EXHIBIT 10.1
XXXXXXX NAVIGATION LIMITED
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the ____ day of ________, 20__, by and
between Xxxxxxx Navigation Limited (the "Company") and _____________________
(the "Executive").
W I T N E S S E T H
WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its shareholders; and
WHEREAS, the Company recognizes that, as is the case with many publicly
held corporations, the possibility of a change in control may arise and that
such possibility may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders; and
WHEREAS, the Board of Directors of the Company has determined that it is
in the best interests of the Company and its shareholders to secure the
Executive's continued services and to ensure the Executive's continued and
undivided dedication to his duties in the event of any threat or occurrence of a
change in control of the Company; and
WHEREAS, the Board of Directors of the Company has authorized the Company
to enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and the Executive hereby
agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Bonus" means the annual or quarterly bonuses payable pursuant to
the Company's Management Incentive Plan or such other plan that provides
for the payment of incentive bonuses as may be, from time to time,
authorized by the Board.
(c) "Cause" means (i) the Executive's engagement in acts of
embezzlement, dishonesty or moral turpitude; (ii) the conviction of the
Executive for having committed a felony; (iii) a breach by the Executive of
the Executive's fiduciary duties and responsibilities to the Company having
the potential to result in a material adverse effect on the Company's
business, operations, prospects or reputation; or (iv) the repeated failure
of the Executive to perform duties and responsibilities as an employee of
the Company to the reasonable satisfaction of the Board (except in the case
of death or disability) that has not been cured within thirty (30) days
after a written demand for substantial performance has been delivered to
the Executive by the Board. The determination of Cause shall be made by the
Board.
(d) "Change in Control" means the occurrence of any of the following
events:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the "beneficial owner" (as defined
in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of
the total voting power represented by the Company's then outstanding
voting securities; or
(ii) the consummation of the sale or disposition by the
Company of all or substantially all of the Company's assets; or
(iii) the consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or its parent) at least sixty
percent (60%) of the total voting power represented by the voting
securities of the Company or such surviving entity or its parent
outstanding immediately after such merger or consolidation.
(iv) a change in the composition of the Board, as a result of
which fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are
directors of the Company as of the date hereof, or (B) are elected,
or nominated for election, to the Board with the affirmative votes of
at least a majority of those directors whose election or nomination
was not in connection with any transaction described in subsections
(i), (ii) or (iii) or in connection with an actual or threatened
proxy contest relating to the election of directors of the Company.
Notwithstanding anything in this Agreement to the contrary, if the
Executive's employment is terminated prior to a Change in Control, and the
Executive reasonably demonstrates that such termination was at the request of a
third party who has indicated an intention or taken steps reasonably calculated
to effect a Change in Control, then for all purposes of this Agreement, the date
immediately prior to the date of such termination of employment shall be deemed
to be the date of a Change in Control.
(e) "Company" means Xxxxxxx Navigation Limited, a California
corporation.
(f) "Date of Termination" means the date on which the Executive's
employment by the Company terminates.
(g) "Good Reason" means, without the Executive's express written
consent, the occurrence of any of the following events after a Change in
Control:
(i) the assignment to the Executive of any duties (including a
diminution of duties) inconsistent in any adverse respect with the
Executive's position(s), duties, responsibilities or status with the
Company immediately prior to such Change in Control; (ii) an adverse
change in the Executive's reporting responsibilities, titles or
offices with the Company as in effect immediately prior to such
Change in Control; (iii) any removal or involuntary termination of
the Executive from the Company otherwise than as expressly permitted
by this Agreement or any failure to re-elect the Executive to any
position with the Company held by the Executive immediately prior to
such Change in Control; (iv) a reduction by the Company in the
Executive's rate of annual base salary as in effect immediately
prior to such Change in Control or as the same may be increased from
time to time thereafter; (v) any requirement of the Company that the
Executive (A) be based anywhere more than twenty-five (25) miles
from the facility where the Executive is located at the time of the
Change in Control or (B) travel on Company business to an extent
substantially more burdensome than the travel obligations of the
Executive immediately prior to such Change in Control; (vi) the
failure of the Company to (A) continue in effect any compensation
plan in which the Executive is participating immediately prior to
such Change in Control, or the taking of any action by the Company
which would adversely affect the Executive's participation in or
reduce the Executive's benefits under any such plan (including the
failure to provide the Executive with a level of discretionary
incentive award grants consistent with the past practice of the
Company in granting such awards to the Executive during the
three-Year period immediately preceding the Change in Control), (B)
provide the Executive and the Executive's dependents with welfare
benefits (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs)
in accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for
the Executive immediately prior to such Change in Control, (C)
provide fringe benefits in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated
companies in effect for the Executive immediately prior to such
Change in Control, or (D) provide the Executive with paid vacation
in accordance with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies as in effect
for the Executive immediately prior to such Change in Control,
unless in the case of any violation of (A), (B) or (C) above, the
Executive is permitted to participate in other plans, programs or
arrangements which provide the Executive (and, if applicable, the
Executive's dependents) with no less favorable benefits at no
greater cost to the Executive; or (vii) the failure of the Company
to obtain the assumption agreement from any successor as
contemplated in Section 10(b) hereof.
