Exhibit 10.20
BONUS AGREEMENT
This BONUS AGREEMENT (this "Agreement") dated as of May 20, 2003 by and
between XXXXXX HOLDING CO. (PA), INC. a Pennsylvania corporation (the
"Company"), and Xxxx X. Xxxxxx (the "Employee").
R E C I T A L S
WHEREAS, the Company intends to effect a recapitalization and redemption
of its capital (the "Transaction") as specified in the Recapitalization and
Stock Purchase Agreement dated as of May 7, 2003 by and between the Company and
certain parties signatories thereto (the "Stock Purchase Agreement"); and
WHEREAS, subject to and upon the consummation of the Transaction, the
Company desires to reward certain members of management and key employees of the
Company for their contribution to the success of the Company.
NOW THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, receipt of which is
hereby acknowledged, the parties, intending to be legally bound, do hereby agree
as follows:
AGREEMENT
1. Definitions. Capitalized terms used herein but not otherwise defined
herein shall have the following meanings:
"Act" means the Securities Act of 1933, as amended.
"Cause" means that the Employee (a) has been convicted of a
felony, or has entered a plea of guilty or nolo contendere to a felony;
(b) has committed an act of fraud or dishonesty which is materially
injurious to the Company or any of its Subsidiaries; (c) has willfully
and continually refused to perform his or her duties with the Company or
any of its Subsidiaries; or (d) has engaged in gross misconduct that is
materially injurious to the Company or any of its Subsidiaries.
"Good Reason" means (a) the assignment to the Employee of
duties, or the assignment of the Employee to a position, constituting a
material diminution in the Employee's role, responsibilities or
authority compared with his or her role, responsibilities or authority
with the Company or its affiliates on the date hereof; (b) a reduction
by the Company in the Employee's base salary as in effect from time to
time; or (c) a demand by the Company to the Employee to relocate to any
place that exceeds a 50 mile radius beyond the location at which the
Employee performed the Employee's duties on the date hereof; provided,
however, that in the event that any change in the Employee's duties,
position, role, responsibilities or authority is implemented or proposed
to be implemented by the Company during the term of his or her
employment with the Company, then: (i) unless the Employee provides
written notice to the Company and the Chief Executive Officer of the
Company within 30 days of being notified of such
change or proposed change that the Employee asserts that such change
constitutes a "material diminution", such change shall be deemed not to
be such a "material diminution" and thereafter the Employee's duties,
position, role, responsibilities and authority shall be as so changed;
and (ii) in the event that the Employee provides such notice in a timely
manner and, within 30 days thereafter, the Company, in its sole
discretion, rescinds or alters such change, then the original change
shall be disregarded (except to the extent so altered).
"Initial Public Offering" means the sale of any of the common
stock of the Company pursuant to a registration statement that has been
declared effective under the Act, if as a result of such sale (a) the
issuer becomes a reporting company under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, and (b) such stock is
traded on the New York Stock Exchange or the American Stock Exchange, or
is quoted on the NASDAQ National Market System or is traded or quoted on
any other national stock exchange or national securities system.
"Liquidity Event" means a transaction or a series of related
transactions which results in a bona fide, unaffiliated change of
economic beneficial ownership of the Company or its business of greater
than 50% (disregarding for this purpose any disparate voting rights
attributable to the outstanding stock of the Company), whether pursuant
to the sale of the stock of the Company, the sale of the assets of the
Company, or a merger or consolidation (other than a sale of stock by a
Non-Employee Stockholder to (a) another Non-Employee Stockholder or
affiliate thereof, or (b) a non-U.S. entity with respect to which a
Non-Employee Stockholder or affiliate thereof has an administrative
relationship).
"Non-Employee Stockholder" means a shareholder of the Company
(other than any such shareholder who is also an employee of the Company)
and any transferees of such shareholder prior to an Initial Public
Offering or a Liquidity Event.
"Subsidiary" means any joint venture, corporation, partnership,
limited liability company or other entity as to which the Company,
whether directly or indirectly, has more than 50% of the (a) voting
rights or (b) rights to capital or profits.
