EXHIBIT 2
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the 23rd day of February, 1998 by
and between Global Industrial Technologies, Inc., a Delaware corporation (the
"Company"), and Xxxxxx X. Xxxxxxx ("Executive").
W I T N E S S E T H
WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its stockholders; and
WHEREAS, the Company recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control may arise and
that such possibility may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders; and
WHEREAS, the Board (as defined in Section 1) has determined that it is
in the best interests of the Company and its stockholders to secure Executive's
continued services and to ensure Executive's continued dedication to his duties
in the event of any threat or occurrence of a Change in Control (as defined in
Section 1) of the Company; and
WHEREAS, the Board has authorized the Company to enter into this
Agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and Executive
hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms
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shall have the respective meanings set forth below.
(a) "Average Bonus Fraction" means a fraction where the numerator is
the aggregate bonus compensation Executive has received during the lesser of (i)
the two (2) year period immediately preceding the year in which the Date of
Termination occurs or (ii) Executive's period of employment immediately
preceding the year in which the Date of Termination occurs, and the denominator
is the aggregate amount of base salary that Executive has received during the
relevant period in clause (i) or (ii) above, as the case may be.
(b) "Board" means the Board of Directors of the Company.
(c) "Bonus Amount" means the product of (i) Executive's current annual
rate of base salary on the Date of Termination (or, if greater, the base salary
in effect on the date of a Change in Control) and (ii) the Average Bonus
Fraction.
(d) "Cause" means (i) the willful and continued failure of Executive
to perform substantially his duties with the Company (other than any such
failure resulting from Executive's incapacity due to physical or mental illness
or any such failure subsequent to Executive being delivered a Notice of
Termination without Cause by the Company (or delivering a Notice of Termination
for Good Reason to the Company) after a written demand for substantial
performance is delivered to Executive by the Board which specifically identifies
the manner in which the Board believes that Executive has not substantially
performed Executive's duties, or (ii) the willful engaging by Executive in
illegal conduct or gross misconduct which is demonstrably and materially
injurious to the Company or its affiliates. For purpose of this paragraph (d),
no act or failure to act by Executive shall be considered "willful" unless done
or omitted to be done by Executive in bad faith and without reasonable belief
that Executive's action or omission was in the best interests of the Company or
its affiliates. Any act, or failure to act, based upon authority given pursuant
to a resolution duly adopted by the Board, based upon the advice of counsel for
the Company or upon the instructions of the Company's chief executive officer or
another senior officer of the Company, shall be conclusively presumed to be
done, or omitted to be done, by Executive in good faith and in the best
interests of the Company. Cause shall not exist unless and until the Company
has delivered to Executive a copy of a resolution duly adopted by three quarters
(3/4) of the entire Board (excluding Executive if Executive is a Board member)
at a meeting of the Board (after reasonable notice to Executive and an
opportunity for Executive, together with counsel, to be heard before the Board
at such meeting), finding that in the good faith opinion of the Board an event
set forth in clauses (1) or (2) has occurred and specifying the particulars
thereof in detail. The Company must notify Executive of any event constituting
Cause within ninety (90) days following the Company's knowledge of its existence
or such event shall not constitute Cause under this Agreement.
(e) "Change in Control" means the occurrence of any one of the
following events:
(i) individuals who, on February 23, 1998, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director
subsequent to February 23, 1998, whose election or nomination for election
was approved by a vote of at least two-thirds of the Incumbent Directors
then on the Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee for
director, without written objection to such nomination) shall be an
Incumbent Director;
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provided, however, that no individual initially elected or nominated as a
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director of the Company as a result of an actual or threatened election
contest with respect to directors or as a result of any other actual or
threatened solicitation of proxies or consents by or on behalf of any
person other than the Board shall be deemed to be an Incumbent Director;
(ii) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board (the "Company
Voting Securities"); provided, however, that the event described in this
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paragraph (ii) shall not be deemed to be a Change in Control by virtue of
any of the following acquisitions: (A) by the Company or any Subsidiary,
(B) by any employee benefit plan (or related trust) sponsored or maintained
by the Company or any Subsidiary, (C) by any underwriter temporarily
holding securities pursuant to an offering of such securities, (D) pursuant
to a Non-Qualifying Transaction (as defined in paragraph (iii)), or (E)
pursuant to any acquisition by Executive or any group of persons including
Executive (or any entity controlled by Executive or any group of persons
including Executive);
(iii) the consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the Company or
any of its Subsidiaries that requires the approval of the Company's
stockholders, whether for such transaction or the issuance of securities in
the transaction (a "Business Combination"), unless immediately following
such Business Combination: (A) 60% or more of the total voting power of
(x) the corporation resulting from such Business Combination (the
"Surviving Corporation"), or (y) if applicable, the ultimate parent
corporation that directly or indirectly has beneficial ownership of 100% of
the voting securities eligible to elect directors of the Surviving
Corporation (the "Parent Corporation"), is represented by Company Voting
Securities that were outstanding immediately prior to such Business
Combination (or, if applicable, is represented by shares into which such
Company Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company
Voting Securities among the holders thereof immediately prior to the
Business Combination, (B) no person (other than any employee benefit plan
(or related trust) sponsored or maintained by the Surviving Corporation or
the Parent Corporation) is or becomes the beneficial owner, directly or
indirectly, of 30% or more of the total voting power of the outstanding
voting securities eligible to elect directors of the
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Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) and (C) at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation) following the consummation of the Business
Combination were Incumbent Directors at the time of the Board's approval of
the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying
Transaction"); or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or a sale of all or substantially
all of the Company's assets.
