KEY EMPLOYEE CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT is made and entered into as of the 29th day of October,
2001, by and between INTEGRITY INCORPORATED (the "Company") and Xxxxx XxXxxxxx
(the "Employee").
WITNESSETH:
WHEREAS, Employee is entering the employ of Company in the position of
Senior Vice President and Chief Marketing Officer; and
WHEREAS, Company wants to induce Employee to remain in said position
and to retain his objectivity during circumstances relating to potential changes
in control by providing Employee a measure of security; and
WHEREAS, Company wants to have the benefits of the Employee's full time
and attention directed to the affairs of Company without diversion due to
concerns about a possible change in control; and
WHEREAS, the Company wants to position itself to attract and retain
able managers by adopting compensation practices competitive with peer companies
by providing similar severance benefits consistent with its policy of
competitive employment and compensation practices;
NOW, THEREFORE, in consideration of ONE DOLLAR and other good and
valuable considerations from each to the other, receipt whereof being hereby
acknowledged, Company and Employee agree as follows:
1. Supplemental Employment Benefit. In the event that Employee is
employed by Company at the time of a Change in Control (as hereinafter defined
in Section 6) Employee shall be entitled to the supplemental employment benefits
hereinafter provided if Employee's employment with Company terminates within 18
months after the Change in Control has occurred,
(a) involuntarily, other than an involuntary termination
for cause and other than occurring as the result of the death,
disability, or termination at or after attaining normal
retirement age,
(b) voluntarily, following
(i) any reduction of more than 10% in Employee's
combined base salary and annual bonus from that for the
calendar year immediately preceding the Change in Control,
(ii) any relocation to an office of the Company
or an affiliate of the Company more than 100 surface miles
(i.e., surface miles using
standard surface transportation such as public streets, roads
and highways by the shortest route available) from the office
where Employee was principally located at the time of the
Change in Control or any increase in Employee's required
travel of more than 100 surface miles (as defined above) due
to a reassignment of Employee to another office of the Company
or to an affiliate of the Company,
(iii) any material reduction in the level of
responsibility, position (including status, office, title,
reporting relationships or working conditions), authority or
duties of Employee from that held by the Employee immediately
preceding the Change in Control, or
(iv) any material reduction in the aggregate
fringe benefits and perquisites available to Employee
immediately preceding the Change in Control not offset by
salary or annual bonus increases, or
(c) voluntarily if, following a Change in Control, any
successor or acquiror of Company either announces that it will
not honor or cause Company to honor the terms of this
Agreement or if, at any time, fails to confirm in writing to
Employee within fifteen (15) business days of a written
request by Employee that it will honor and will cause Company
to honor the terms of this Agreement.
As soon as practicable and in no event more than sixty (60)
days after a termination described in (a), (b) or (c) above, Company shall pay
to Employee the Severance Payment specified in Section 2 and shall provide the
Benefits specified in Section 3 on an uninterrupted basis. For purposes hereof a
termination shall be considered to be "for cause" if it occurs in conjunction
with a determination by Company that Employee has committed or engaged in either
(i) any intentional act that constitutes, on the part of Employee, (A) fraud,
dishonesty, a felony or gross malfeasance of duty, and (B) that directly results
in material injury to the Company; or (ii) conduct by Employee in his office
with the Company that is grossly inappropriate and demonstrably likely to lead
to material injury to the Company, as determined by the Board of Directors of
the Company (the "Board") acting reasonably and in good faith; provided,
however, that in the case of (ii) above, such conduct shall not constitute
"cause" unless the Board shall have delivered to the Employee notice setting
forth with specificity (A) the conduct deemed to qualify as "cause", (B)
reasonable action that would remedy such objection, and (C) a reasonable time
(not less than thirty (30) days) within which the Employee may take such
remedial action, and the Employee shall not have taken such specified remedial
action within such specified reasonable time. For purposes hereof, (i) the
Employee shall be considered "disabled" if Employee is eligible for benefits
under the Company's long term disability plan (or would be eligible if not for
an applicable exclusion period, waiting period, preexisting condition, reduction
in benefits due to other sources of funds such as social security or worker's
compensation, and any other similar limitation) and (ii) "normal retirement age"
shall mean age 65. In the event Company takes the position that a termination
has occurred "for cause" it shall so notify Employee in writing at the
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time of such termination. If for any reason, or no reason, Company takes the
position that some or all of the benefits provided hereunder are not due and
owing to Employee or that it will not pay Employee any or all of the benefits
provided hereunder, either Employee or Company may submit the resolution of such
dispute to arbitration as provided in Section 5. Notwithstanding any dispute
regarding this Agreement, however, Company shall pay to Employee the Severance
Payment and continue to make the Benefits available during the period specified
herein, unless and until it is determined by arbitration proceedings pursuant to
Section 5 that Employee is not entitled to all or a portion of the amount paid
and/or to continuation of the Benefits, at which time Employee shall reimburse
Company all amounts to which Employee is determined not to be entitled, plus an
amount equal to the legal rate of interest specified under the laws of the State
of Alabama for situations where there is an obligation to pay interest and no
express contract to pay interest at a specified rate.
