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TERMINATION BENEFITS AGREEMENT
THIS AGREEMENT, dated as of the ___ day of _____________, 1997, is by and
between XxXxxxxxx Xxxxxxx Corporation, a Maryland corporation (hereinafter
referred to as the "Company"), and ________________ (hereinafter the
"Executive").
RECITALS:
A. The Board of Directors of the Company (the "Board") considers it
essential to the best interests of the Company and its shareholders that its key
management personnel be encouraged to remain with the Company and its
subsidiaries and to continue to devote full attention to the Company's business
in the event that any third person expresses its intention to complete a
possible business combination with the Company, or in taking any other action
which could result in a change in control of the Company. In this connection,
the Board recognizes that the possibility of a change in control and the
uncertainty and questions which it may raise among management may result in the
departure or distraction of key management personnel to the detriment of the
Company and its shareholders. The Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of key members of the Company's management to their assigned duties
without distraction in the face of the potentially disturbing circumstances
arising from the possibility of a change in control of the Company.
B. The Executive currently serves as a key executive of the Company and his
or her services and knowledge are valuable to the Company in connection with the
management of one or more of the Company's principal operating facilities,
divisions, subsidiaries or functions.
C. The Board believes the Executive has made and is expected to continue to
make valuable contributions to the productivity and profitability of the Company
and its subsidiaries.
D. Should the Company receive any proposal from a third person concerning a
possible business combination or any other action which could result in a change
in control of the Company, the Board believes it imperative that the Company and
the Board be able to rely upon the Executive to continue in his or her position,
and that the Company and the Board be able to receive and rely upon his or her
advice, if so requested, as to the best interests of the Company and its
shareholders without concern that he or she might be distracted by the personal
uncertainties and risks created by such a proposal, and to encourage Executive's
full attention and dedication to the Company.
E. Should the Company receive any such proposal, in addition to the
Executive's regular duties, the Executive may be called upon to assist in the
assessment of such proposal, advise management and the Board as to whether such
proposal would be in the best interests of the Company and its shareholders, and
to take such other actions as the Board might determine to be necessary or
appropriate.
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TERMS AND CONDITIONS:
NOW, THEREFORE, to assure the Company and its subsidiaries that it will
have the continued, undivided attention, dedication and services of the
Executive and the availability of the Executive's advice and counsel
notwithstanding the possibility, threat or occurrence of a change in control of
the Company, and to induce the Executive to remain in the employ of the Company
and its subsidiaries, and for other good and valuable consideration, the
adequacy and sufficiency of which are hereby acknowledged, the Company and the
Executive agree as follows:
1. Change in Control
For purposes of this Agreement, a "Change in Control" of the Company shall
be deemed to have occurred upon (a) the acquisition at any time by a "person" or
"group" (as that term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (excluding, for this
purpose, the Company or any subsidiary or any employee benefit plan of the
Company or any subsidiary) of beneficial ownership (as defined in Rule 13d-3
under the Exchange Act) directly or indirectly, of securities representing 20%
or more of the combined voting power in the election of directors of the
then-outstanding securities of the Company or any successor of the Company; (b)
the termination of service as directors, for any reason other than death,
disability or retirement from the Board in accordance with Resolution 706 of the
Board, as it may be amended or superseded, during any period of two consecutive
years or less, of individuals who at the beginning of such period constituted a
majority of the Board, unless the election of or nomination for election of each
new director during such period was approved by a vote of at least two-thirds of
the directors still in office who were directors at the beginning of the period;
(c) approval by the shareholders of the Company of liquidation of the Company or
any sale or disposition, or series of related sales or dispositions, of 50% or
more of the assets or earning power of the Company; or (d) approval by the
shareholders of the Company and consummation of any merger or consolidation or
statutory share exchange to which the Company is a party as a result of which
the persons who were shareholders of the Company immediately prior to the
effective date of the merger or consolidation or statutory share exchange shall
have beneficial ownership of less than 50% of the combined voting power in the
election of directors of the surviving corporation following the effective date
of such merger or consolidation or statutory share exchange. A "Change in
Control" shall not include any reduction in ownership of an affiliate of the
Company so long as the entity continues to meet the definitions of those terms
as contained in this Section.
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2. Adjustment of Benefits upon Change in Control
The Company agrees that its Management Compensation and Succession
Committee or such other committee succeeding to such committee's
responsibilities with respect to executive compensation (collectively, the
"Compensation Committee") shall make such equitable adjustments to any
performance targets contained in any awards under the Company's Performance
Sharing Plan (the "PSP") or Senior Executive Performance Sharing Plan (the
"Senior Executive PSP") or any successor plan in which the Executive is a
participant, as may be required to eliminate any negative effects from any
transactions relating to a Change in Control (such as costs or expenses
associated with the transaction or any related transaction, including, without
limitation, any reorganizations, divestitures, recapitalizations or borrowings,
or changes in targets or measures to reflect the disruption of the business,
etc.), in order to preserve reward opportunities and performance objectives.