Notwithstanding the foregoing, a Change in Control of the Company
shall not be deemed to occur solely because any person acquires beneficial
ownership of more than 30% of the Company Voting Securities as a result of the
acquisition of Company Voting Securities by the Company which reduces the number
of Company Voting Securities outstanding; provided, that, if after such
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acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control of the Company shall then occur.
(f) "Date of Termination" means (i) the effective date on which
Executive's employment by the Company terminates as specified in a prior written
notice by the Company or Executive, as the case may be, to the other, delivered
pursuant to Section 13 or (ii) if Executive's employment by the Company
terminates by reason of death, the date of death of Executive.
(g) "Disability" means termination of Executive's employment by the
Company due to Executive's absence from Executive's duties with the Company on a
full-time basis for at least one hundred eighty (180) consecutive days as a
result of Executive's incapacity due to physical or mental illness.
(h) "Good Reason" means, without Executive's express written consent,
the occurrence of any of the following events after a Change in Control:
(i) any change in the duties or responsibilities of Executive that is
inconsistent in any material and adverse respect with Executive's
position(s), duties, responsibilities or status with the Company
immediately prior to such Change in Control (including any material and
adverse diminution of such duties or responsibilities); provided, however,
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that Good Reason shall not be deemed to occur upon a change in duties or
responsibilities that is solely and
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directly a result of the Company no longer being a publicly traded entity
(other than such change which would have a material and adverse effect on
Executive's duties or responsibilities) and does not involve any other
event set forth in this paragraph (h) or (B) a material and adverse change
in Executive's titles or offices (including, if applicable, membership on
the Board) with the Company as in effect immediately prior to such Change
in Control;
(ii) a reduction by the Company in Executive's rate of annual base
salary or annual target bonus opportunity (including any material and
adverse change in the formula for such annual bonus target) as in effect
immediately prior to such Change in Control or as the same may be increased
from time to time thereafter;
(iii) any requirement of the Company that Executive (A) be based
anywhere more than thirty (30) miles from the office where Executive is
located at the time of the Change in Control or (B) travel on Company
business to an extent substantially greater than the travel obligations of
Executive immediately prior to such Change in Control;
(iv) the failure of the Company to (A) continue in effect any
material employee benefit plan, compensation plan, welfare benefit plan or
fringe benefit plan in which Executive is participating immediately prior
to such Change in Control or the taking of any action by the Company which
would adversely affect Executive's participation in or reduce Executive's
benefits under any such plan, unless Executive is permitted to participate
in other plans providing Executive with substantially equivalent benefits,
or (B) provide Executive with paid vacation in accordance with the most
favorable vacation policies of the Company as in effect for Executive
immediately prior to such Change in Control, including for purposes of both
(A) and (B), the crediting of all service for which Executive had been
credited under such plans and policies prior to the Change in Control;
(v) any refusal by the Company to continue to permit Executive to
engage in activities not directly related to the business of the Company
which Executive was permitted to engage in prior to the Change in Control;
(vi) any purported termination of Executive's employment which is not
effectuated pursuant to Section 11(b) (and which will not constitute a
termination hereunder); or
(vii) the failure of the Company to obtain the assumption (and, if
applicable, guarantee) agreement from any successor (and Parent
Corporation) as contemplated in Section 10(b).
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An isolated, insubstantial and inadvertent action taken in good faith
and which is remedied by the Company within ten (10) days after receipt of
notice thereof given by Executive shall not constitute Good Reason. Executive's
right to terminate employment for Good Reason shall not be affected by
Executive's incapacities due to mental or physical illness and Executive's
continued employment shall not constitute consent to, or a waiver of rights with
respect to, any event or condition constituting Good Reason; provided, however,
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that Executive must provide notice of termination of employment within ninety
(90) days following Executive's knowledge of an event constituting Good Reason
or such event shall not constitute Good Reason under this Agreement.
