EXHIBIT 5
EXHIBIT 5(A) TO SCHEDULE 14D-9
FORM OF CHANGE OF CONTROL AGREEMENT
(INCLUDING AMENDMENT)
[date]
[Name of executive]
Dear [executive]:
NOTE: FOR THIS AGREEMENT TO BECOME EFFECTIVE ONE COPY, DULY SIGNED, MUST BE
REQUIRED TO XXXXX XXXXXXX WITHIN SEVEN (7) DAYS OF THE DATE HEREOF.
CHANGE OF CONTROL AGREEMENT
WHEREAS, Elsag Xxxxxx Process Automation, either directly or through its
subsidiary by which the Executive designated herein is employed, (hereinafter,
"the Company") desires to retain the services of [name of executive]
(hereinafter the "Executive") and the Executive desires to continue to provide
such services as [executive's title]; and
WHEREAS, a transaction which causes a "Change of Control" in the ownership
of the Company could result in a change in the status of the Executive which
could be contrary to the interest of the Executive; and
WHEREAS, the Company desires to encourage the Executive to remain fully
attentive and committed to his duties with the corporation;
NOW, THEREFORE, in consideration of the promises and the mutual agreements
contained herein and intending to be legally bound, the company and the
Executive agree to the following special Change of Control provisions:
A "Change-of-Control" shall be deemed to have occurred (i) if any person or
group of persons acting in concert (but excluding Finmeccanica or persons who
control or are controlled by or under common control of Finmeccanica) becoming
the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934), directly or indirectly, of any or all of the Priority Shares of
the Company, or securities of the Company representing shares representing 50%
or more of the total voting power represented by the Company's then
outstanding voting securities (including in the determination of such
outstanding voting securities, all securities, beneficially owned by such
person or group); (ii) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation that 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) of at least 50% of the total
voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;
(iii) a sale of all or substantially all the assets of the Company.
1. If, during the period eighteen (18) months immediately following any
event constituting a Change-in-Control, the Executive should be terminated
from his employment with the Company or any successor Company (except for
"just cause"), then the Executive shall be entitled to a notice period (or
payment in lieu of) of six (6) months prior to such termination. In addition,
a severance payment equal to [12, 18 or 24] months salary shall be paid
immediately upon such termination. If such termination occurs within six (6)
months immediately preceding a Change-of-Control (unless such termination is
for "just cause") then, it shall be considered a termination in anticipation
of a Change-of-Control and the Executive shall be entitled to receive at least
the minimum notice, severance and bonus pay provided under this paragraph. The
severance payment under this section shall be based on the higher of his base
compensation in effect as of the date of the termination of employment or his
base compensation in effect as of the date of the Change-in-Control. In
addition, the Executive shall receive a cash payment equal to the highest
short term incentive bonus paid during the last three years immediately prior
to the termination times the number of years and partial years for which the
Executive is entitled to Notice Period and Severance Pay. (For example, if the
Executive receives 1 1/2 year of Notice and
1
Severance Pay, he shall receive 12 incentive pay; if he receives 2 years
Notice and Severance Pay, he shall receive 2 years incentive pay). This
provision shall constitute the full amount of Severance due the Executive in
the event of Change-of-Control as defined herein.
2. In addition, the employee and executive benefits which the Executive
enjoys as of the date of the Change-in-Control or upon termination in the
event of a termination "in anticipation of' a Change-of-Control, (or any
changes thereto which are more favorable to the Executive) shall be provided
for the period of time equivalent to the maximum severance and notice period
to which the Executive is entitled (but only to the extent the Executive and
his eligible dependents are not eligible to receive reasonably comparable
benefits in connection with the Executive's or his eligible dependents'
subsequent employment) as defined in this Agreement. This provision shall
include any and all insured benefits, qualified or non-qualified benefit
plans, executive insurances, executive automobile and mobile telephone,
Retirement or Stock Option Plans, or any other perquisite made available to
the Executive. Should, by operation of law or regulation, the Company be
unable to continue the Executive's participation in any benefit plan(s)
required hereunder following termination of his services hereunder, then the
Company shall arrange a comparable benefit or provide a cash payment of
equivalent total value to the Executive.
3. A "constructive dismissal" entitling the Executive, at this election made
within ninety (90) days thereafter, to the provisions of paragraphs 1 and 2 of
this Agreement under following circumstances: (i) if the Executive is not
offered a position substantially similar in scope of responsibilities which
offers a total compensation, benefit and perquisite package which is
comparable to that enjoyed as of the date of the Change-of-Control; (ii) if
the Executive is required to change his principal residence outside of his
home country; or, (iii) the failure of the Company to obtain an assumption of
the obligations of the Company to perform this Agreement by any successor to
the Company.