3. Termination Following Change in Control
(a) If any of the events described in Section 1 hereof constituting a
Change in Control of the Company shall have occurred, the Executive shall
be entitled to the benefits set forth herein upon any termination by the
Company of the Executive's employment with the Company and its subsidiaries
within two years following a Change in Control for any reason except any of
the following:
(i) Termination by reason of the Executive's death, provided the
Executive has not previously given a "Notice of Termination" pursuant
to Section 4;
(ii) Termination by reason of the Executive's "disability,"
provided the Executive has not previously given a "Notice of
Termination" pursuant to Section 4. For the purposes of this
Agreement, "disability" shall be defined as the Executive's inability
by reason of illness or other physical or mental disability to perform
the principal duties required by the position held by the Executive at
the inception of such illness or disability for any consecutive
180-day period. A determination of "disability" shall be subject to
the certification of a qualified medical doctor agreed to by the
Company and the Executive or, in the Executive's incapacity to
designate a doctor, the Executive's legal representative. If the
Company and the Executive cannot agree on the designation of a doctor,
each party shall nominate a qualified medical doctor and the two
doctors shall select a third doctor; the third doctor shall make the
determination as to "disability";
(iii) Termination by reason of retirement in accordance with and
under the Company's Employee Retirement Income Plan -- Salaried Plan,
or such of the Company's other salaried employee tax-qualified
retirement plans in which the Executive participates (or any plans in
substitution thereof) as in effect on the date of this Agreement
(collectively, the "Retirement Plan"), provided the Executive has not
previously given Notice of Termination pursuant to Section 4; or
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(iv) Termination by the Company for "Cause". For purposes of this
Agreement, "Cause" shall mean (A) any act or acts by the Executive
constituting a felony under applicable law; (B) any act or acts of
gross dishonesty or gross misconduct on the Executive's part which
result or are intended to result directly or indirectly in gain or
personal enrichment at the expense of the Company or its subsidiaries
to which the Executive is not legally entitled; or (C) any material
violation by the Executive of his or her obligations under this
Agreement (other than any violation resulting from the Executive's
incapacity due to physical or mental illness), which violation is
demonstrably willful and deliberate on the Executive's part and which
results in material damage to the business or reputation of the
Company or its subsidiaries. Notwithstanding the foregoing, the
employment of the Executive shall in no event be deemed to have been
terminated by the Company for "Cause" if termination of his or her
employment by the Company took place: (i) as the result of bad
judgment or negligence on the part of the Executive other than gross
negligence; (ii) because of an act or omission believed by the
Executive in good faith to have been in or not opposed to the
interests of the Company and its subsidiaries; (iii) for any act or
omission in respect of which a determination could properly be made
that the Executive met the applicable standard of conduct prescribed
for indemnification or reimbursement or payment of expenses under the
charter or bylaws of the Company or the laws of the state of
incorporation of the Company, in each case as in effect at the time of
such act or omission; (iv) as the result of an act or omission which
occurred more than twelve calendar months prior to the Executive's
having been given Notice of Termination (as defined below) for such
act or omission unless the commission of such act or omission could
not at the time of such commission or omission have been known to a
member of the Board (other than the Executive, if he or she is then a
member of the Board), in which case more than twelve calendar months
from the date that the commission of such act or such omission was or
could reasonably have been so known; or (v) as the result of a
continuing course of action which commenced and was or could
reasonably have been known to a member of the Board (other than the
Executive) more than twelve calendar months prior to the Executive
having been given Notice of Termination.
(b) Notwithstanding any other provision of this Agreement, if a Change
in Control occurs and if the Executive's employment with the Company and
its subsidiaries is terminated by the Company less than six months prior to
the date on which the Change in Control occurs, and if it is demonstrated
by the Executive that such termination of employment by the Company (i) was
at the request of a third party which has taken steps reasonably calculated
to result in or effect the Change in Control or (ii) otherwise arose in
connection with or in anticipation of the Change in Control, then for all
purposes of this Agreement, such termination of employment shall be deemed
to have occurred within two years following such Change in Control;
provided, that the obligations contained in Section 4 to deliver a Notice
of Termination shall not apply.
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(c) The Company shall also provide the Executive with the benefits set
forth herein upon any termination by the Executive of employment with the
Company and its subsidiaries for Good Reason within two years after a
Change in Control. Any failure by the Executive to give such notice to
receive such benefits shall not be deemed to constitute a waiver or
otherwise to affect adversely the rights of the Executive hereunder,
provided the Executive gives notice to receive such benefits prior to the
expiration of such two year period. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of any one or more of the following
events: {Chief Executive Officer has discretion to narrow the list of
events which constitute "Good Reason"}
(i) The assignment to the Executive of any duties inconsistent in
any material adverse respect with his or her position, authority or
responsibilities with the Company and its subsidiaries immediately
prior to the Change in Control, or any other material adverse change
in such position, including titles, authority, or responsibilities, as
compared with the Executive's position immediately prior to the Change
in Control;
(ii) A reduction by the Company in the amount of the Executive's
base salary or annual or long term incentive compensation paid or
payable as compared to that which was paid or made available to
Executive immediately prior to the Change in Control; or the failure
of the Company to increase Executive's compensation each year by an
amount which is substantially the same, on a percentage basis, as the
average annual percentage increase in the base salaries of other
executives of comparable status with the Company;
(iii) The failure by the Company to continue to provide the
Executive with substantially similar perquisites or benefits the
Executive in the aggregate enjoyed under the Company's benefit
programs, such as any of the Company's pension, savings, vacation,
life insurance, medical, health and accident, or disability plans in
which he or she was participating at the time of the Change in Control
(or, alternatively, if such plans are amended, modified or
discontinued, substantially similar equivalent benefits thereto in the
aggregate); the taking of any action by the Company which would
directly or indirectly cause such benefits to be no longer
substantially equivalent in the aggregate to the benefits in effect at
the time of the Change in Control; provided, that any amendment,
modification or discontinuation of any plans or benefits referred to
in this Subsection (iii) that generally affect substantially all
domestic salaried employees of the Company shall not be deemed to
constitute Good Reason;
(iv) The Company's requiring the Executive to be based at any
office or location more than 35 miles from that location at which he
or she performed his or her services immediately prior to the Change
in Control, except for travel reasonably required in the performance
of the Executive's responsibilities to the extent substantially
consistent with the Executive's business travel obligations prior to
the Change in Control;
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(v) Any failure of the Company to obtain the assumption of the
obligation to perform this Agreement by any successor as contemplated
in Section 11 herein; or
(vi) Any breach by the Company of any of the provisions of this
Agreement or any failure by the Company to carry out any of its
obligations hereunder, in either case, for a period of five business
days after receipt of written notice from the Executive and the
failure by the Company to cure such breach or failure during such five
business day period.