(i) "Qualifying Termination" means a termination of Executive's
employment (i) by the Company other than for Cause or (ii) by Executive for Good
Reason. Termination of Executive's employment on account of death, Disability
or Retirement shall not be treated as a Qualifying Termination.
(j) "Retirement" means Executive's mandatory retirement (not including
any mandatory early retirement) in accordance with the Company's retirement
policy generally applicable to its salaried employees, as in effect immediately
prior to the Change in Control, or in accordance with any retirement arrangement
established with respect to Executive with Executive's written consent.
(k) "Subsidiary" means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities or interests of such
corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% of the assets or liquidation or dissolution.
(l) "Termination Period" means the period of time beginning with a
Change in Control and ending three (3) years following such Change in Control.
Notwithstanding anything in this Agreement to the contrary, if (i) Executive's
employment is terminated prior to a Change in Control for reasons that would
have constituted a Qualifying Termination if they had occurred following a
Change in Control; (ii) Executive reasonably demonstrates that such termination
(or Good Reason event) was at the request of a third party who had indicated an
intention or taken steps reasonably calculated to effect a Change in Control;
and (iii) a Change in Control involving such third party (or a party competing
with such third party to effectuate a Change in Control) does occur, then for
purposes of this Agreement, the date immediately prior to the date of such
termination of employment or event constituting Good Reason shall be treated as
a Change in Control. For purposes of determining the timing of payments and
benefits to Executive under Section 4, the date of the actual Change in Control
shall be treated as Executive's Date of Termination under Section 1(f).
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2. Obligation of Executive. In the event of a tender or exchange
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offer, proxy contest, or the execution of any agreement which, if consummated,
would constitute a Change in Control, Executive agrees not to voluntarily leave
the employ of the Company, other than as a result of Disability, Retirement or
an event which would constitute Good Reason if a Change in Control had occurred,
until the Change in Control occurs or, if earlier, such tender or exchange
offer, proxy contest, or agreement is terminated or abandoned.
3. Term of Agreement. This Agreement shall be effective on the date
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hereof and shall continue in effect until the first anniversary thereof;
provided, however, that the term of this Agreement shall automatically be
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extended commencing on the first anniversary hereof for successive additional
one (1) year periods unless either party gives written notice not to extend the
term not less than ninety (90) days prior to the then next upcoming expiration
date; provided, further, that notwithstanding the delivery of any such notice,
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this Agreement shall continue in effect for a period of three (3) years after a
Change in Control, if such Change in Control shall have occurred during the term
of this Agreement. Notwithstanding anything in this Section to the contrary,
this Agreement shall terminate if Executive or the Company terminates
Executive's employment prior to a Change in Control except as provided in
Section 1(l).
4. Payments Upon Termination of Employment.
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(a) Qualifying Termination. If during the Termination Period the
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employment of Executive shall terminate pursuant to a Qualifying Termination,
then the Company shall provide to Executive:
(i) within ten (10) business days following the Date of Termination a
lump-sum cash amount equal to the sum of (A) Executive's base salary
through the Date of Termination and any bonus amounts which have become
payable, to the extent not theretofore paid or deferred, (B) a pro rata
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portion of Executive's annual bonus for the fiscal year in which
Executive's Date of Termination occurs in an amount at least equal to (1)
Executive's Bonus Amount, multiplied by (2) a fraction, the numerator of
which is the number of days in the fiscal year in which the Date of
Termination occurs through the Date of Termination and the denominator of
which is three hundred sixty-five (365), and reduced by (3) any amounts
paid from the Company's annual incentive plan for the fiscal year in which
Executive's Date of Termination occurs and (C) any accrued vacation pay, in
each case to the extent not theretofore paid; plus
(ii) within ten (10) business days following the Date of Termination,
a lump-sum cash amount equal to (A) three (3) times Executive's highest
annual rate of base salary during the 12-month period immediately prior to
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Executive's Date of Termination, plus (B) three (3) times Executive's Bonus
Amount.
(b) If during the Termination Period the employment of Executive shall
terminate pursuant to a Qualifying Termination, the Company shall continue to
provide, for a period of (3) years following Executive's Date of Termination,
Executive (and Executive's dependents, if applicable) with the same level of
medical, dental, accident, disability and life insurance benefits upon
substantially the same terms and conditions (including contributions required by
Executive for such benefits) as existed immediately prior to Executive's Date of
Termination (or, if more favorable to Executive, as such benefits and terms and
conditions existed immediately prior to the Change in Control); provided, that,
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if Executive cannot continue to participate in the Company plans providing such
benefits, the Company shall otherwise provide such benefits on the same after-
tax basis as if continued participation had been permitted (the Continued
Benefits), provided, further, that such Continued Benefits shall terminate on
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the date Executive receives substantially equivalent coverage and benefits,
without waiting periods or pre-existing condition limitations, at the same or
lower costs to Executive, taking into consideration deductibles, premiums, and
co-payment requirements, under plans and programs of a subsequent employer (such
coverage, benefits and cost to be determined on a coverage-by-coverage or
benefit-by-benefit basis).