2. Cash Bonus Amount. For each fiscal year of the Company set forth on
Exhibit A attached hereto and subject to the conditions set forth in Section 3
hereof, the Employee shall accrue the right to the Cash Bonus Amount set forth
in column (C) of Exhibit A if the Company's annual Earnings before Interest,
Taxes, Depreciation and Amortization ("EBITDA"), as defined on Exhibit A, equals
or exceeds the Target Annual EBITDA amount set forth in column (A) of Exhibit A
with respect to such fiscal year. If for any fiscal year set forth on Exhibit A
the Company's annual EBITDA amount for that fiscal year equals or exceeds 95% of
the Target Annual EBITDA amount set forth in column (A) with respect to such
fiscal year, but is less than 100% of such Target Annual EBITDA amount, then,
subject to the conditions set forth in Section 3 hereof, the Employee shall
accrue the right to 75% of the Cash Bonus Amount that the Employee would have
accrued had the Company achieved 100% of its Target Annual EBITDA amount for
that fiscal year. If for any fiscal year set forth on Exhibit A the Company's
annual EBITDA amount for that fiscal year equals or exceeds 90% of the Target
Annual
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EBITDA amount set forth in column (A) with respect to such fiscal year,
but is less than 95% of such Target Annual EBITDA amount, then, subject to the
conditions set forth in Section 3 hereof, the Employee shall accrue the right to
50% of the Cash Bonus Amount that the Employee would have accrued had the
Company achieved 100% of its Target Annual EBITDA amount for that fiscal year.
If for any fiscal year set forth on Exhibit A the Company's cumulative annual
EBITDA amount for that and the proceeding fiscal years equals or exceeds the
Cumulative Target EBITDA amount set forth in column (B) of Exhibit A with
respect to such fiscal year, and subject to the conditions set forth in Section
3 hereof, the Employee shall accrue the right to the Cash Bonus Amount as if the
Company had achieved its Target Annual EBITDA amounts for that and each of the
preceding fiscal years.
3. Payment of Cash Bonus Amount. (a) Upon the consummation of a
Liquidity Event or an Initial Public Offering and subject to Section 4 hereof,
the Company shall pay, or cause to be paid, to the Employee, subject to Section
6 hereof, the aggregate amount of the accrued Cash Bonus Amount.
(b) If the Employee is terminated without Cause (including,
but not limited to disability or death) or resigns with Good Reason after the
date hereof but prior to the earlier of (i) December 31, 2008, or (ii) a
Liquidity Event or an Initial Public Offering, then upon the consummation of a
Liquidity Event or an Initial Public Offering the Company shall pay, or cause to
be paid, to the Employee the aggregate Cash Bonus Amount that such Employee had
accrued as of the date such Employee ceased to be so employed.
4. Termination. (a) This Agreement will terminate and the Company shall
have no obligation to pay, or cause to be paid, to the Employee the accrued Cash
Bonus Amount on the earlier to occur of (i) December 31, 2008, or (ii) unless
otherwise provided in Section 3(b) above, the date upon which the Employee's
employment with the Company terminates for any reason.
(b) The Employee shall not be considered to have ceased to be
employed by the Company for purposes of this Agreement if he or she continues to
be employed by the Company or a Subsidiary, or by a company of which the Company
is a Subsidiary.
5. Not an Employment Contract. This Agreement shall not confer upon the
Employee any right with respect to continuance of employment with the Company or
any affiliate of the Company, nor shall it interfere in any way with the right
of the Company to terminate the Employee's employment at any time.
6. Taxes. Any payment made hereunder shall be subject to withholding of
such taxes as the Company shall deem appropriate.
7. Notices. All notices and other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed to have been duly
given or made (a) three business days after being sent by registered or
certified mail, return receipt requested, (b) upon delivery, if hand delivered,
(c) one business day after being sent by a nationally recognized prepaid
overnight carrier with guaranteed delivery, with a record of receipt, or (d)
upon
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transmission with confirmed delivery if sent by facsimile, to the parties at the
following addresses (or at such other addresses as shall be specified by the
parties by like notice):
If to the Company to:
Xxxxxx Holding Co. (PA), Inc.
00 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, General Counsel
With a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: E. Xxxxxxx Xxxxxxx
If to the Employee to the address set forth below the Employee's
signature below.