4. Notice of Termination
Any termination of the Executive's employment by the Company as
contemplated by Subsection 3(a)(ii) or 3(a)(iv) or by the Executive as
contemplated by Subsection 3(c) shall be communicated by written "Notice of
Termination" to the other party hereto. Any "Notice of Termination" shall set
forth (a) the effective date of termination, which shall not be less than 15 or
more than 30 days after the date the Notice of Termination is delivered (the
"Termination Date"); (b) the specific provision in this Agreement relied upon;
and (c) in reasonable detail the facts and circumstances claimed to provide a
basis for such termination. Notwithstanding the foregoing, if within fifteen
(15) days after any Notice of Termination is given, the party receiving such
Notice of Termination notifies the other party that a good faith dispute exists
concerning the termination, the "Date of Termination" shall be the date on which
the dispute is finally determined in accordance with the provisions of Section
18 hereof. In the case of any good faith dispute as to the Executive's
entitlement to benefits under this Agreement resulting from any termination by
the Company for which the Company does not deliver a Notice of Termination, the
"Date of Termination" shall be the date on which the dispute is finally
determined in accordance with the provisions of Section 18 hereof.
Notwithstanding the pendency of any such dispute referred to in the two
preceding sentences, the Company shall continue to pay the Executive his or her
full compensation in effect when the notice giving rise to the dispute was given
and continue the Executive as a participant in all compensation, benefits and
perquisites in which he or she was participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved, provided the
Executive is willing to continue to provide full time services to the Company
and its subsidiaries in substantially the same position, if so requested by the
Company. Amounts paid under this Section shall be in addition to all other
amounts due under this Agreement and shall not be offset against or reduce any
other amounts due under this Agreement. If a final determination by the Panel
(as defined in Section 18(c)(ii)) that Good Reason did not exist pursuant to
Section 18(c)(v) is made in the case of a Notice of Termination by the
Executive, the Executive shall have the sole right to nullify and void his or
her Notice of Termination by delivering written notice of same to the Company
within three (3) business days of the date of such final determination, unless
the basis for the claim by the Executive of Good Reason is found by the Panel to
have been manifestly unreasonable. If the parties do not dispute the Executive's
entitlement to benefits hereunder, the "Date of Termination" shall be the
Termination Date.
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5. Termination Benefits
(a) Base Salary and Annual Incentive Compensation. Subject to the
conditions set forth in Sections 3, 4, 8 and 10(c) hereof, the Company
shall continue to pay the Executive (subject to any applicable payroll or
other taxes required to be withheld) for a period (the "Continuation
Period") [commencing on the Date of Termination and] terminating on the
earlier of (x) [twenty-four (24)/thirty-six (36)] months following the date
of the [Change in Control/Date of Termination], (y) the date on which the
Executive reaches normal retirement age under the Retirement Plan, or (z)
such date on which any of the contingencies under Section 10(c) shall
occur, as follows:
(i) The base salary of the Executive at the greater of the
Executive's effective monthly base salary rate at the Termination Date
or the Executive's effective monthly base salary rate immediately
prior to the Change in Control, which amount shall be payable on a
monthly basis;
(ii) A monthly amount equal to (x) the greater of (1) the
Executive's annualized target incentive compensation award relating to
the monthly base salary in Section 5(a)(i) above or (2) the
Executive's annual target incentive compensation award for the year
prior to the Change in Control, multiplied by (y) the greater of the
average percentage of the Executive's earned incentive compensation
award to the Executive's annual target incentive compensation award
for the three complete years prior to either (1) the Change in Control
or (2) the Termination Date, in either case, under the Company's PSP
or Senior Executive PSP, or any successor plan, and divided by (z)
twelve (12), which amount shall be payable on a monthly basis; and
(b) "Short Year" Annual Incentive Compensation. Subject to the
conditions set forth in Sections 3, 4, 8 and 10(c) hereof, the Company
shall pay the Executive (subject to any applicable payroll or other taxes
required to be withheld) the product of (i) the amount determined in
accordance with Section 5(a)(ii)(x) above, multiplied by (ii) the amount
determined in accordance with Section 5(a)(ii)(y) above, multiplied by
(iii) the ratio of the number of days that elapsed in such year prior to
such Termination Date divided by 365; provided, that such "short year"
annual incentive compensation shall be paid in cash in a lump sum on the
Date of Termination.
(c) [One-Time Cash Termination Benefit. Subject to the conditions set
forth in Sections 3, 4, 8 and 10(c) hereof, the Company shall pay the
Executive (subject to any applicable payroll or other taxes required to be
withheld) the amount of $________ in cash in a lump sum on the Date of
Termination.]