Any event or condition described in Sections 1(g)(i) through (vi) which
occurs prior to a Change in Control, but was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change in Control, shall constitute Good Reason following a Change in Control
for purposes of this Agreement (as if a Change in Control had occurred
immediately prior to the occurrence of such event or condition) notwithstanding
that it occurred prior to the Change in Control.
For purposes of this Agreement, any good faith determination of Good
Reason made by the Executive shall be conclusive; provided, however, that an
isolated, insubstantial and inadvertent action taken in good faith and which is
remedied by the Company promptly after receipt of notice thereof given by an
Executive shall not constitute Good Reason. The Executive's continued employment
shall not constitute consent to or a waiver of rights with respect to any event
or condition constituting Good Reason. The Executive must provide notice of
termination within ninety (90) days of his knowledge of an event or condition
constituting Good Reason hereunder or such event shall not constitute Good
Reason hereunder. A transaction which results in the Company no longer being a
publicly traded entity shall not in and of itself be treated as Good Reason
unless and until one of the events or conditions set forth in Sections 1(g)(i)
through (vii) occurs.
(h) "Nonqualifying Termination" means a termination of the
Executive's employment (i) by the Company for Cause, (ii) by the Executive
for any reason other than Good Reason, (iii) as a result of the
Executive's death, or (iv) by the Company due to the Executive's absence
from his duties with the Company on a full-time basis for at least one
hundred eighty (180) consecutive days as a result of the Executive's
incapacity due to physical or mental illness.
(i) "Projected Bonus Amount" means, with respect to any Year, the
greater of (i) the Executive's Target Bonus Amount for such Year; or (ii)
to the extent calculable after at least one calendar quarter of the Year,
the Bonus the Executive would have earned in the Year in which the
Executive's Date of Termination occurs had the Company's financial
performance through the end of the fiscal quarter immediately preceding
the Date of Termination continued throughout said Year (the "Earned Bonus
Amount").
(l) "Subsidiary" means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the
total combined voting power of the then outstanding securities of such
corporation or other entity.
(m) "Target Bonus Amount" means, with respect to any Year, the
Participant's target Bonus for such Year based upon the Company's
forecasted operational plan.
(n) "Termination Period" means the period of time beginning with a
Change in Control and ending one (1) year following such Change in
Control.
(o) "Year" means the fiscal year of the Company.
2. Acceleration of Options Upon Change in Control. Upon a Change in
Control each of the Executive's outstanding stock options granted under any of
the Company's stock option or incentive plans shall accelerate and become vested
and exercisable with respect to the total number of shares covered by all such
outstanding stock options.
3. Termination of Employment.
(a) If during the Termination Period the employment of the Executive
shall terminate, other than by reason of a Nonqualifying Termination, then
the Company shall pay to the Executive, within five (5) business days
following the Date of Termination, as compensation for services rendered
to the Company:
(i) a lump-sum cash amount equal to the sum of (A) the
Executive's base salary from the Company and its Subsidiaries
through the Date of Termination and any outstanding Bonus for which
payment is due and owing at such time, (B) any accrued vacation pay,
and (C) to the extent not provided under the Company's Bonus plans,
a pro-rata portion of the Executive's Projected Bonus Amount for the
Year in which the Executive's Date of Termination occurs, in each
case to the extent not theretofore paid; plus
(ii) a lump-sum cash amount equal to the sum of (A) twelve
(12) months of base salary calculated using the Executive's highest
monthly rate of base salary during the 12-month period immediately
preceding the Date of Termination, or if greater, immediately
preceding the Change in Control and (B) the highest of (x) the
Executive's average Bonus (annualized for any partial Years of
employment) earned during the 3-Year period immediately preceding
the Year in which the Date of Termination occurs (or shorter
annualized period if the Executive had not been employed for the
full three-Year period), (y) the Executive's Target Bonus Amount for
the Year in which the Change in Control occurs and (z) the
Executive's Target Bonus Amount for the Year in which the Date of
Termination occurs; provided, that any amount paid pursuant to this
Section 3(a)(ii) shall offset an equal amount of any severance
relating to salary or bonus continuation to be received by the
Executive upon termination of employment of the Executive under any
severance plan, policy, or arrangement of the Company.