2. Amount of Severance Payment. Subject to the limitation of
Section 4, the Severance Payment shall be an amount equal to the amount of the
Employee's annual base salary under his Employment Agreement multiplied by 2.
For purposes of this section, Employee's annual base salary shall be the greater
of (i) his salary immediately prior to the Change in Control, or (ii) his salary
at the time of his termination.
3. Life, Medical and Other Benefits.
For a period of eighteen (18) months following a termination of
employment under circumstances entitling Employee to payment of the Severance
Payment, Company shall make available to Employee (and his spouse and other
qualified dependents) basic life insurance, long-term disability insurance and
benefits, health insurance and other medical benefits ("Benefits") available to
Employee immediately preceding the Change in Control and such Benefits shall be
made available under the same terms and conditions (e.g., employee contributions
for certain benefits that are in effect for active employees who are similarly
situated) as continue to be available for comparable employees of Company during
the period provided in this Section 3 with such changes as may be applicable to
such other employees. Notwithstanding the foregoing, Company shall not be
entitled to reduce the coverage available to the Employee, his spouse and other
qualified dependents or modify any of the terms and conditions thereof without
the written consent of Employee provided, however, that Company may provide a
substantially equivalent form of Benefit for any particular Benefit.
Notwithstanding the foregoing, Employee's rights to the foregoing benefits shall
terminate as to any benefit for which he becomes eligible that provides
substantially similar benefits on substantially similar terms through a program
of a subsequent employer or otherwise (such as through coverage obtained by
Employee's spouse).
4. Limitation.
(a) It is intended that all amounts payable hereunder,
together with all other amounts payable to Employee upon or in
connection with a Change in Control, are reasonable compensation for
Employee's service to Company and its
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subsidiaries. Notwithstanding the foregoing, if the independent
accounting firm that was approved by the shareholders in the annual
shareholders' meeting immediately prior to the Change in Control
("Accounting Firm"), opines that payment of any or all of the Severance
Payment and the Benefits together with any other amounts received by
Employee that must be included in such determination, would result in
the denial of any deduction or the imposition of an excise tax under
Sections 280G and 4999 of the Code, then Company will reduce the amount
otherwise due and owing to Employee under this Agreement by the
smallest amount necessary to avoid the imposition of any excise tax or
the denial of any deduction. Such opinion shall be based upon the
proposed regulations under Code Sections 280G and 4999 or substantial
authority within the meaning of Code Section 6662, and shall set forth
with particularity the smallest amount by which the payment due
Employee hereunder would have to be reduced to avoid the imposition of
any excise tax or the denial of any deduction pursuant to Code Sections
280G and 4999 and shall demonstrate the relation of such amount to the
amounts set forth above.
(b) Company may reduce the Severance Payment and Benefits
pursuant to this Section 4 only if within sixty (60) days following the
Employee's termination it provides Employee with the opinion of the
Accounting Firm described in paragraph (a) above. Employee shall, if he
agrees with the determination of Accounting Firm, notify Company in
writing of the payments and/or Benefits that he wishes to have reduced
in order to comply with the provisions of this Section 4. In the event
that Employee fails to designate an order of priority for the
application of any such reduction, such reduction shall be made in the
order of priority determined by Company. In the event that Employee
does not agree with the opinion or calculation presented and he is
unable to resolve any dispute with Company regarding such disagreement
within a period of thirty (30) days of receipt of the opinion
referenced above, Employee may submit the resolution of this matter to
arbitration pursuant to Section 5 or take such other steps as he may
deem advisable to enforce his position.