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6. Other Benefits
Subject to the conditions set forth in Sections 3, 4, 8 and 10(c) hereof,
the following benefits (subject to any applicable payroll or other taxes
required to be withheld) shall be paid or provided to the Executive:
(a) Health/Welfare Benefits
(i) During the Continuation Period, the Company shall continue to
keep in full force and effect all programs of medical, dental, vision,
accident, disability, life insurance, including optional term life
insurance, and other similar health or welfare programs with respect
to the Executive and his or her dependents with the same level of
coverage, upon the same terms and otherwise to the same extent as such
programs shall have been in effect immediately prior to the
Termination Date (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 Termination Date (or, if more favorable to the Executive,
immediately prior to the Change in Control) or, if the terms of such
programs do not permit continued participation by the Executive (or if
the Company otherwise determines it advisable to amend, modify or
discontinue such programs for employees generally), the Company shall
otherwise provide benefits substantially similar to and no less
favorable to the Executive in terms of cost or benefits ("Equivalent
Benefits") than he or she was entitled to receive at the end of the
period of coverage, for the duration of the Continuation Period.
(ii) If, at or prior to the end of the Continuation Period, the
Executive has attained the earliest age for retirement under the
Retirement Plan, without regard to any minimum period of service (the
"Eligible Age"), he or she shall be entitled to be enrolled at that
time or any time thereafter in the Company's retiree health program
upon the same terms and conditions as if the Executive had remained
employed during the Continuation Period, or if the terms of such
program do not permit such enrollment, the Company shall provide
Equivalent Benefits which include such retiree coverage. If, at or
prior to the end of the Continuation Period, the Executive shall not
have attained the Eligible Age, he or she shall be entitled to the
foregoing benefits upon attainment of the Eligible Age. If, at the end
of the Continuation Period, the Executive shall not have attained the
Eligible Age, he or she will be given the same rights to health care
continuation as if the health care continuation coverage rights under
the Consolidated Omnibus Reconciliation Act of 1985, as amended or
replaced ("COBRA"), would apply as of the end of such Continuation
Period, such rights under COBRA to be determined as if the end of such
Continuation Period were an event causing the Executive to lose
coverage under the Company's health care plan on account of a
termination of employment.
(iii) All benefits which the Company is required by this Section
6(a) to provide, which will not be provided by the Company's programs
described herein, shall be provided through the purchase of insurance
unless the Executive is uninsurable. If the Executive is uninsurable,
the Company will provide the benefits out of its general assets.
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(b) Retirement Benefits
(i) Subject to Section 6(b)(v), the Executive shall be deemed to
be completely vested under the Company's Retirement Plan and any and
all supplemental non-qualified plans (or any successor plans), in
which Executive is a participant, which are in effect as of the date
of the Change in Control (collectively, the "Plans"), regardless of
the Executive's actual vesting service credit thereunder.
(ii) In addition, subject to Section 6(b)(v), he or she shall be
deemed to have earned an additional service credit for service and
benefit calculation purposes thereunder as if he or she had continued
in the employ of the Company for the duration of the Continuation
Period, and the rate of compensation which is used in the
determination of the payment to the Executive under Section 5 shall be
the rate of compensation used for benefit calculations with respect to
such additional period, with the effect that benefits based on Salary
Compensation and Average Monthly Salary (as such terms are defined in
the Retirement Plan and as may be amended or replaced), shall reflect
such additional years of service at such rates of compensation.
(iii) In addition, the Executive shall receive all other benefits
under the Plans that he or she would have received had he or she
continued in the employ of the Company for the duration of the
Continuation Period, including, without limitation, all ancillary
benefits, such as early retirement, survivor rights and all other
benefits at retirement.
(iv) If the Executive has attained the Eligible Age as of the
Termination Date, the Executive shall be entitled to elect retirement
in lieu of deferred vested status under the Retirement Plan. If the
Executive has not attained the Eligible Age as of the Termination
Date, the Executive shall be entitled to elect retirement in lieu of
deferred vested status under the Retirement Plan upon attainment of
the Eligible Age, and for purposes of determining the adjustment, if
any, to the Executive's accrued benefit under the eighty-five (85)
point rule (if otherwise eligible under such rule) under the
Retirement Plan, the Executive shall be credited with both age and
years of service until the date he or she reaches the Eligible Age.
(v) Any part of the foregoing retirement benefits which are
otherwise required to be paid by a tax-qualified Plan but which cannot
be paid through such Plan by reason of the laws and regulations
applicable to such Plan, shall be paid by one or more supplemental
non-qualified Plans or by the Company in accordance with such Plan or
Plans.
(vi) The payments calculated hereunder which are not actually
paid by the Retirement Plan shall be paid thirty (30) days following
the Date of Termination in a single lump sum cash payment (of
equivalent actuarial value to the payment calculated hereunder using
the same actuarial assumptions as are used in calculating benefits
under the Retirement Plan but using the discount rate that would be
used by the Company on the Date of Termination to determine the
actuarial present value of projected benefit obligations).
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(c) Savings Plan Benefits
(i) Subject to Section 6(c)(iii), the Executive shall be deemed
to be completely vested under the Company's Employee Savings Plan --
Salaried Plan and all excess or supplemental savings plans (or any
successor plans) in effect as of the date of the Change in Control
("the Savings Plans") regardless of his or her actual vesting service
credit on the Termination Date.
(ii) In addition, subject to Section 6(c)(iii), during the
Continuation Period, he or she shall be entitled to an amount equal to
the Company matching contributions (at the greater of the Company's
rates in effect at the Termination Date or the date of the Change in
Control) under the Savings Plans which would have accrued to the
benefit of the Executive had he or she continued his or her
participation in, and elected to continue to make the elective
deferral or contributions under such Savings Plans at the same rate at
which he or she was electing to make them at the time of the
Termination Date.
(iii) Any part of such Savings Plans benefits which are otherwise
required to be paid by a tax-qualified Savings Plan but which cannot
be paid through such Savings Plan by reason of the laws and
regulations applicable to the Plan shall be paid by an excess or
supplemental Savings Plan or by the Company in a lump sum cash payment
on the Date of Termination.