(b) If during the Termination Period, the employment of the
Executive shall terminate, other than by reason of a Nonqualifying
Termination, for a period of one (1) year commencing on the Date of
Termination, the Company shall continue to keep in full force and effect
(or otherwise provide) all policies of medical, dental, accident,
disability and life insurance with respect to the Executive and his
dependents with the same level of coverage, upon the same terms and
otherwise to the same extent (and on the same after-tax basis), as such
policies shall have been in effect immediately prior to the Date of
Termination (or, if more favorable to the Executive, immediately prior to
the Change in Control), and the Company and the Executive shall share the
costs of the continuation of such insurance coverage in the same
proportion as such costs were shared immediately prior to the Date of
Termination.
(c) If during the Termination Period, the employment of the
Executive shall terminate, other than by reason of a Nonqualifying
Termination, each of the Executive's outstanding stock options granted
under any of the Company's stock option or incentive plans shall be
exercisable by the Executive until the earlier of (A) the expiration of
the term of the option or (B) one (1) year following the Date of
Termination.
(d) If during the Termination Period the employment of the Executive
shall terminate by reason of a Nonqualifying Termination, then the Company
shall pay to the Executive (or the Executive's beneficiary or estate) such
payments and provide to the Executive such benefits, if any, as the
Company customarily pays or provides to executives of the Company upon
termination of employment.
4. Golden Parachute. In the event that the benefits provided for in this
Agreement (together with any other benefits or amounts) otherwise constitute
"parachute payments" within the meaning of Section 280G of the Code and would,
but for this Section 4 be subject to the excise tax imposed by Section 4999 of
the Code (the "Excise Tax"), then the Executive's benefits under this Agreement
shall be either: (i) delivered in full, or (ii) delivered as to such lesser
extent as would result in no portion of such benefits being subject to the
Excise Tax, whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the Excise Tax, results in
the receipt by the Executive on an after-tax basis, of the greatest amount of
benefits, notwithstanding that all or some portion of such benefits may be
taxable under Section 4999 of the Code. Unless the Company and the Executive
otherwise agree in writing, all determinations required to be made under this
Section 4, including the manner and amount of any reduction in the Executive's
benefits under this Agreement, and the assumptions to be utilized in arriving at
such determinations, shall be made in writing in good faith by Ernst & Young LLP
(the "Consulting Firm"). In the event that the Consulting Firm (or any affiliate
thereof) is unable or unwilling to act, the Executive may appoint a nationally
recognized public accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Consulting Firm
hereunder). All fees and expenses of the Consulting Firm shall be borne solely
by the Company and the Company shall enter into any agreement requested by the
Consulting Firm in connection with the performance of the services hereunder.
For purposes of making the calculations required by this Section 4, the
Consulting Firm may make reasonable assumptions and approximations concerning
the application of Sections 280G and 4999 of the Code. The Company and the
Executive shall furnish to the Consulting Firm such information and documents as
the Consulting Firm may reasonably request to make a determination under this
Section 4.
5. Withholding Taxes. The Company may withhold from all payments due to
the Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
6. Reimbursement of Expenses. If any contest or dispute shall arise under
this Agreement involving termination of the Executive's employment with the
Company or involving the failure or refusal of the Company to perform fully in
accordance with the terms hereof, the Company shall reimburse the Executive, on
a current basis, for all legal fees and expenses, if any, incurred by the
Executive in connection with such contest or dispute (regardless of the result
thereof), together with interest in an amount equal to the prime rate of Bank of
America from time to time in effect, but in no event higher than the maximum
legal rate permissible under applicable law, such interest to accrue from the
date the Company receives the Executive's statement for such fees and expenses
through the date of payment thereof.
