Exhibit A CHANGE OF CONTROL AGREEMENT
EXHIBIT
10.3
Exhibit
A
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Parties:
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Analysts
International Corporation
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(“Company”)
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0000
Xxxx 00xx
Xxxxxx, Xxxxx 000
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Xxxxxxxxxxx,
XX 00000
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Xxxxxx
X. Xxxxx
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(“Executive”)
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Date:
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January
3, 2008
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RECITALS:
1.
Executive has been employed by the Company since January 1, 2008, and currently
serves as the Senior Vice President, Secretary, and General Counsel of the
Company, and Executive has extensive knowledge and experience relating to the
Company’s business.
2.
The parties recognize that a “Change of Control” may materially change or
diminish Executive’s responsibilities and substantially frustrate Executive’s
commitment to the Company.
3.
The parties further recognize that it is in the best interests of the Company
and its stockholders to provide certain benefits payable upon a “Change of
Control Termination” to encourage Executive to continue in his/her position in
the event of a Change of Control, although no such Change of Control is now
contemplated or foreseen.
4.
The parties further desire to provide certain benefits payable upon a
termination of Executive’s employment following a Change of
Control.
AGREEMENTS:
1.
Term of
Agreement. Except as otherwise provided herein, this Agreement
shall commence on the date executed by the parties and shall continue in effect
until the third anniversary of the date set forth above; provided, however,
that
if a Change of Control of the Company shall occur during the term of this
Agreement, this Agreement shall continue in effect for a period of twelve (12)
months beyond the
date of such Change of Control. If, prior to the
earlier
of the third anniversary of this Agreement or a Change of Control, Executive’s
employment with the Company terminates for any reason or no reason, or if
Executive no longer serves as an executive officer of the Company, this
Agreement shall immediately terminate, and Executive shall not be entitled
to
any of the compensation and benefits described in this Agreement. Any
rights and obligations accruing before the termination or expiration of this
Agreement shall survive to the extent necessary to enforce such rights and
obligations.
1
2.
“Change of
Control.” For purposes of this Agreement, “Change of Control”
shall mean any one or more of the following events occurring after the
date of
this Agreement:
(a)
The purchase or other acquisition by any one person, or more than one
person
acting as a group, of stock of the Company that, together with stock held by
such person or group, constitutes more than 50% of the total combined value
or
total combined voting power of all classes of stock issued by the Company;
provided, however, that if any one person or more than one person acting as
a
group is considered to own more than 50% of the total combined value or total
combined voting power of such stock, the acquisition of additional stock by
the
same person or persons shall not be considered a Change of
Control;
(b)
A merger or consolidation to which the Company is a party if the individuals
and
entities who were shareholders of the Company immediately prior to the effective
date of such merger or consolidation have, immediately following the effective
date of such merger or consolidation, beneficial ownership (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) of less than fifty percent
(50%) of the total combined voting power of all classes of securities issued
by
the surviving entity for the election of directors of the surviving
corporation;
(c)
Any one person, or more than one
person acting as a group, acquires or has acquired during the twelve
(12) month period ending on the date of the most recent acquisition by such
person or persons, direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of stock of the Company
constituting more than
fifty-percent (50%) of the total combined voting power of all classes of stock
issued by the Company;
(d)
The purchase or other acquisition
by any one person, or more than one person acting as a group, of substantially
all of the total gross value of the assets of the Company during the
twelve-month period ending on the date of the most recent purchase or other
acquisition by such person or persons. For purposes of this Section
2(d), “gross value” means the value of the assets of the Company or the value of
the assets being disposed of, as the case may be, determined without regard
to
any liabilities associated with such assets;
(e)
A change in the composition of the Board of the Company at any time during
any
consecutive twelve (12) month period such that the “Continuity Directors” cease
for any reason to constitute at least a sixty-six and two-thirds percent
(66-2/3%) majority of the Board. For purposes of this event, “Continuity
Directors” means those members of the Board who either:
2
(1)
were directors at the beginning of such consecutive twelve (12) month period;
or
(2)
were elected by, or on the nomination or recommendation of, at least a
two-thirds (2/3) majority of the then-existing Board of Directors.