5. Arbitration. The parties agree that all disputes that may
arise between them relating to the interpretation or performance of this
Agreement, including matters relating to any funding arrangements for the
benefits provided under this Agreement, to the maximum extent allowed by
applicable law, shall be determined by binding arbitration through an arbitrator
chosen as provided in this Section 5. Either party may notify the other party of
the existence of a dispute by written notice in accordance with Section 12
herein. The arbitration shall proceed in accordance with the provisions of the
Federal Arbitration Act and the rules and procedures of the American Arbitration
Association. If the parties can agree to an arbitrator, the dispute may be
resolved by a single arbitrator. Otherwise, each party shall designate an
arbitrator and a third arbitrator shall be appointed by the two arbitrators
selected by the parties. If either party shall fail to appoint an arbitrator
within thirty (30) days after it is notified to do so, then the arbitration
shall be conducted by a single arbitrator. All arbitrators shall be selected
from a panel proposed by the American Arbitration Association. The parties agree
that the
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arbitrators shall apply the laws of the State of Alabama and any applicable
federal law. Unless otherwise agreed by the parties, all arbitration proceedings
shall be held in Mobile, Alabama. The award of the arbitrators shall be issued
within sixty (60) days of the close of the hearing or the submission of
post-hearing memoranda, whichever is later, and shall include each arbitrator's
individual vote. The award of the arbitrators shall be binding and conclusive
upon the parties. Either party shall have the right to have the award made the
judgment of a court of competent jurisdiction in the State of Alabama. At least
thirty (30) days prior to the arbitration, the Company shall provide Employee
with an offer to resolve the dispute and to pay Employee whatever benefits to
which the Company believes he is entitled. If the arbitrators' award is greater
than the amount of the Company's offer, Employee shall be entitled to payment by
the Company of all of his attorneys' fees, expenses and costs incurred in
connection with the arbitration, including the Employee's portion of the
arbitrators' fees. If the arbitrators' award is equal to or less than the
Company's offer, the parties shall be responsible for their own attorneys' fees,
expenses and costs and shall share the expenses of the arbitrators.
6. Change in Control. "Change in Control" means and includes each
of the following:
(a) A change of control of the Company of a nature that
would be required to be reported in response to Item 6(e) of Schedule
14A of the 1934 Act regardless of whether the Company is subject to
such reporting requirement;
(b) A change of control of the Company through a
transaction or series of transactions, such that any person (as that
term is used in Section 13 and 14(d)(2) of the 1934 Act), excluding
affiliates of the Company as of the date of this Agreement, is or
becomes the beneficial owner (as that term is used in Section 13(d) of
the 0000 Xxx) directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's
then outstanding securities;
(c) Any consolidation, merger or share exchange involving
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Company stock would be
converted into cash, securities or other property, other than a merger
of the Company in which the holders of the shares of Company stock
immediately before the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger;
(d) The stockholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company; or
(e) Substantially all of the assets of the Company are
sold or otherwise transferred to parties that are not within a
"controlled group of corporations" (as defined in Section 1563 of the
Code) in which the Company is a member.
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7. Other Employee Benefits. The benefits hereunder shall not be
affected by or reduced because of any other benefits to which Employee may be
entitled by reason of his continuing employment with Company or the termination
of his employment with Company, and no other such benefit by reason of such
employment shall be so affected or reduced because of the benefits bestowed by
this Agreement except as hereinafter specifically provided. Employee shall not
be entitled to duplicative health, medical, life, disability and other insurance
benefits or to severance payments specifically made only with respect to
termination of employment under any employment, retention or severance pay
agreement, plan or other arrangement. In addition, the payment of benefits to
Employee under Section 2 shall not entitle Employee to payments under the other
plans or arrangements providing similar benefits except to the extent such other
plans or arrangements provide additional benefits to those provided herein.
8. Withholding; Set-off. All amounts payable by Company hereunder
shall be subject to withholding of such amounts related to taxes as Company may
be legally obligated to withhold. The right of Employee to receive benefits
under this Agreement, however, shall be absolute and shall not be subject to any
set-off, counterclaim, recoupment, defense, duty to mitigate or other rights
Company may have against him or anyone else.
9. Subsequent Employment. Employee's right to receive benefits
under this Agreement shall not be reduced by reason of Employee's employment
with any other employer after terminating employment with the Company (except as
set forth in Section 3). Any compensation for services rendered or consulting
fees earned after the date of termination shall not diminish Employee's right to
receive all amounts due hereunder.