4. The Executive, following his termination of services for whatever reason,
shall not, for a period of twenty four (24) months, directly or indirectly
employ or solicit (or cause or assist any other person to employ or solicit)
for employment, any employee of the Company (or any of its affiliates),
wheresoever situated, who was employed by the Company (or any of its
affiliates) as of the date of the Executive's termination. Nor, during the
employment of the Executive, the period for which the Executive is entitled to
receive Severance Pay hereunder, or for eighteen (18) months in the event of a
termination for "just cause", shall the Executive directly or indirectly
engage, participate or be interested in as owner, officer, director, manager,
employee, consultant or otherwise or have any financial interest in, or aid or
assist anyone else in the conduct of any business or activity in any
jurisdiction which is at the time competitive with the business of the Company
or its affiliate as carried on as of such date of termination or is actively
being considered (and known to the Executive) as an additional business of the
Company or its affiliates on such date of termination; provided, however, that
the Executive's ownership of not more than 5% of the securities of any
corporation or other entity which are traded on any securities exchange or in
the over-the-counter market shall not constitute a violation of this Section.
5. "Just cause" is defined as:
a. the willful failure of the Executive to comply with any reasonable
lawful directive of Management Board of the Company;
b. dishonesty, gross negligence or malfeasance by the Executive in the
performance of his assigned duties;
c. deliberate breach of any fiduciary duties related to the Executive's
position, and if applicable, as an officer of the Company;
d. material failure or inability of the executive to perform the normal
scope of his duties hereunder.
6. The provisions of paragraphs 1, 2, and 3 of this agreement shall be valid
for a three (3) year period commencing from the date of this letter, unless
extended or modified by mutual agreement.
2
7. In the event that termination protections (including notice/severance
pay, executive benefit privileges, etc.) are more generous for the executive
under terms of his local (meaning home country) contract or other personal
employment agreement, then those benefits shall prevail over the benefits
specified herein. Nothing in this Agreement is intended to diminish the
protections contained in prior written agreements, which remain in effect as
of the date of a Change of Control. However, in no case shall the benefits
specified herein be construed to be cumulative with similar benefits contained
in other agreements.
8. Upon termination of employment under either Paragraph 1 or 3 of this
Agreement, the Executive will immediately resign from any and all positions
with the Company or any of its affiliates.
Sincerely,
Xxxxxxxx Xxxxxxxxxx
ACCEPTED: ___________________________
WITNESS: ____________________________
3
[date]
[name of executive]
Dear [executive]:
NOTE: FOR THIS AMENDMENT TO BECOME EFFECTIVE ONE COPY, DULY SIGNED, MUST BE
RETURNED TO XXXXX XXXXXXX WITHIN SEVEN (7) DAYS OF THE DATE HEREOF.
AMENDMENT TO CHANGE OF CONTROL AGREEMENT
WHEREAS, Elsag Xxxxxx Process Automation, N.V., either directly or through a
subsidiary by which the Executive designated herein is employed (hereinafter
the "Company") desires to retain the services of [name of executive]
(hereinafter the "Executive") and the Executive desires to continue to provide
such services as [executive's title]; and
WHEREAS, the Company has previously entered into a Change of Control
Agreement with the Executive dated , 1997 (the "Agreement") to
encourage the Executive to remain fully attentive and committed to his duties
with the Company;
WHEREAS, the Company desires to ensure that its executives resident in
various countries who are subject to different contractual and legal
protection relevant to a change of control or termination of employment shall
be treated fairly and equitably; and
WHEREAS, the Company and the Executive desire to clarify various provisions
of the Agreement and amend in certain respects such Agreement;
NOW, THEREFORE, in consideration of the promises and the mutual agreements
contained herein and intending to be legally bound, the Company and the
Executive agree as follows:
1. The six (6) month notice period referred to in paragraph 1 and
elsewhere in the Agreement is hereby incorporated in the Executive's
severance pay period used for computing severance entitlements under the
Agreement, with such notice period, therefore, being eliminated and the
severance period being increased by six (6) months (as so increased the
"Severance Period").
2. Paragraph 1 of the Agreement is hereby clarified to make it clear that
all payments made pursuant thereto shall be made in a lump sum distribution
within five (5) days of the termination of employment (or, if later, within
five (5) days of the date of a Change in Control), and is further clarified
to make it clear that the reference to the "last three years" means the
"most recent year (whether or not completed) for which a bonus has been
paid or accrued (annualized as appropriate) and the two preceding years".