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In
all cases, the determination of
whether a Change of Control has occurred shall be made in accordance
with
Code Section 409A and the regulations, notices and other guidance
of
general applicability issued
thereunder.
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3.
“Change of Control
Termination.” For purposes of this Agreement, “Change of
Control Termination” shall mean any of the following events occurring upon or
within twelve (12) months after a Change of Control:
(a)
The termination of Executive’s employment by the Company for any reason, except
for termination by the Company for “cause.” For purposes of this
Agreement, “cause” shall have the same meaning as set forth in Executive’s
employment agreement with the Company, if any, as amended from time to
time. If Executive does not have an employment agreement with
the Company, then “cause” shall mean (i) Executive’s substantial failure or
neglect, or refusal to perform, the duties and responsibilities of Executive’s
position and/or the reasonable direction of the Board of
Directors; (ii) the commission by Executive of any willful,
intentional or wrongful act that has the effect of materially injuring the
reputation, business or performance of the Company; (iii) Executive’s conviction
of, or Executive’s guilty or nolo contendere plea with respect to, any crime
punishable as a felony; (iv) Executive’s conviction of, or
Executive’s guilty or nolo contendere plea with respect to, any crime involving
moral turpitude; or (v) any bar against Executive from serving as a director,
officer or executive of any firm the securities of which are
publicly-traded.
For
purposes of this Section 3(a), an act or failure to act by Executive shall
not
be “willful” unless it is done, or omitted to be done, in bad faith and without
any reasonable belief that Executive’s action or omission was in the best
interests of the Company.
(b)
The termination of employment with the Company by Executive for “Good
Reason.” Such termination shall be accomplished by, and effective
upon, Executive giving written notice to the Company of his/her decision to
terminate. “Good Reason” shall mean a good faith determination by
Executive that any one or more of the following events has occurred upon or
within twelve (12) months after a Change of Control; provided, however, that
such event shall not constitute Good Reason if Executive has expressly consented
to such event in writing or if Executive fails to provide written notice of
his/her decision to terminate within ninety (90) days of the occurrence of
such
event:
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(1)
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A
change in Executive’s reporting title(s), status, position(s), authority,
duties or responsibilities as an executive of the Company as in effect
immediately prior to the Change of Control which, in Executive’s
reasonable judgment, is material and adverse (other than, if applicable,
any such change directly attributable to the fact that the Company
is not
longer publicly owned); provided, however, that Good Reason does
not
include such a change that is remedied by the Company promptly after
receipt of notice of such change is given by Executive;
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(2)
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A
reduction by the Company in Executive’s base salary or an adverse change
in the form or timing of the payment thereof, as in effect immediately
prior to the Change of Control or as thereafter increased;
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(3)
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the
Company’s requiring Executive to be based more than fifty (50) miles from
where Executive’s office is located immediately prior to the Change of
Control, except for required travel on the Company’s business, and then
only to the extent substantially consistent with the travel obligations
which Executive undertook on behalf of the Company during the ninety-day
period immediately preceding the Change of Control (without regard
to
travel related to or in anticipation of the Change of Control);
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(4)
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the
Company’s failure to cover Executive under any pension, bonus, incentive,
stock ownership, stock purchase, stock option, life insurance, health,
accident, disability, or any other employee compensation or benefit
plan,
program or arrangement (collectively referred to as the “Benefit Plans”)
that, in the aggregate, provide substantially similar benefits to
Executive (and/or Executive’s family and dependents) at a substantially
similar total cost to Executive (e.g., premiums,
deductibles, co-pays, out-of-pocket maximums, and required contributions)
relative to the benefits and total costs under the Benefit Plans
in which
Executive (and/or Executive’s family or dependents) was participating at
any time during the ninety-day period immediately preceding the Change
of
Control;
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4
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(5)
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any
purported termination by the Company of Executive’s employment that is not
properly effected pursuant to a written notice that specifies the
provision pursuant to which such notice is given and which complies
with
all other requirements of this Agreement, and, for purposes of
this
Agreement, no such purported termination will be effective;
or
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(6)
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any
refusal by the Company to continue to allow Executive to attend to
matters
or engage in activities not directly related to the business of the
Company which, at any time prior to the Change of Control, Executive
was
not expressly prohibited in writing by the Board from attending to
or
engaging in.
