executive, or the Executive's
beneficiaries or legal representative, as the case may be.
(a) For a twelve (12) month period after the Date of
Termination or, if sooner, until the Executive reaches the age of
sixty-five (65) years, the Company shall pay to the Executive monthly
payments equal to one-twelfth (1/12) the highest Annual Base Salary
paid or payable to the Executive during the thirty-six (36) month
period immediately preceding the month in which the Change in Control
occurs.
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(b) For a twelve (12) month period after the Date of
Termination, or if sooner, until the Executive reaches the age of
sixty-five (65) years, the Company shall arrange to provide the
Executive with life, disability, accident and health insurance
benefits substantially similar (and at the same cost) to those that
the Executive is receiving immediately prior to any related Potential
Change in Control or the receipt of the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change
in Control which reduction constitutes Good Reason), whichever is
greater; PROVIDED, HOWEVER, that the continued coverage period
hereunder shall be deemed to constitute the full amount of the
Executive's entitlement to COBRA benefits as a result of his
termination of employment. Benefits otherwise receivable by the
Executive pursuant to this Section 6.1(b) shall be reduced to the
extent comparable benefits are actually received by or made available
to the Executive without cost during such period following the
Executive's termination of employment (and any such benefits actually
received by the Executive shall be reported to the Company by the
Executive).
(c) The Executive shall immediately become 100% vested in the
Executive's accrued benefit and/or account balance to date under any
non-qualified deferred compensation plan (assuming that the accrual of
benefits under such plans continues for the period defined in (a) above at
the rate(s) in effect under such plans at the commencement of such period),
including (without limitation) any deferred bonus awards and any
non-qualified supplemental executive retirement plan, and such benefit
shall thereafter be non-forfeitable, and any amendment, modification or
termination of any such plan occurring within two years after any Change in
Control shall not be effective against the Executive or change any of the
Executive's rights thereunder.
6.2 LIMITED REDUCTION. Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be received
by the Executive in connection with a Change in Control or the termination of
the Executive's employment (whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement with the Company or any of its
subsidiaries, any Person whose actions result in a Change in Control or any
Person affiliated with the Company or such Person) (all such payments and
benefits, including the Severance Payments, being hereinafter called "Total
Payments") would subject the Executive to the excise tax imposed under Section
4999 of the Code (or any successor section thereto) the "Excise Tax"), and if
such Total Payments less the Excise Tax is less than the maximum amount of Total
Payments which could otherwise be payable to the Executive without the
imposition of the Excise Tax, then, to the extent necessary to eliminate the
imposition of the Excise Tax (and after taking into account any reduction in the
Total Payments provided by reason of Section 280G of the Code in such other
plan, arrangement or agreement), (A) the cash Severance Payments shall first be
reduced (if necessary, to zero), and (B) all other non-cash Severance Payments
shall next be reduced (if necessary, to zero). For purposes of this limitation
(i) no portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior
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to the Date of Termination shall be taken into account, (ii) no portion of the
Total Payments shall be taken into account which in the opinion of tax counsel
selected by the Company's independent auditors and reasonably acceptable to the
Executive does not constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of
the Code, (iii) the Severance Payments shall be reduced only to the extent
necessary so that the Total Payments (other than those referred to in clauses
(i) or (ii)) in their entirety constitute reasonable compensation for services
actually rendered within the meaning of section 280G(b)(4)(B) of the Code or are
otherwise not subject to disallowance as deductions, in the opinion of the tax
counsel referred to in clause (ii); and (iv) the value of any non-cash benefit
or any deferred payment or benefit included in the Total Payments shall be
determined by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
6.3 LEGAL COSTS. The Company shall reimburse the Executive for
reasonable legal fees and expenses incurred in good faith by the Executive as a
result of any dispute with any party (including, but not limited to, the Company
or any subsidiary of the Company) regarding the payment of any benefit provided
for in this Agreement (including, but not limited, all such fees and expenses
incurred in disputing any termination or in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement, plus in each case
interest on any delayed payment at the applicable Federal rate provided for in
section 7872(f)(2)(A) of the Code. Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied by such evidence of fees and expenses incurred as the Company
reasonably may require.