3. To clarify and/or quantify the Executive's entitlements pursuant to
paragraph 2 of the Agreement (relating to continued employee and executive
benefits during the Severance Period), the Executive's entitlements
pursuant to paragraph 2 of the Agreement shall be as follows (which
entitlements shall be paid or commence within five (5) days of the
termination of employment or, if later, within five (5) days of the date of
a Change in Control):
(a) for the Severance Period, health, life and disability coverage
and use of a vehicle and mobile phone, in each case on a basis no less
favorable to the Executive than the most favorable coverage or policy
in effect immediately prior to (i) the date of his termination, (ii)
the Change of Control, or (iii) in the case of a constructive
dismissal, the occurrence of the event or circumstance giving rise to
such constructive dismissal;
(b) in lieu of continued participation in the Company's qualified
(Retirement Savings Plan) and nonqualified (Excess Savings Plan)
retirement program as in effect on the date hereof for the Severance
4
Period, a lump sum payment, in cash, that on an after-tax basis
(including federal income and social security taxes, and state and
local income taxes, each at the highest marginal rate), equals 6% of
the total amount payable pursuant to paragraph 1 of the Agreement, or,
if the Executive was not participating in such retirement program, the
Executive shall be entitled to additional benefit service for a period
equal to the Severance Period under any Company-sponsored pension
scheme or arrangement in which the Executive was participating (or if
such additional benefit service is not permissible by operation of law,
an equivalent payment in lieu thereof);
(c) in lieu of continued participation in the Company's 1993 Long-
Term Stock Incentive Plan as in effect on the date hereof for the
Severance Period, a lump sum payment, in cash equal to the product of
(i) the Severance Period (expressed in years and fractions thereof),
(ii) the value, immediately prior to a Change of Control, of a fully
vested and immediately exercisable option to purchase one share of
Company common stock at a strike price equal to the fair market value
of such share at such time, which value shall be determined by
multiplying the last closing price of such share prior to the Change of
Control by 61.642% (determined by Xxxxxxx X. Xxxxxx, Inc. to be the
Black-Scholes value of such an option, expressed as a percentage of
market price), and (iii) (representing the average number of
shares subject to options granted to the Executive during the three
most recent calendar years (whether or not completed) in which such
grants were actually made to the Executive, excluding grants made in
May, 1998 or thereafter (option grants made in a year prior to 1997
that were cancelled and reissued in 1997 in connection with a repricing
are counted as grants made during such prior year, but are based on the
number of shares subject to the options reissued in 1997, and such
reissued options are not treated as options granted with respect to
1997));
(d) a lump sum payment, in cash, equal to the sum of (i) any
incentive bonus which has been allocated or awarded to the Executive
for a completed fiscal year or other measuring period preceding the
Executive's date of termination but has not yet been paid, and (ii) for
terminations occurring after December 31, 1998, a pro rata portion to
such date of termination of the aggregate value of all contingent
incentive compensation awards to the Executive for all uncompleted
periods calculated as to each such award by assuming the achievement of
the maximum performance level within the performance range established
with respect to such award (or, where such maximum is incalculable, the
highest such award paid to the Executive within the prior three years)
and basing such pro-rata portion upon the portion of the award period
that has elapsed as of the date of termination; and
(e) a credit to the Executive's account balances under any retirement
or salary deferral program of all amounts attributable to the
Executive's deferrals thereunder (including matching contributions),
and the full vesting of such account balances (or, where such vesting
is not possible by operation of law, payment of an equivalent cash
amount).
4. The Executive shall also be entitled to reimbursement for expenses
incurred by the Executive during the first six (6) months of the Severance
Period in seeking employment with another employer, including the fees of a
reputable outplacement organization that provides placement services for
positions commensurate with the position the Executive held with the
Company.
5. [FOR U.S. EXECUTIVES ONLY:] The Company will pay to the Executive an
amount that, on an after-tax basis (including federal income, excise and
social security taxes, and state and local income taxes), equals any excise
tax that is determined to be payable by the Executive pursuant to Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") (and any
interest or penalties related to the imposition of such excise tax), by
reason of entitlements under the Agreement (including under paragraph 5 of
this Amendment), as well as entitlements outside of the Agreement that are
described in Section 280G(b)(2)(A)(i) of the Code. For purposes of this
paragraph 5, the Executive shall be deemed to pay federal, state and local
income taxes at the highest marginal rate of taxation. The determination as
to the amount payable pursuant to this paragraph 5 shall be made by Xxxxxxx
X. Xxxxxx, Inc., or such other nationally recognized consulting or
accounting firm as may be agreed to by the parties.
5
6. [FOR U.S. EXECUTIVES ONLY:] The Company shall pay to the Executive all
legal fees and expenses incurred in good faith by the Executive (regardless
of the outcome of any legal proceeding or other contest) (i) as a result of
a termination of the Executive's employment during the six (6) month period
before, or the eighteen (18) month period after, a Change of Control
(including all such fees and expenses, if any, incurred in disputing in
good faith any such termination), or (ii) in seeking in good faith to
obtain or enforce any benefit or right provided by the Agreement. For
purposes of this paragraph, an Executive shall be deemed to have acted in
good faith unless a court finds that the Executive's action resulting in
such legal fees and expenses was frivolous. Such payments shall be made
within five (5) business days after delivery of the Executive's written
requests for payment accompanied with evidence of such fees and expenses.