(d) Financial Planning
During the Continuation Period, the Company shall reimburse the
Executive for costs associated with financial planning to the same extent
as was customarily provided by the Company to senior executives prior to
the Change in Control.
(e) Executive Outplacement Counseling
During the Continuation Period, unless the Executive shall reach
normal retirement age during the Continuation Period, the Executive may
request in writing and the Company shall at its expense engage within a
reasonable time following such written request an outplacement counseling
service of national reputation to assist the Executive in obtaining
employment.
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7. Payment of Certain Costs
Except as otherwise provided in Section 18(c)(v), if a dispute arises
regarding a termination of the Executive or the interpretation or enforcement of
this Agreement, subsequent to a Change in Control, all of the reasonable legal
fees and expenses incurred by the Executive and all Arbitration Costs (as
hereafter defined) in contesting any such termination or obtaining or enforcing
all or part of any right or benefit provided for in this Agreement or in
otherwise pursuing all or part of his or her claim will be paid by the Company,
unless prohibited by law. The Company further agrees to pay pre-judgment
interest on any money judgment obtained by the Executive calculated at the prime
interest rate reported in The Wall Street Journal in effect from time to time
from the date that payment to him or her should have been made under this
Agreement.
8. Excise Tax Payments.
(a) Notwithstanding anything contained in this Agreement to the
contrary, in the event that any payment (within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended or replaced
(the "Code")), or distribution to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise in connection with, or arising out of,
his or her employment with the Company (a "Payment" or "Payments"), would
be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, interest and penalties collectively referred
to as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all such taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments;
provided, that the Executive shall not be entitled to receive any
additional payment relating to any interest or penalties attributable to
any action or omission by the Executive in bad faith.
(b) An initial determination shall be made by an accounting firm
mutually agreeable to the Company and the Executive and, if not agreed to
within three days after the Date of Termination, a national independent
accounting firm selected by the Executive (the "Accounting Firm"), as to
whether a Gross-Up Payment is required pursuant to this Section 8 and the
amount of such Gross-Up Payment. To permit the Accounting Firm to make the
initial determination, the Company shall furnish the Accounting Firm with
all information reasonably required for such firm to complete such
determination as soon as practicable after the Date of Termination, but in
no event more than fifteen (15) days thereafter. All fees, costs and
expenses (including, but not limited to, the cost of retaining experts) of
the Accounting Firm shall be borne by the Company and the Company shall pay
such fees, costs and expenses as they become due. The Accounting Firm shall
provide detailed supporting calculations, reasonably acceptable both to the
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Company and the Executive within thirty (30) days of the Date of
Termination, if applicable, or such other time as requested by the Company
or by the Executive (provided the Executive reasonably believes that any of
the Payments may be subject to the Excise Tax). The Gross-Up Payment, if
any, as determined pursuant to this Section 8(b) shall be paid by the
Company to the Executive within five (5) business days of the receipt of
the Accounting Firm's determination. If the Accounting Firm determines that
no Excise Tax is payable by the Executive with respect to a Payment or
Payments, it shall furnish the Executive with an opinion reasonably
satisfactory to the Executive that no Excise Tax will be imposed with
respect to any such Payment or Payments. Any such initial determination by
the Accounting Firm of the Gross-Up Payment shall be binding upon the
Company and the Executive subject to the application of Section 8(c).
(c) As a result of the uncertainty in the application of Sections 4999
and 280G of the Code, it is possible that a Gross-Up Payment (or a portion
thereof) will be paid which should not have been paid (an "Overpayment") or
a Gross-Up Payment (or a portion thereof) which should have been paid will
not have been paid (an "Underpayment"). An Underpayment shall be deemed to
have occurred upon a "Final Determination" (as hereinafter defined) that
the tax liability of the Executive (whether in respect of the then current
taxable year of the Executive or in respect of any prior taxable year of
the Executive) will be increased by reason of the imposition of the Excise
Tax on a Payment or Payments with respect to which the Company has failed
to make a sufficient Gross-Up Payment. An Overpayment shall be deemed to
have occurred upon a "Final Determination" (as hereinafter defined) that
the Excise Tax shall not be imposed (or shall be reduced) upon a Payment or
Payments with respect to which the Executive had previously received a
Gross-Up Payment. A Final Determination shall be deemed to have occurred
when (i) in the case of an Overpayment, the Executive has received from the
applicable governmental taxing authority a refund of taxes or other
reduction in his or her tax liability imposed as a result of a Payment or,
in the case of an Underpayment, the Executive receives notice from a
competent governmental authority that his or her tax liability imposed as a
result of a Payment will be increased, and (ii) in the case of an
Overpayment or an Underpayment, upon either (x) the date a determination is
made by, or an agreement is entered into with, the applicable governmental
taxing authority which finally and conclusively binds the Executive and
such taxing authority, or in the event that a claim is brought before a
court of competent jurisdiction, the date upon which a final determination
has been made by such court and either all appeals have been taken and
finally resolved or the time for all appeals has expired or (y) the statute
of limitations with respect to the Executive's applicable tax return has
expired. If an Underpayment occurs, the Executive shall promptly notify the
Company and the Company shall promptly pay to the Executive an additional
Gross-Up Payment equal to the amount of the Underpayment plus any interest
and penalties imposed on the Underpayment (other than interest and
penalties attributable to any action or omission by the Executive in bad
faith). If an Overpayment occurs, the amount of the Overpayment shall be
treated as a loan by the Company to the Executive and the Executive shall,
within ten (10) business days of the occurrence of such Overpayment, pay
the Company the amount of the Overpayment, without interest.