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Termination
for “Good Reason” shall not include Executive’s death or a termination for any
reason other than one of the events specified in clauses (1) through (6)
above.
4.
Compensation and
Benefits. Subject to the limitations contained in this
Agreement, upon a Change of Control Termination, Executive shall be entitled
to
all of the following compensation and benefits:
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(a)
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Within
ten (10) business days after a Change of Control Termination, the
Company
shall pay to Executive:
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(1)
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All
salary and other compensation earned by Executive through the date
of the
Change of Control Termination at the rate in effect immediately prior
to
such Termination;
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(2)
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All
other amounts to which Executive may be entitled to receive under
any
compensation plan maintained by the Company, subject to any distribution
requirements contained therein, including but not limited to amounts
payable under the Restated Special Executive Retirement Plan, or
any
successor plan;
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(3)
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A
severance payment, payable in a lump sum in cash, equal to one (1) times the
annual
cash compensation paid to Executive by the Company (or any predecessor
entity or related entity) and includible in Executive’s gross income for
federal income tax purposes for the calendar year immediately prior
to the
Change of Control Termination. For purposes of this paragraph,
“annual cash compensation” shall mean Executive’s annual base
salary. Further, for purposes of this paragraph, “predecessor
entity” and “related entity” shall have the meaning set forth in Section
280G of the Internal Revenue Code of 1986, as amended, and the regulations
issued thereunder.
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(b)
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The
Company shall provide Executive with continuation coverage (“COBRA
coverage”) under the Company’s life, health, dental and other welfare
plans as required by the Internal Revenue Code of 1986, as amended,
the
Employee Retirement Income Security Act of 1974, as amended, and
applicable state law.
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5
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(c)
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The
Company shall provide Executive with outplacement services for twelve
(12)
months following the Change of Control Termination or, if earlier,
until
Executive has accepted employment with another employer.
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Notwithstanding
the foregoing, if any of the payments described in this Section 4
above
are subject to the requirements of Code Section 409A and the Company
determines that Executive is a “specified employee” as defined in Code
Section 409A as of the date of the Change of Control Termination,
such
payments shall not be paid or commence earlier than the first day
of the
seventh month following the Change of Control Termination, but shall
be
paid or commence during the calendar year following the year in which
the
Change of Control Termination occurs and within 30 days of the earliest
possible date permitted under Code Section 409A. Further, in no
event shall the benefits described in Section 4(c) extend beyond
December
31st
of the second calendar year following the calendar year in which
the
Change of Control Termination occurs.
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5.
Limitation on Change of Control
Payments. Executive shall not be entitled to receive any
Change of Control Payment, as defined below, which would constitute a “parachute
payment” for purposes of Code Section 280G, or any successor provision, and the
regulations thereunder. In the event any Change of Control Payment
payable to Executive would constitute a “parachute payment,” Executive shall
have the right to designate those Change of Control Payments which would be
reduced or eliminated so that Executive will not receive a “parachute
payment.” For purposes of this Section 5, a “Change of Control
Payment” shall mean any payment, benefit or transfer of property in the nature
of compensation paid to or for the benefit of Executive under any arrangement
which is considered contingent on a Change of Control for purposes of Code
Section 280G, including, without limitation, any and all of the Company’s
salary, bonus, incentive, restricted stock, stock option, equity-based
compensation or benefit plans, programs or other arrangements, and shall include
benefits payable under this Agreement.
6.
Withholding
Taxes. The Company shall be entitled to deduct from all
payments or benefits provided for under this Agreement any federal, state or
local income and employment-related taxes required by law to be withheld with
respect to such payments or benefits.
7.