7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
7.1 NOTICE OF TERMINATION. After a Change in Control and during the
Term, any purported termination of the Executive's employment (other than by
reason of death) shall be communicated by written Notice of Termination from one
party hereto to the other party hereto in accordance with Section 10 hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated. Further, a Notice of Termination for Cause is
required to include a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board which was called and held for the purpose of considering
such termination (which meeting may be a regular meeting of the Board where
prior notice of consideration of such termination is given to members of the
Board) finding that, in the good faith opinion of the Board, (i) the Executive
engaged in conduct set forth in clause (i) or (ii) of the definition of Cause
herein, and specifying the particulars thereof in detail, or (ii) one of the
events set forth in clause (iii) of such definition has occurred. For purposes
of this Agreement, any purported termination not effected in accordance with
this Section 7.1 shall not be considered effective.
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7.2 DATE OF TERMINATION. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Potential Change in
Control and during the Term, shall mean (i) if the Executive's employment is
terminated for Disability, thirty (30) days after Notice of Termination is given
(provided that the Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty (30) day period), and
(ii) if the Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination (which, in the case of a termination by
the Company or Evenflo, shall not be less than thirty (30) days (except in the
case of a termination for Cause) and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than sixty (60)
days, respectively, after the date such Notice of Termination is given).
7.3 DISPUTE CONCERNING TERMINATION. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally resolved either by mutual written agreement of the
parties or by a final judgement, order, or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
PROVIDED, HOWEVER, that the Date of Termination shall not be extended by a
notice of dispute if the basis for such notice, as determined in good faith by
the party receiving such notice, is unreasonable, such notice is not given in
good faith or the party giving such notice does not pursue the resolution of
such dispute with reasonable diligence. Subject to the rights granted by
Section 4.3, any controversy or claim arising out of, or relating to, any
provision of this Agreement shall be settled by binding arbitration in
accordance with the laws of The State of Florida by three arbitrators, one of
whom shall be appointed by the Company, one by the Executive, and the third by
the first two arbitrators. If the first two arbitrators cannot agree on the
appointment of a third arbitrator, then the third arbitrator shall be appointed
by the American Arbitration Association. Such arbitration shall be conducted in
Florida in accordance with the rules of the American Arbitration Association,
except with respect to the selection of arbitrators which shall be as provided
in this Section. Judgment on the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof.
7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control and during the Term, and such termination is
disputed in accordance with Section 7.3 above (and pursuant thereto the Date of
Termination is extended), the Company shall continue to pay the Executive the
full Annual Base Salary in effect at the time of any related Potential Change in
Control or when the notice giving rise to the dispute was given (whichever is
greater). Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement or any other plan, agreement or arrangement.
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8. NO MITIGATION. The Company agrees that, if the Executive's employment
is terminated during the Term, the Executive is not required to seek other
employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 6 or Section 7.4. Further, the
amount of any payment or benefit provided for in Section 6 (other than pursuant
to Section 6.1.(b)) or Section 7.4 shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, or offset against any amount claimed to be owed by the
Executive to the Company or any of its subsidiaries, or otherwise.
9. SUCCESSORS; BINDING AGREEMENT.
9.1 SUCCESSORS. In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate employment with the Company or
Evenflo for Good Reason after a Change in Control, except that, for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2 BINDING AGREEMENT. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be payable to
the Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the beneficiary (or beneficiaries) designated by
the Executive from time to time in accordance with the procedures for notice set
out in Section 10; PROVIDED, HOWEVER, that if there shall be no effective
designation of beneficiary by the Executive, such amounts shall be paid to the
executors, personal representatives or administrators of the Executive's estate.
10. NOTICES; OTHER COMMUNICATIONS. For the purpose of this Agreement,
notices and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or mailed by
United States certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to such other address
as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
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To the Company:
Spalding & Evenflo Companies, Inc.
000 X. Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx, General Counsel
With a copy to:
_____________________, Esq.
Milbank, Tweed, Xxxxxx & XxXxxx
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
To the Executive:
Mr. __________________
______________________
______________________
11. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Florida without regard to the principles of conflict
of laws thereof. All references to sections of the Exchange Act or the Code (or
the rules and/or regulations under either) shall be deemed also to refer to and
include any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law and any additional withholding to which the
Executive has agreed. The rights and obligations of the Company and the
Executive under this Agreement shall survive the expiration of the Term and the
Employment Period.
12. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, all of which shall remain in full force and effect.
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13. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. NO LIMITATION. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement with the Company or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement as in effect from time to time except as
explicitly modified by this Agreement.
15. OTHER AGREEMENTS. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes all
prior agreements understandings, discussions, negotiations and undertakings,
whether written or oral, between the parties with respect thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
SPALDING & EVENFLO COMPANIES, INC.
By:________________________________________
Name:
Title:
__________________________________________
[Name of Executive]
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