10. Employee's Indemnity. Employee shall be entitled to the
benefits of the indemnity provided by Company's articles of incorporation,
bylaws or otherwise immediately prior to the Change in Control, and any
subsequent changes to the articles of incorporation, bylaws, or otherwise
reducing the indemnity granted to officers shall not affect the rights granted
hereunder. Company may not reduce these indemnity benefits confirmed to Employee
hereunder without the written consent of Employee.
11. Term. Without the consent of the Employee, the terms of this
Agreement may be terminated or amended by Company following the first
anniversary of the date hereof at any time prior to the first to occur of (i) a
Change in Control, (ii) the public announcement of a proposal for a transaction
that, if consummated, would constitute a Change in Control, or (iii) the Board
of Directors learns of a proposal for a transaction that, if consummated, would
constitute a Change in Control; provided, that termination or amendment of this
Agreement by the Company shall not terminate or amend the Employee's Employment
Agreement except to the extent that this Agreement is incorporated into the
Employment Agreement (i.e., all other terms of the Employment Agreement shall be
unaffected by such unilateral action of the Company). Upon the occurrence of any
of the foregoing events, this Agreement shall continue as in effect at such time
without termination or further change by Company until the earlier of (x) 18
months following any Change in Control, or (y) the final withdrawal or
termination of a
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proposal under item (ii) or (iii) that, had it been consummated, would have
constituted a Change in Control, at which time this Agreement may, once again,
be amended or terminated by Company until one of the events in (i), (ii) or
(iii) occurs. Notwithstanding the foregoing, in the event of a Change in
Control, upon Employee's termination of employment entitling him to benefits
under Sections 1 and 2, this Agreement may not be amended or terminated by
Company until all of the obligations and liabilities are satisfied. For purposes
of Sections 1, 2 and 3, Employee's base salary and benefits, and for purposes of
Section 10, Employee's indemnity immediately prior to an event causing this
Agreement to be non-amendable by Company alone shall be considered to be
Employee's base salary, benefits or indemnity immediately prior to the Change in
Control if such salary, benefits or indemnity prior to the event is greater. In
addition, action that would be described in Section 1(b)(ii) or (iii) if
occurring following a Change in Control shall be considered to have so occurred
if occurring following an event causing this Agreement to become non-amendable
if there ultimately is a Change in Control.
12. Notices. Notices, which must be in writing, will be considered
effective upon receipt and shall be sent to Company at its headquarters office,
attention Chief Executive Officer, or to Employee at the address set forth
below. Either party may notify the other of any change in the address for
notice. If the Employee is the Chief Executive Officer, notice to the Company
shall be sent to any outside director of the Company's Board of Directors.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Alabama applicable to
agreements made and entirely to be performed therein.
14. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the successors (including any successor to Company
by reason of any Change in Control), heirs, personal representatives and assigns
of the parties hereto.
15. Employment With Related Parties. Employment with any present
or future parent, subsidiary or affiliate of Company or any successor to
substantially all of the business of Company shall be considered employment with
Company for all purposes of this Agreement.
16. Not Contract for Employment. Nothing in this Agreement shall
be deemed to give Employee the right to be retained in the service of Company or
to deny Company any right it may have to discharge, or demote Employee at any
time.
17. Severability. The invalidity and unenforceability of any
particular provision of this Agreement shall not affect any other provision of
the Agreement and the Agreement shall be construed in all respects as if the
invalid or unenforceable provision were omitted.
18. No Assignment or Alienation of Benefits by Employees. The
Employee
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shall not have any power or right to transfer, assign, anticipate, hypothecate,
mortgage, commute, modify or otherwise encumber in advance any of the benefits
payable under this Agreement, nor shall these benefits be subject to seizure for
the payment of debt, judgment, alimony or separate maintenance owed by the
Employee, or any person claiming through the Employee, or be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise. Any
attempted assignment, anticipation, hypothecation, transfer, or other disposal
of the benefits hereunder, shall be void.
19. Miscellaneous. No provisions of this Agreement may be waived
or discharged unless such waiver or discharge is agreed to in writing signed by
Employee and 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 the 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, expressed
or implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
20. Headings. The headings herein are for convenience only and
shall have no significance in the interpretation of this Agreement.
[Signatures begin on next page.]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement under their respective seals as of the date written above.
INTEGRITY INCORPORATED
By: /s/ P. Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
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Title: President
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ATTEST:
/s/ Xxxxxx X. Xxxxxxxxx
Secretary
[CORPORATE SEAL]
XXXXX XXXXXXXX
/s/ Xxxxx XxXxxxxx [SEAL]
--------------------------
Xxxxx XxXxxxxx