7. For purposes of determining whether a constructive dismissal has
occurred under clause (i) of paragraph 3 of the Agreement, a position will
not be treated as "substantially similar in scope of responsibilities" if
such position will result in a diminution in, or assignment to the
Executive of any duties inconsistent with, the nature or status of the
Executive's duties, responsibilities or functions. In addition, clause (ii)
of paragraph 3 of the Agreement is hereby amended to include as
circumstances constituting constructive dismissal (i) any relocation that
exceeds 500 city to city air miles, and (ii) any relocation that is not
accompanied by a relocation package (including cost of living adjustments)
reasonably acceptable to the Executive.
8. Paragraph 4 of the Agreement is amended in its entirety to read as
follows: "If there is a constructive dismissal of the Executive's
employment pursuant to paragraph 3 of the Agreement entitling the Executive
to the provisions of paragraphs 1 and 2 of the Agreement (other a
constructive dismissal on account of a material reduction in the
Executive's base salary), the Executive agrees that he shall not, for a
period of 12 months following the date of his termination (i) solicit (or
cause or assist any other person to solicit) for employment, any employee
of the Company (or any of its affiliates), wheresoever situated, who was
employed by the Company (or any of its affiliates) on the commencement of
such 12 month period; or (ii) engage as a stockholder, employee, director,
officer, consultant or otherwise in any enterprise anywhere in the world
which is a substantial competitor of the Company, such as those competitors
named in the Company's Form 20-F. This paragraph shall not bar the
Executive from owning up to 5% of the outstanding securities of a publicly-
held company, or from being engaged by a substantial competitor if such
engagement does not involve a business activity which competes with the
Company."
9. Paragraph 5 of the Agreement is hereby amended by adding the following
to the end thereof: "Prior to any termination of the Executive for just
cause, the Executive must have a reasonable opportunity to cure the conduct
described above after a written notice is delivered to the Executive by the
Management Board, which notice specifically identifies the manner in which
the Management Board believes that it has grounds to terminate the
Executive for just cause. In addition, if any inability of the Executive to
perform his duties is on account of a mental or physical illness or
disability, the Executive shall be given at least a six month period to
recover from such disability."
10. Paragraph 6 of the Agreement is hereby clarified to make clear that
the provisions of the Agreement shall remain valid so long as a Change of
Control occurs within the three (3) year period commencing on the original
date of the Agreement.
11. Paragraph 7 of the Agreement shall be restated in its entirety to
read as follows: "In the event that the Executive is entitled to
termination protections (including cash and non-cash severance benefits)
under the terms of his local (meaning home country) contract (including
legally mandated benefits) or other personal employment agreement, and the
Executive desires to receive such termination protections in lieu of the
amounts and benefits provided under paragraphs 1 and 2, he shall notify the
Company prior to the time any such amount or benefit is provided. If such
notice is provided, the provisions of this Agreement shall become null and
void in their entirety, and the termination protections under such local
contract (including legally mandated benefits) or other personal employment
agreement shall apply. If such notice is
6
not provided, the Executive shall be entitled to the amounts and benefits
provided under paragraphs 1 and 2 hereunder, and shall not be entitled to
the termination protections under such local contract (including legally
mandated benefits) or other personal employment agreement; provided,
however, that where legally mandated benefits cannot be waived under
applicable law but must be paid, the amounts and benefits provided under
paragraphs 1 and 2 hereunder shall be reduced by such legally mandated
benefits."
12. The Company agrees that, if the Executive is entitled to payments
under the Agreement, 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. Further, except as specifically provided in
paragraph 2 of the Agreement, the amount of any payment or benefit provided
for in the Agreement shall not be reduced by any compensation or benefits
earned by the Executive as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by the
Executive to the Company, for any breach or alleged breach of paragraph 4
of the Agreement, or otherwise. If the Executive has entered into any
Proprietary Information and Conflict of Interest Agreement, the Executive's
obligations thereunder not to compete shall cease upon any termination of
the Executive's employment for any reason during the during the six (6)
month period before, or the eighteen (18) month period after, a Change of
Control.
13. For purposes of the Agreement, a "successor" to the Company shall
include any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or a significant portion (i.e., greater
than 50%) of the business or assets of the Company. The term "Company" as
in the Agreement shall include any successor to the Company's business or
assets which assumes and agrees to perform the Agreement by operation of
law, or otherwise (except in determining whether or not any Change of
Control of the Company has occurred in connection with such succession) and
the term "Management Board" shall include the governing body of such
successor.
14. The validity, interpretation, construction and performance of the
Agreement shall be governed by the laws of . The Company hereby
consents to the jurisdiction of the courts which have jurisdiction over the
place of principal employment of the Executive in any action related to the
Agreement. All references to sections of law shall be deemed also to refer
to any successor provisions to such sections. Any payments provided for
under the Agreement shall be subject to any applicable withholding required
under applicable law and any additional withholding to which the Executive
has agreed.