Successors and
Assigns. This Agreement shall inure to the benefit of and
shall be enforceable by Executive, his/her heirs and the personal representative
of his/her estate, and shall be binding upon and inure to the benefit of the
Company and its successors and assigns. The Company will require the
transferee of any sale of all or substantially all of the business and assets
of
the Company or the survivor of any merger, consolidation or other transaction
expressly to agree to honor this Agreement in the same manner and to the same
extent that the Company would be required to perform this Agreement if no such
event had taken place. Failure of the Company to obtain such
agreement before the effective date of such event shall be a breach of this
Agreement and shall entitle Executive to the benefits provided in Sections
4 and
5 as if Executive had terminated employment for Good Reason following a Change
in Control.
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8.
Notices. For
the purpose of this Agreement, notices and all other communications provided
for
in the Agreement shall be in writing and shall be deemed to have been duly
given
when delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth on the first page of this Agreement 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
receipt. All notices to the Company shall be directed to the
attention of the Board of Directors of the Company.
9.
Captions. The
headings or captions set forth in this Agreement are for convenience only and
shall not affect the meaning or interpretation of this Agreement.
10.
Governing
Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Minnesota.
11.
Construction. Wherever
possible, each term and provision of this Agreement shall be interpreted in
such
manner as to be effective and valid under applicable law. If any term
or provision of this Agreement is invalid or unenforceable under applicable
law,
(a) the remaining terms and provisions shall be unimpaired, and (b) the invalid
or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing
the
intention of the unenforceable term or provision.
12.
Amendment;
Waivers. This Agreement may not be modified, amended, waived
or discharged in any manner except by an instrument in writing signed by both
parties hereto. The waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this
Agreement. Notwithstanding anything in this Agreement to the
contrary, the Company expressly reserves the right to amend this Agreement
without Executive’s consent to the extent necessary or desirable to comply with
Code Section 409A, and the regulations, notices and other guidance of general
applicability issued thereunder.
13.
Entire
Agreement. This Agreement supersedes all prior or
contemporaneous negotiations, commitments, agreements (written or oral) and
writings between the Company and Executive with respect to the subject matter
hereof, including but not limited to any negotiations, commitments, agreements
or writings relating to any severance benefits payable to Executive, and
constitutes the entire agreement and understanding between the parties
hereto. All such other negotiations, commitments, agreements and
writings will have no further force or effect, and the parties to any such
other
negotiation, commitment, agreement or writing will have no further rights or
obligations thereunder.
14.
Counterparts. This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together shall constitute one and the same
instrument.
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15.
Arbitration. Any
dispute arising out of or relating to this Agreement or the alleged breach
of
it, or the making of this Agreement, including claims of fraud in the
inducement, shall be discussed between the disputing parties in a good faith
effort to arrive at a mutual settlement of any such controversy. If,
notwithstanding, such dispute cannot be resolved, such dispute shall be settled
by binding arbitration. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator shall be a retired state or federal judge or
an attorney who has practiced securities or business litigation for at least
10
years. If the parties cannot agree on an arbitrator within 20 days,
any party may request that the chief judge of the District Court for Hennepin
County, Minnesota, select an arbitrator. Arbitration will be
conducted pursuant to the provisions of this Agreement, and the commercial
arbitration rules of the American Arbitration Association, unless such rules
are
inconsistent with the provisions of this Agreement. Limited civil
discovery shall be permitted for the production of documents and taking of
depositions. Unresolved discovery disputes may be brought to the
attention of the arbitrator who may dispose of such dispute. The
arbitrator shall have the authority to award any remedy or relief that a court
of this state could order or grant; provided, however, that punitive or
exemplary damages shall not be awarded. Unless otherwise ordered by
the arbitrator, the parties shall share equally in the payment of the fees
and
expenses of the arbitrator. The arbitrator may award to the
prevailing party, if any, as determined by the arbitrator, all of the prevailing
party’s costs and fees, including the arbitrator’s fees, and expenses, and the
prevailing party’s travel expenses, out-of-pocket expenses and reasonable
attorneys’ fees. Unless otherwise agreed by the parties, the place of
any arbitration proceedings shall be Hennepin County, Minnesota.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
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ANALYSTS
INTERNATIONAL CORPORATION
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By: ______________________________________
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Its: ______________________________________
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__________________________________________
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Executive
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