7. Termination of Agreement. This Agreement shall be effective on the date
hereof and shall continue until the first to occur of (i) the termination of the
Executive's employment with the Company prior to a Change in Control (except as
otherwise provided hereunder), (ii) a Nonqualifying Termination, or (iii) the
termination of the Executive's employment following the Termination Period.
8. Scope of Agreement. Nothing in this Agreement shall be deemed to
entitle the Executive to continued employment with the Company or its
Subsidiaries, and if the Executive's employment with the Company shall terminate
prior to a Change in Control, the Executive shall have no further rights under
this Agreement (except as otherwise provided hereunder); provided, however, that
notwithstanding anything herein to the contrary, any termination of the
Executive's employment following a Change in Control shall be subject to all of
the benefit and payment provisions of this Agreement.
9. Obligations of the Executive. The Executive agrees that if a Change in
Control shall occur, the Executive shall not voluntarily leave the employ of the
Company without Good Reason during the 90-day period immediately following a
Change in Control.
10. Successors' Binding Obligation.
(a) This Agreement shall not be terminated by any merger,
consolidation or corporate reorganization of the Company (a "Company
Change") or transfer of assets. In the event of any Company Change or
transfer of assets, the provisions of this Agreement shall be binding upon
the surviving or resulting corporation or any person or entity to which the
assets of the Company are transferred.
(b) The Company agrees that concurrently with any Company Change or
transfer of assets, it will cause any successor or transferee
unconditionally to assume by written instrument delivered to the Executive
(or his beneficiary or estate) all of the obligations of the Company
hereunder. Failure of the Company to obtain such assumption prior to the
effectiveness of any such Company Change or transfer of assets that results
in a Change in Control shall constitute Good Reason hereunder and shall
entitle the Executive to compensation and other benefits from the Company
in the same amount and on the same terms as the Executive would be entitled
hereunder if the Executive's employment were terminated following a Change
in Control other than by reason of a Nonqualifying Termination. For
purposes of implementing the foregoing, the date on which any such Company
Change or transfer of assets becomes effective shall be deemed the date
Good Reason occurs, and the Executive may terminate employment for Good
Reason on or following such date.
(c) 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 amounts would be payable to the Executive
hereunder had the Executive continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to such person or persons appointed in writing by the
Executive to receive such amounts or, if no person is so appointed, to the
Executive's estate.
11. Notice.
(a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered or five (5) days
after deposit in the United States mail, certified and return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
If to the Company:
Xxxxxxx Navigation Limited
000 X. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt. Alternatively, notice may be
deemed to have been delivered when sent by facsimile to a location
provided by the other party hereto.
(b) A written notice of the Executive's Date of Termination by the
Company or the Executive, as the case may be, to the other, shall (i)
indicate the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated and (iii) specify the
termination date (which date shall not be less than fifteen (15) nor more
than sixty (60) days after the giving of such notice). The failure by the
Executive or the Company to set forth in such notice any fact or
circumstance which contributes to a showing of Good Reason or Cause shall
not waive any right of the Executive or the Company hereunder or preclude
the Executive or the Company from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
12. Full Settlement; No Mitigation. The Company's obligation to make any
payments provided for by this Agreement to the Executive and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Agreement and such amounts shall not be reduced whether or not the
Executive obtains other employment.
13. Employment with Subsidiaries. Employment with the Company for purposes
of this Agreement shall include employment with any Subsidiary.
14. Governing Law; Validity. The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of California without regard to
the principle of conflicts of laws. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which other provisions shall remain in
full force and effect.
15. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
16. Miscellaneous. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and signed by
the Executive and by a duly authorized officer of the Company. 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. Failure by the
Executive or the Company to insist upon strict compliance with any provision of
this Agreement or to assert any right the Executive or the Company may have
hereunder, including without limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement. Except as otherwise
specifically provided herein, the rights of, and benefits payable to, the
Executive, his estate or his beneficiaries pursuant to this Agreement are in
addition to any rights of, or benefits payable to, the Executive, his estate or
his beneficiaries under any other employee benefit plan or compensation program
of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer of the Company and the Executive has
executed this Agreement as of the day and year first above written.
Xxxxxxx Navigation Limited
By: ________________________________
Name: ______________________________
Title: _____________________________
Executive
____________________________________
Name: ______________________________
Title: _____________________________