Sincerely,
Xxxxxxxx Xxxxxxxxxx
ACCEPTED: ___________________________
"THE EXECUTIVE"
WITNESS: ____________________________
7
EXHIBIT 5(B) TO SCHEDULE 14D-9
[MANAGING DIRECTOR EMPLOYMENT AGREEMENT, SHOWING THE PROVISIONS OF THE
AMENDMENT DATED JANUARY 30, 1998, WITH DELETED TEXT IN BRACKETS [ ] AND NEW
TEXT BETWEEN ASTERISKS **]
AGREEMENT
THIS AGREEMENT, entered into as of this 1st day of April 1996, by and
between Elsag Xxxxxx Process Automation, NV, a corporation organized under the
laws of The Netherlands (hereinafter the "Company") and Xxxxxxxx Xxxxxxxxxx
(hereinafter the "Managing Director").
WITNESSETH :
WHEREAS, the Company desires to continue to retain the services of the
Managing Director and the Managing Director desires to continue to provide
such services to the Company pursuant to the terms of this Agreement; and
WHEREAS, the Company and the Managing Director desire that this Agreement
supersede all prior terms of agreements and understandings related to the
Managing Director's provision of services to the Company;
NOW, THEREFORE, in consideration of the promises and the mutual agreements
contained herein and intending to be legally bound, the Company and the
Managing Director agree as follows:
SECTION 1. EMPLOYMENT
A. The Managing Director is offered and does hereby accept the position of
Managing Director and Chief Executive Officer of the Company. In such
capacities, the Managing Director shall be responsible for the management of
the Company along with the overall responsibility for the operations of the
companies in the Elsag Xxxxxx Group.
B. The Managing Director shall execute his duties to the Company
effectively, faithfully, on a full-time basis and with good conduct and shall
comply with all reasonable regulations of the Company including, but not
limited to, the provisions of the Proprietary Information and Conflict of
Interest Agreement of the Company (a current version thereof being attached
hereto and incorporated herein), as amended from time-to-time, except as the
provisions thereof conflict with any provisions of this Agreement.
SECTION 2. TERM OF AGREEMENT
A. The Managing Director shall be retained by the Company for an initial
term of three (3) years from April 1, 1996. Upon expiration of the initial
term, this Agreement shall be automatically *renewed for an additional three
(3) year term unless terminated by the Company with written notice at least 15
months before the expiration date and* continued until terminated by either
party as hereinafter provided. Such continuation shall be at the Managing
Director's last aggregate base salary in effect at the time of expiration of
the initial term of the Agreement, unless increased pursuant to Section 3
Paragraph A. Should either party desire not to continue the Agreement at the
end of the [initial] *additional three year* term, such party must give
written notice to the other party not less than six (6) months prior to the
expiration of the initial term of the Agreement.
B. This Agreement may be terminated by the Managing Director upon six months
written notice to the Company. This Agreement shall also automatically be
terminated upon the death of the Managing Director. This Agreement may also be
terminated by the Company at any time as follows:
(i) Written notice to the Managing Director of six (6) months (or by
payment of salary in lieu of such notice); or
8
(ii) Disability of the Managing Director as determined by the Supervisory
Board in its sole discretion; or
(iii) For just cause, defined as:
(a) any material breach of this Agreement by the Managing Director or
the willful failure of the Managing Director to comply with any
reasonable lawful directive of the Supervisory Board or its Designated
Officers;
(b) dishonesty, *gross* negligence or malfeasance by the Managing
Director in the performance of his duties hereunder;
(c) *deliberate* breach of any fiduciary duties related to the
Managing Director's position, and if applicable, as an officer of the
Company;
(d) material failure or inability of the Managing Director to perform
the normal scope of his duties hereunder.
C. The Company shall also have all rights under Dutch law to remove the
Managing Director from his position with the Company as a Managing Director at
any time, provided, however, that the Managing Director shall be paid any
amounts to which he is entitled under Section 4.
SECTION 3. COMPENSATION
A. The Managing Director's salary effective April 1, 1996 shall be the
equivalent of US$440,000.00 (four hundred forty thousand dollars) per year
(payable in such currency as the Managing Director and the Company may agree),
which amount may be increased from time-to-time at the sole discretion of the
Company. The salary paid the Managing Director is subject to withholdings
required by law and other deductions agreed to by the Managing Director. The
Managing Director shall be paid in accordance with procedures which will be
agreed upon between the Company and the Managing Director based on where the
Managing Director has established his residence, his principal work location,
relevant regulations and related considerations. The Managing Director's
salary shall not be subject to reduction without the Managing Director's
agreement during the term defined herein.