8. Governing Law. All terms of and rights under this Agreement shall be
governed by and construed in accordance with the internal laws of the
Commonwealth of Pennsylvania, without giving effect to principles of conflicts
of law.
9. Entire Agreement, Binding Obligations. This Agreement shall become
binding on the Closing Date as such term is defined in the Stock Purchase
Agreement, subject to the consummation of the Transaction. This Agreement sets
forth the entire agreement and understanding between the parties as to the
subject matter hereof and supersedes all prior oral and written and all
contemporaneous oral discussions, agreements and understandings of any kind or
nature.
10. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the maximum extent possible.
11. Remedies. In the event of a breach by any party to this Agreement of
its obligations under this Agreement, any party injured by such breach, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, shall be entitled to specific performance of its rights
under this Agreement. The parties agree that the provisions of this Agreement
shall be specifically enforceable, it being agreed by the parties that the
remedy at law, including monetary damages, for breach of any such provision will
be inadequate
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compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is hereby waived.
12. Further Assurances. Each party shall cooperate and take such action
as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement.
13. Assignment; Binding Effect. This Agreement shall not be assigned by
operation of law or otherwise by any party hereto without the prior written
consent of the other party hereto. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective permitted successors
and assigns.
14. Amendment; Waiver. Any term of this Agreement may be amended and the
observance of any such term may be waived (either generally or in a particular
instance) only with the prior written consent of the Company and the Employee.
15. Headings. The headings preceding the text of the sections hereof are
inserted solely for convenience of reference, and shall not constitute a part of
this Agreement, nor shall they affect its meaning, construction or effect.
16. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, but which together shall constitute
one and the same instrument. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile shall be as effective as delivery of a
manually executed counterpart to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
XXXXXX HOLDING CO. (PA), INC.
By:
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and CEO
EMPLOYEE:
----------------------------------
Name: Xxxx X. Xxxxxx
Address: 000 Xxxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000-0000
EXHIBIT A
XXXX X. XXXXXX
EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
(COLUMNS A AND B IN MILLIONS OF DOLLARS)
(A) (B) (C)
Annual Cumulative Cash Bonus
Fiscal Year Target Target Amount
------------ -------- --------------- ----------------
2003 92.1 92.1 $200,669.60
2004 103.6 195.7 $200,669.60
2005 115.6 311.3 $200,669.60
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") for a particular period is defined as Consolidated Net Income (loss)
of the Company and its subsidiaries as shown on the consolidated statement of
income (loss) for such period prepared in accordance with U.S. GAAP,
consistently applied, which shall (a) exclude or be adjusted otherwise for all
acquisitions and additional equity contributions to the extent such acquisitions
and/or equity contributions materially change target EBITDA for any particular
fiscal year of the Company, (b) reflect a reduction for all management and
employment bonuses payable with respect to the fiscal year of the Company and
(c) be adjusted for any material amendment to the capital expenditure plan
approved by the Board of Directors of the Company (the "Board"); plus (minus),
to the extent such amounts are otherwise taken into account in determining
EBITDA (prior to adjustment), the following:
1. Any provision (benefit) for taxes, including franchise taxes,
deducted (added) in calculating such consolidated net income (loss);
2. Any interest expense (net of interest income), deducted in
calculating such consolidated net income (loss);
3. Amortization expenses deducted in calculating such
consolidated net income (loss);
4. Depreciation expense deducted in calculating consolidated net
income (loss);
5. Management fees paid to Investcorp to the extent recorded as
an expense in calculating such consolidated net income (loss);
6. Any unusual losses (gains) deducted (added) in calculating
such consolidated net income (loss). This adjustment is intended to
exclude, in the calculation of EBITDA, the effects, if any, of any
transactions outside of the Company's ordinary
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course of business as and to the extent determined to be appropriate in
good faith by the Board.
The Board reserves the right to make other adjustments to EBITDA or the
EBITDA targets as the Board determines in good faith are appropriate to take
into account the effect of material transactions or events during the period,
including without limitation acquisitions, divestitures, equity issuances and
significant changes to capital expenditure plans.
The Employee and his or her representative shall be provided reasonable
opportunity to review the computation of EBITDA and reasonable access to the
data and information supporting such computation, but the Board's determination
shall be conclusive and binding.
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