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(d) Notwithstanding anything contained in this Agreement to the
contrary, in the event it is determined that an Excise Tax will be imposed
on any Payment or Payments, the Company shall pay to the applicable
governmental taxing authorities as Excise Tax withholding, the amount of
the Excise Tax that the Company has actually withheld from the Payment or
Payments.
9. Mitigation
The Executive is not required to seek other employment or otherwise
mitigate the amount of any payments to be made by the Company pursuant to
this Agreement, and employment by the Executive will not reduce or
otherwise affect any amounts or benefits due the Executive pursuant to this
Agreement, except as otherwise provided in Section 10(c).
10. Continuing Obligations
(a) Acknowledgements by the Executive
The Executive hereby recognizes and acknowledges the following:
(i) The Company and its subsidiaries (collectively, for purposes
of this Section 10, the "Company") are engaged in, among other things,
the business of researching, designing, developing, manufacturing,
selling and distributing on a worldwide basis fighter and military
transport aircraft, commercial aircraft, helicopters, missiles,
satellite launch vehicles, and certain related and other businesses
(the "Business").
(ii) In connection with the Business, the Company has expended a
great deal of time, money and effort to develop and maintain the
secrecy and confidentiality of substantial proprietary trade secret
information and other confidential business information which, if
misused or disclosed, could be very harmful to the Business and could
cause the Company to lose its competitive edge in the marketplace.
(iii) The Executive desires to become entitled to receive the
benefits contemplated by this Agreement but which the Company would
not make available to the Executive but for the Executive's signing
and agreeing to abide by the terms of this Section 10.
(iv) The Executive's position with the Company provides the
Executive with access to certain of the Company's confidential and
proprietary trade secret information and other confidential business
information.
(v) The Company compensates its employees to, among other things,
develop and preserve goodwill with its customers on the Company's
behalf and business information for the Company's ownership and use.
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(vi) If the Executive were to leave the Company, the Company in
all fairness would need certain protection in order to ensure that the
Executive does not appropriate and misuse any confidential information
entrusted to the Executive during the course of the Executive's
employment with the Company, or take any other action which could
result in a loss of the Company's goodwill that was generated on the
Company's behalf and at its expense, and, more generally, to prevent
the Executive from having an unfair competitive advantage over the
Company.
(b) Confidential Information.
(i) The Executive agrees to keep secret and confidential, and not
to use or disclose to any third parties, except as directly required
for the Executive to perform the Executive's employment
responsibilities for the Company, any of the Company's confidential
and proprietary trade secret information or other confidential
business information concerning the Business acquired by the Executive
during the course of, or in connection with, the Executive's
employment with the Company (and which was not known by the Executive
prior to the Executive's being hired by the Company). The Company
considers and treats as confidential (among other things) its
engineering, design and technical data, computer software and
programs, component sourcing and supply information, pricing policies,
operational methods, strategic plans, internal financial information,
research and development plans and activities, and business
acquisition and expansion plans, and, except as provided herein, the
Executive agrees to treat such information as secret and confidential
so long as such information does not become generally known to the
public through no fault or wrongful act of the Executive.
(ii) The Executive acknowledges that any and all notes, records,
sketches, computer diskettes and other documents obtained by or
provided to the Executive, or otherwise made, produced or compiled
during the course of the Executive's employment with the Company,
which contain any such confidential Company information, regardless of
the type of medium in which it is preserved, are the sole and
exclusive property of the Company and shall be surrendered to the
Company upon the Executive's termination of employment and on demand
at any time by the Company.
(c) Post-Termination Restrictions.
The Executive agrees that, at any time during the Continuation Period,
the Company shall be entitled to discontinue any further payment,
allocation, accrual or provision of any amounts or benefits required by
Sections 5(a), 6(a)(i), 6(b)(ii), 6(d) and 6(e) (provided, that any such
amounts or benefits theretofore allocated or accrued with respect to the
portion of the Continuation Period preceding the occurrence of any of the
contingencies set forth below shall be preserved), if the Executive on the
Executive's own behalf or on behalf of any other person, firm, corporation
or entity in the world:
15
(i) provides any services for any of the Company's significant
competitors, suppliers or customers or provides any general business,
technical or strategic consulting or planning with respect to the
Business for any such companies. The Executive recognizes that such
companies could benefit greatly if they were to obtain the Company's
confidential information. The Executive may request permission to
provide services to or consult with any company that may be included
in the category of the Company's significant competitors, suppliers or
customers. The written denial or grant of such a request by the
Company's President and CEO shall be conclusive and binding on the
parties hereto. The grant of such a request will not be unreasonably
withheld, and if this request is granted, the Executive will not be
held in violation of this Section 10(d) for providing services to or
consulting with such company in accordance with the terms of this
request.
(ii) knowingly solicits, entices, induces, hires, employs or
seeks to employ any salesperson, engineer, technician, manager or
executive-level employee of the Company, who was employed by the
Company during the Executive's last six (6) months of employment with
the Company, to provide any services with respect to the Business; or
(iii) materially breaches or violates Section 10(b) or any
Company policy regarding confidentiality.
(d) Acknowledgement Regarding Restrictions. The Executive recognizes
and agrees that the provisions of this Section 10 are reasonable and
enforceable because, among other things, (1) the Executive is receiving
compensation under this Agreement and (2) there are many other areas in
which, and companies for which, the Executive could work in view of the
Executive's background, and this Section 10 therefore does not impose any
undue hardship on the Executive. The Executive further recognizes and
agrees that the provisions of this Section 10 are reasonable and
enforceable in view of the Company's legitimate interests in protecting its
confidential information and customer goodwill and the limitations
contained therein on the duration and geographic scope of, and activities
covered by, such provisions.