B. In order to provide the Managing Director financial incentive to achieve
and/or exceed the goals of the Company and to encourage the Managing Director
to continue his services to the Company well into the future, the Managing
Director shall be eligible to participate in Management Incentive Plans
established by the Company which shall provide the Managing Director with the
opportunity to earn additional compensation based upon the financial results
of the Company and upon the Managing Director's individual performance. Such
plans shall be comprised of the following:
(i) a short term portion with a target amount of incentive pay of not more
than 50% of the Managing Director's aggregate base annual salary
effective as of January 1 of each year to which this Agreement applies
(or as of April 1, 1996 with respect to the year commencing on such
date), which amount may be increased from time to time at the sole
discretion of the Company. The short term incentive award will be
payable annually following the close of the Company's fiscal year and
upon final approval of the Supervisory Board of the Company.
(ii) a long term portion which shall be based upon participation in the
Company's Long Term Incentive Plan, which currently provides
incentives based solely upon Stock Options granted from time-to-time
by the Company in its sole discretion.
It is understood that there is no guaranty of payment of any management
incentive compensation and the determination of any such award is at the
exclusive right of the Company in conformance with management incentive plans.
Participation in such plans is in accordance with plan provisions, which are
subject to amendment or modification in the exclusive discretion of the
Company.
9
C. BENEFITS
1) The Managing Director is currently participating in the following benefit
plans which are maintained by the Company's United States subsidiary:
Health Plan (medical, hospitalization, dental and vision) with Executive
Medical Expense Reimbursement
Life Insurance with Optional coverage
Retirement Savings and Excess Retirement Savings Plan
Mandated social security and related programs
Disability Plan (company sponsored and optional)
The Managing Director shall be entitled to continue participation in said
programs according to plan provisions (as amended from time to time by the
Company in its sole discretion) so long as such programs are in effect and the
Managing Director is resident in the United States and continues to provide
services to the Company and shall be provided comparable local benefits made
available to senior executives at the relevant local expense to him in the
event that his residence in connection with the services to be provided to the
Company hereunder (or an affiliate of the Company) should change from the
United States to another location. For any and all length of service related
benefit plans, the Managing Director's service date shall be recognized as
January 1, 1982 to the extent that under the terms of the plan the plan is
legally permitted to do so.
2) The Managing Director shall be entitled to receive annually five (5)
weeks of vacation (holiday) to be taken at such times as the Managing Director
chooses, subject, however, to approval of the Company, in addition to the
normally scheduled holidays which are recognized by the Company.
3) The Managing Director shall be provided with an automobile along with
reimbursement for insurance and operating expenses, according to the general
Automobile Policy maintained by the Company. The type and size of the
automobile shall be suitable and fitting for the role of the Managing Director
and subject to final approval of the Company.
4) In the event the Managing Director shall die or become permanently
disabled during the term of this Agreement, Managing Director or his
dependents or beneficiaries, as the case may be, shall continue to be paid
such remuneration and continue to participate in such benefit programs in
accordance with the practices of the local company with which he was employed
at the time of his death or permanent disability. Health plan benefits
(including medical, hospitalization, dental and vision) which were being
provided to the Managing Director and his dependents at the time of his death
shall be continued for his eligible dependents during any period of salary
continuation.
5) The Managing Director and/or his dependent family is entitled to full
relocation benefits under the Company's relocation policy if, while his
principal residence is outside of Italy, this Agreement should be terminated
by the Company under the provisions of Section 2 Paragraph B subparagraph (i),
or in the event the Managing Director shall die during the term of this
Agreement. [While it is acknowledged that the Managing Director's residence in
New York, New York on the date hereof, the managing Director agrees to
relocate his resident to be proximate to the place determined from time to
time to be the headquarters of the Company.] The Managing Director will be
reimbursed for any expenses incurred in connection with any [such] relocation
*of his residence* pursuant to the Company's relocation policy.
SECTION 4. SPECIAL PROVISIONS
A. In the event the Company elects not to continue this Agreement at the end
of the initial term pursuant to Section 2 Paragraph A or in the event of the
Managing Director's termination of employment by the Company pursuant to
Section 2 Paragraph B sub-paragraph (i), the Managing Director shall be
entitled to receive severance pay ("Severance Pay") equal to 12 months pay in
addition to any salary due until the end of the initial term of this
Agreement, at his then current base salary; provided, however, that if the
termination of employment occurs after the expiration of the initial term of
this Agreement, such Severance Pay shall be equal to 18 months pay at his then
current base salary.
10
Severance Pay shall be in the form of salary continuation unless the parties
mutually agree to otherwise pay such amounts.
B. During any period in which Severance Pay is payable hereunder, as
described above, the Managing Director shall continue to participate in those
Benefit Plans described in Section 3 Paragraph C above which provide health,
medical or life insurance benefits (but only to the extent that the Managing
Director and his eligible dependents are not eligible to receive reasonably
comparable benefits in connection with the Managing Director's or his eligible
dependents' subsequent employment).
C. In the event of termination of this Agreement by the Company, except "for
cause" as defined in Section 2 Paragraph B sub-paragraph (iii), or if the
Company elects not to continue this Agreement after the initial term, the
Managing Director shall be entitled to retain the right to exercise any Stock
Options granted pursuant to the Long Term Incentive Plan according to the time
such Options are exercisable under the various Stock Option Agreements in
effect at the time of termination.
D. In the event that ownership of the Company's voting stock by Finmeccanica
SpA and its affiliates at any time is not sufficient for Finmeccanica to
appoint a majority of the members of the Supervisory Board of the Company,
then a Change-in-Control event shall be deemed to have occurred and the
following special provisions shall become effective:
(i) The term of this Agreement shall immediately be extended until the
later of the expiration of the twenty-four (24) month period following
the date of the Change-in-Control or the expiration of the [initial]
*additional three year* term of the Agreement.
(ii) If this Agreement is terminated by the Company during such extended
period, except "for cause" as defined above, the Managing Director
shall be entitled to receive a severance benefit as defined in Section
4 Paragraph A above, but with the period during which severance
payments are made after the expiration of the term of the agreement
established in accordance with Paragraph D subparagraph (i) above to
be equal to 18 months. The severance payment under this section shall
be based on the higher of his base compensation in effect as of the
date of the termination of this Agreement or his base compensation in
effect as of the date of the Change-in-Control. In addition, the
Managing Director shall receive a cash payment equal to the highest
short term incentive bonus paid *and stock option granted* under the
term of this Agreement times the number of years and partial years in
which the Severance Pay is payable. (For example, if the Managing
Director receives 3 years of Severance Pay, he shall receive 3 years
incentive pay; if he receives 2 years and 4 months Severance Pay, he
shall receive 2 1/3 years incentive pay.) This provision shall
constitute the full amount of Severance Pay due the Managing Director
in the event of Change-in-Control as defined herein. In addition, the
Benefits described under Section 3 Paragraph C, above which provide
health, medical or life insurance benefits (but only to the extent
that the Managing Director and his eligible dependents are not
eligible to receive reasonably comparable benefits in connection with
the Managing Director's or his eligible dependents' subsequent
employment) shall be provided for the period of time equivalent to the
maximum severance and notice period to which the Managing Director is
entitled as defined in this Agreement.
(iii) A "constructive dismissal" entitling the Managing Director, at his
election made within ninety (90) days thereafter, to the provisions
of sub-paragraph (ii) of this Section under the following
circumstances: a material reduction in the Managing Director's
duties, responsibilities and functions (not including a mere change
in the Managing Director's title); a reduction in the aggregate base
compensation received by the Managing Director from the Company and
each subsidiary thereof; the failure of the Company to continue to
provide any of the employment benefits or perquisites described
herein without substituting substantially similar benefits; or the
failure of the Company to obtain an assumption of the obligations of
the Company to perform this Agreement by any successor to the
Company.
11
E. Should, by operation of law or regulation, the Company be unable to
continue Managing Director's participation in any benefit plan(s) required
hereunder following termination of his services hereunder, then the Company
shall arrange a comparable benefit or provide a cash payment of equivalent
total value to the Managing Director.
F. If the Managing Director is terminated "for cause" he shall be entitled
to receive pay through his last day worked and his earned but unused vacation
pay for the year of his termination. Benefit plan coverage will be treated in
accordance with plan provisions or as required by law.
G. The Managing Director, following his termination of services hereunder
for whatever reason, shall not during the period for which the Managing
Director is entitled to receive Severance Pay (or, if the termination is for
just cause pursuant to Xxxxxxx 0, Xxxxxxxxx X(xxx), for thirty-six (36) months
following his termination of services hereunder) directly or indirectly employ
or solicit (or cause or assist any other person to employ or solicit) for
employment, any employee of the Company (or any of its affiliates),
wheresoever situated, who was employed by the Company (or any of its
affiliates) as of the date of the Managing Director's termination.
H. During the term of this Agreement and for the period during which the
Managing Director is entitled to receive Severance Pay (or, if the termination
is for just cause pursuant to Xxxxxxx 0, Xxxxxxxxx X(xxx), for the period of
thirty-six (36) months from the date of termination of services hereunder),
the Managing Director will not, directly or indirectly, engage, participate or
be interested in as owner, officer, director, manager, employee, consultant or
otherwise or have any financial interest in, or aid or assist anyone else in
the conduct of, any business or activity in any jurisdiction which is at the
time competitive with the business of the Company or its affiliates as carried
on as of such date of termination or is actively being considered as an
additional business of the Company or its affiliates on such date of
termination; provided, however, that the Managing Director's ownership of not
more than 5% of the securities of any corporation or any entity which are
traded on any securities exchange or in the over-the-counter market shall not
constitute a violation of this Section H.