(e) Breach. In the event of a breach of Section 10(b) or the
occurrence of any of the contingencies under Section 10(c), the Company's
sole remedy shall be the discontinuation of the payment, allocation,
accrual or provision of any amounts or benefits as provided in Section
10(c). The Executive recognizes and agrees, however, that it is the intent
of the parties that neither this Agreement nor any of its provisions shall
be construed to adversely affect any rights or remedies that Company would
have had, including, without limitation, the amount of any damages for
which it could have sought recovery, had this Agreement not been entered
into. Accordingly, the parties hereby agree that nothing stated in this
Section 10 shall limit or otherwise affect the Company's right to seek
legal or equitable remedies it may otherwise have, or the amount of damages
for which it may seek recovery, in connection with matters covered by this
Section 10 but which are not based on breach or violation of this Section
10 (including, without limitation, claims based on the breach of fiduciary
or other duties of the Executive or any obligations of the Executive
arising under any other contracts, agreements or understandings). Without
16
limiting the generality of the foregoing, nothing in this Section 10 or any
other provision of this Agreement shall limit or otherwise affect the
Company's right to seek legal or equitable remedies it may otherwise have,
or the amount of damages for which it may seek recovery, resulting from or
arising out of statutory or common law or any Company policies relating to
fiduciary duties, confidential information or trade secrets. Further, the
Executive acknowledges and agrees that the fact that Subsection 10(c) is
limited to the Continuation Period, and that the sole remedy of the Company
hereunder is the discontinuation of benefits, shall not reduce or otherwise
alter any other contractual or other legal obligations of the Executive
during any period or circumstance, and shall not be construed as
establishing a maximum limit on damages for which the Company may seek
recovery.
11. Successors
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by
agreement to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. For purposes of this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, beneficiaries, devises and
legatees. If the Executive should die while any amounts are payable to him
or her hereunder, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, beneficiary or other designee or, if there be no such
designee, to the Executive's estate.
12. Notices
For the purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given (i) on the date of delivery if delivered by hand, (ii) on the date of
transmission, if delivered by confirmed facsimile, (iii) on the first business
day following the date of deposit if delivered by guaranteed overnight delivery
service, or (iv) on the third business day following the date delivered or
mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
[To Be Provided]
If to the Company: By Personal Delivery
By Mail or Facsimile
XxXxxxxxx Xxxxxxx Corporation XxXxxxxxx Xxxxxxx Corporation
X.X. Xxx 000 Xxxxx Xxxxxxxxxxxx Xxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000 Airport Road & XxXxxxxxx Blvd.
Attention: Chief Executive Officer Xx. Xxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
By Personal Delivery
By Mail or Facsimile
XxXxxxxxx Xxxxxxx Corporation XxXxxxxxx Xxxxxxx Corporation
X.X. Xxx 000 Xxxxx Xxxxxxxxxxxx Xxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000 Airport Road & XxXxxxxxx Blvd.
Attention: General Counsel Xx. Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
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.
13. Governing Law
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Missouri, without regard
to principles of conflicts of laws.
14. Miscellaneous
No provisions of this Agreement may be amended, modified, waived or
discharged unless such amendment, waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. Section headings contained herein are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
15. Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which will constitute one and the
same instrument.
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16. Non-Assignability
This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign, or transfer this Agreement or
any rights or obligations hereunder, except as provided in Section 11. Without
limiting the foregoing, the Executive's right to receive payments hereunder
shall not be assignable or transferable, whether by pledge, creation of a
security interest or otherwise, other than a transfer by his or her will or
trust or by the laws of descent or distribution, and in the event of any
attempted assignment or transfer contrary to this paragraph the Company shall
have no liability to pay any amount so attempted to be assigned or transferred.
17. Term of Agreement
This Agreement shall commence on the date hereof and shall continue in
effect through December 31 of 1998; provided, however, that commencing on
January 1 of 1998 and of each year thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Company or the Executive shall have
given notice to the other party that it does not wish to extend this Agreement;
provided further, if a Change in Control of the Company shall have occurred
during the original or any extended term of this Agreement, this Agreement shall
continue in effect for a period of thirty-six (36) months beyond the month in
which such Change in Control occurred; and, provided further, that if the
Company shall become obligated to make any payments or provide any benefits
pursuant to Section 5 or 6 hereof, this Agreement shall continue in effect
indefinitely.
18. Arbitration
(a) Scope; Initiation. Resolution of any and all disputes arising from
or in connection with this Agreement, whether based on contract, tort,
statute or otherwise, including disputes over arbitrability and disputes in
connection with claims by third persons ("Disputes") shall be exclusively
governed by and settled in accordance with the provisions of this Section
18. Either party to this Agreement (each a "Party" and together the
"Parties") may commence proceedings hereunder by delivery of written notice
providing a reasonable description of the Dispute to the other, including a
reference to this Section (the "Dispute Notice").
(b) Negotiations Between Parties. The Parties shall first attempt in
good faith to resolve promptly any Dispute by good faith negotiations. Not
later than three (3) business days after delivery of the Dispute Notice,
the Company shall appoint an executive to meet with the Executive or his or
her representative at a reasonably acceptable time and place, and
thereafter as such representatives deem reasonably necessary. The Parties
shall exchange relevant non-privileged information and endeavor to resolve
the Dispute. Prior to any such meeting, each Party or representative shall
advise the other as to any other individuals who will attend such meeting.
All negotiations pursuant to this Section 18(b) shall be confidential and
shall be treated as compromise negotiations for purposes of Rule 408 of the
Federal Rules of Evidence and similarly under other federal and state rules
of evidence.