I. The Managing Director acknowledges and agrees that a breach by him of the
restrictive covenants set forth above will cause the Company irreparable
injury and damage. The Managing Director, therefore, expressly agrees that the
Company shall be entitled to injunctive and/or other equitable relief to
prevent an anticipatory or continuing breach of such covenants. Nothing herein
shall be construed as a waiver by the Company of any right it may have or
hereafter acquire to monetary damages by reason of any injury to its property,
business or reputation or otherwise arising out of any wrongful act or
omission of the Managing Director.
J. While the restrictions and covenants set forth in this Agreement are
considered by the parties to be reasonable under all the circumstances, it is
recognized that restrictions and covenants of their nature may fail for
unforeseen technical reasons. Accordingly, it is agreed that if any such
restriction or covenant shall be adjudged void as going beyond what is
reasonable under all the circumstances for the protection of the interests of
the Company or any of its affiliates, but would be valid if part of the
wording thereof were deleted or the periods (if any) thereof reduced or the
range of activities or geographical area (if any) thereof reduced in scope,
such restriction or covenant shall apply with such modifications as may be
necessary to make it valid and effective.
SECTION 5. EFFECT OF TERMINATION
Upon termination of this Agreement for any reason, the Managing Director
shall immediately resign from any and all official positions with the Company
and any of its affiliates. The Managing Director shall cooperate fully with
the Company including rendering such assistance and cooperation as is
reasonably requested to transition responsibilities to others.
SECTION 6. NOTICES
All notices given in connection with this Agreement shall be in writing and
shall be deemed to have been given:
(i)At the time delivered;
12
(ii)At the time telecopied with confirmation by the receiving party or
agent; or,
(iii) four (4) days after deposit at any general or branch of the official
postal service of the country in which the Managing Director has
established his residence or the United States of America enclosed in
a registered or certified, postage-paid envelope addressed to the
address of the respective parties as follows:
To the Company: Elsag Xxxxxx Process Automation, NV
Xxxxxxxx Xxxxxxxxx
0000 X0
Xxx Xxxxxxxxxxx
To the Managing Director:
Xxxxxxxx Xxxxxxxxxx
Xxxxx Xxxxxxx, 00
00000 Xxxxxx
Xxxxx
or to such other addresses as the parties provide to each other.
SECTION 7. FAILURE TO ASSERT RIGHTS AND WAIVERS
The Managing Director's or the Company's failure to insist upon strict
compliance with any provision of this agreement or the failure to assert any
right the Managing Director or the Company may have hereunder, including,
without limitation, the right of the Company to terminate the Managing
Director with or without cause, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement. No
waiver by either party of any breach by the other party of 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 times.
SECTION 8. ENTIRE AGREEMENT, EFFECT ON PRIOR AGREEMENTS AND AMENDMENTS
This Agreement constitutes the entire agreement of the parties relating to
the employment of the Managing Director by the Company and supersedes all
prior agreements and understandings whether written or oral, related thereto.
This Agreement may not be amended or modified except in a writing signed by
the Company and the Managing Director.
SECTION 9. BINDING AGREEMENTS, REQUIRED ACTIONS
The parties respectively state that this Agreement is not contrary to any
other agreement or understanding that applies to them and this Agreement will
be a binding and valid obligation. The parties agree to execute such documents
and to take such further actions as are necessary to accomplish the intent of
this Agreement. If during the term of this Agreement, the Managing Director is
serving as a member of the Supervisory Board of the Company and any action is
to be or any be taken by the Supervisory Board with respect to his employment
or benefits under this Agreement, the Managing Director agrees that such
action may be considered and taken solely by the other members of the
Supervisory Board.
SECTION 10. ASSIGNMENT
This Agreement is personal to the Managing Director and shall not be
assignable by the Managing Director to any other person or entity. The
Company's rights and obligations under this Agreement shall inure to the
benefit or and be binding upon the successors and assigns of the Company upon
any sale of all or substantially all of the Company's assets or upon any
merger or consolidation of the Company with any other corporation or entity.
13
SECTION 11. GOVERNING LAW
The validity, interpretation, construction, performance and enforcement of
this Agreement shall be governed by the laws of The Netherlands. Any
controversy arising under this Agreement or its enforcement shall be subject
to the exclusive jurisdiction of the Court of Amsterdam in the first instance.
SECTION 12. INVALIDITY
The invalidity or unenforceability of any term of this Agreement shall not
invalidate or otherwise affect any other term of this Agreement which shall
remain in full force and effect.
SECTION 13. HEADINGS
The headings contained herein are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
SECTION 14. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
FOR THE COMPANY: FOR THE MANAGING DIRECTOR:
BY __________________________________ -------------------------------------
ITS Chairman of the Supervisory Board
WITNESS: WITNESS:
------------------------------------- -------------------------------------
NAME NAME
------------------------------------- -------------------------------------
14