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(c) Binding Arbitration. The Parties hereby agree to submit all
Disputes to arbitration under the following provisions, which arbitration
shall be final and binding upon the Parties, their successors and assigns,
and that the following provisions constitute a binding arbitration clause
under applicable law.
(i) Either Party may initiate arbitration of a Dispute by
delivery of a demand therefor (the "Arbitration Demand") to the other
Party not sooner than five (5) business days after the date of
delivery of the Dispute Notice but at any time thereafter.
(ii) The arbitration shall be conducted in the County of St.
Louis, Missouri, by three arbitrators (acting by majority vote, the
"Panel") selected by agreement of the Parties not later than 10 days
after delivery of the Arbitration Demand or, failing such agreement,
appointed pursuant to the Commercial Arbitration Rules of the American
Arbitration Association, as amended from time to time (the "AAA
Rules"). If an arbitrator becomes unable to serve, his or her
successor(s) shall be similarly selected or appointed.
(iii) The arbitration shall be conducted pursuant to the Federal
Arbitration Act and the Missouri Uniform Arbitration Act, such
procedures as the Parties may agree or, in the absence of or failing
such agreement, pursuant to the AAA Rules. Notwithstanding the
foregoing: (w) each party shall be allowed to conduct discovery
through written requests for information, document requests, requests
for stipulations of fact, and depositions; (x) the nature and extent
of such discovery shall be determined by the Panel, taking into
account the needs of the Parties and the desirability of making
discovery expeditious and cost-effective; (y) the Panel may issue
orders to protect the confidentiality of information, to be disclosed
in discovery; and (z) the Panel's discovery rulings may be enforced in
any court of competent jurisdiction.
(iv) All hearings shall be conducted on an expedited schedule,
and all proceedings shall be confidential. Either Party may at its
expense make a stenographic record thereof.
(v) The Panel shall complete all hearings not later than twenty
(20) days after selection or appointment, and shall make a final award
not later than ten (10) days thereafter. The award shall be in writing
and shall specify the factual and legal bases for the award, and shall
include a determination as to whether any claim by the Executive of
Good Reason was manifestly unreasonable for purposes of the
second-to-last sentence of Section 4. Notwithstanding anything
contained in Section 7, in circumstances where a Dispute has been
asserted by the Executive or defended against by the Executive on
grounds that the Panel deems manifestly unreasonable (whether related
to a claim of Good Reason or otherwise), the Panel may assess all or
part of the costs and expenses of the arbitration, including the
Panel's fees and expenses and fees and expenses of experts and legal
counsel ("Arbitration Costs"), against the Executive and may include
in the award the Executive's and the Company's attorney's fees and
expenses in connection with any and all proceedings under this Section
18. Notwithstanding the foregoing, in no event may the Panel award
multiple, punitive or exemplary damages to either party.
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(d) Confidentiality - Notice. Each Party shall notify the other
promptly, and in any event prior to disclosure to any third person, if it
receives any request for access to confidential information or proceedings
hereunder.
19. No Setoff
The Company shall have no right of setoff or counterclaim in respect of any
claim, debt or obligation against any payment provided for in this Agreement.
20. Non-Exclusivity of Rights
Nothing in this Agreement shall prevent or limit the Executive's continuing
or future participation in any benefit, bonus, incentive or other plan or
program provided by the Company or any of its subsidiaries or successors and for
which the Executive may qualify, nor shall anything herein limit or reduce such
rights as the Executive may have under any other agreements with the Company or
any of its subsidiaries or successors. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan or program
of the Company or any of its subsidiaries shall be payable in accordance with
such plan or program, except as explicitly modified by this Agreement.
21. No Guaranteed Employment
The Executive and the Company acknowledge that this Agreement shall not
confer upon the Executive any right to continued employment and shall not
interfere with the right of the Company to terminate the employment of the
Executive at any time.
22. Invalidity of Provisions
In the event that any provision of this Agreement is adjudicated to be
invalid or unenforceable under applicable law in any jurisdiction, the validity
or enforceability of the remaining provisions thereof shall be unaffected as to
such jurisdiction and such adjudication shall not affect the validity or
enforceability of such provision in any other jurisdiction. To the extent that
any provision of this Agreement, including, without limitation, Section 10
hereof, is adjudicated to be invalid or unenforceable because it is overbroad,
that provision shall not be void but rather shall be limited to the extent
required by applicable law and enforced as so limited. The parties expressly
acknowledge and agree that this Section 22 is reasonable in view of the parties'
respective interests.
23. Non-Waiver of Rights
The failure by the Company or the Executive to enforce at any time any of
the provisions of this Agreement or to require at any time performance by the
other party of any of the provisions hereof shall in no way be construed to be a
waiver of such provisions or to affect either the validity of this Agreement, or
any part hereof, or the right of the Company or the Executive thereafter to
enforce each and every provision in accordance with the terms of this Agreement.
21
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year first above set forth.
PLEASE NOTE: BY SIGNING THIS TERMINATION BENEFITS AGREEMENT, THE EXECUTIVE IS
HEREBY CERTIFYING THAT THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT
FOR REVIEW AND STUDY BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY
BEFORE SIGNING IT; (C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE
AGREEMENT TO ASK ANY QUESTIONS THE EXECUTIVE HAS ABOUT THE AGREEMENT AND HAS
RECEIVED SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE
EXECUTIVE'S RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT.
THIS AGREEMENT IN SECTION 18 CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
XXXXXXXXX XXXXXXX CORPORATION
By:______________________________________
Xxxxx X. Xxxxxxxxxxx, President & CEO
EXECUTIVE:
__________________________________________