In addition, the Company shall pay to Executive, within ten (10)
business days following his Date of Termination, a lump sum payment in an amount
equal to the sum of (A) and (B), where (A) is the excess, if any, of (i) the
present value of the benefits to which Executive would be entitled under
Company's pension and retirement plans (whether or not intended to be qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the Code)
if Executive had continued in the employ of the Company for an additional three
(3) years following his Date of Termination earning during such three-year
period the rate of base salary and Bonus Amount in effect as of his Date of
Termination, over (ii) the present value of the benefit to which Executive is
actually entitled under such pension and retirement plans as of his Date of
Termination and (B) is the present value of the Company contributions that would
have been made under all Company savings programs (whether or not intended to be
qualified under Section 401(a) of the Code) if Executive had continued in the
employ of the Company for an additional three (3) years following his Date of
Termination earning during such three-year period the rate of base salary and
Bonus Amount in effect as of his Date of Termination, assuming that the Company
would have made the maximum contributions permitted under such savings programs,
and assuming, for purposes of determining the amount of any Company matching
contributions, that Executive would have contributed the amount necessary to
receive the maximum matching contributions available under such savings
programs.
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For purposes of the preceding sentence, present value shall be
determined as of the Date of Termination and shall be calculated based upon a
discount rate equal to the applicable Federal rate as provided in Section
1274(b)(2)(B) of the Code and without reduction for mortality.
(c) If during the Termination Period the employment of Executive shall
terminate other than by reason of a Qualifying Termination, then the Company
shall pay to Executive within thirty (30) days following the Date of
Termination, a lump-sum cash amount equal to the sum of (i) Executive's base
salary through the Date of Termination and any bonus amounts which have become
payable, to the extent not theretofore paid or deferred, and (ii) any accrued
vacation pay, in each case to the extent not theretofore paid.
5. Certain Additional Payments by the Company.
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(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, award, benefit or distribution
(or any acceleration of any payment, award, benefit or distribution) by the
Company (or any of its affiliated entities) or any entity which effectuates a
Change in Control (or any of its affiliated entities) to or for the benefit of
Executive (whether pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
5) (the "Payments") would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), or any interest
or penalties are incurred by Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Company shall pay to
Executive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by Executive of all taxes (including any Excise Tax) imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal
to the sum of (x) the Excise Tax imposed upon the Payments and (y) the product
of any deductions disallowed because of the inclusion of the Gross-up Payment in
Executive's adjusted gross income and the highest applicable marginal rate of
federal income taxation for the calendar year in which the Gross-up Payment is
to be made. For purposes of determining the amount of the Gross-up Payment, the
Executive shall be deemed to (i) pay federal income taxes at the highest
marginal rates of federal income taxation for the calendar year in which the
Gross-up Payment is to be made, (ii) pay applicable state and local income taxes
at the highest marginal rate of taxation for the calendar year in which the
Gross-up Payment is to be made, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes and
(iii) have otherwise allowable deductions for federal income tax purposes at
least equal to those which could be disallowed because of the inclusion of the
Gross-up Payment in the Executive's adjusted gross income.
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Notwithstanding the foregoing provisions of this Section 5(a), if it
shall be determined that Executive is entitled to a Gross-Up Payment, but that
the Payments would not be subject to the Excise Tax if the Payments were reduced
by an amount that is less than 10% of the portion of the Payments that would be
treated as "parachute payments" under Section 280G of the Code, then the amounts
payable to Executive under this Agreement shall be reduced (but not below zero)
to the maximum amount that could be paid to Executive without giving rise to the
Excise Tax (the "Safe Harbor Cap"), and no Gross-Up Payment shall be made to
Executive. The reduction of the amounts payable hereunder, if applicable, shall
be made by reducing first the payments under Section 4(a)(ii), unless an
alternative method of reduction is elected by Executive. For purposes of
reducing the Payments to the Safe Harbor Cap, only amounts payable under this
Agreement (and no other Payments) shall be reduced. If the reduction of the
amounts payable hereunder would not result in a reduction of the Payments to the
Safe Harbor Cap, no amounts payable under this Agreement shall be reduced
pursuant to this provision.
(b) Subject to the provisions of Section 5(a), all determinations
required to be made under Sections 4 and 5, including whether and when a Gross-
Up Payment is required, the amount of such Gross-Up Payment, the reduction of
the Payments to the Safe Harbor Cap and the assumptions to be utilized in
arriving at such determinations, shall be made by a nationally recognized public
accounting firm that is retained by the Company (the "Accounting Firm"). In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change in Control, Executive may
appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). The Accounting Firm shall provide detailed
supporting calculations both to the Company and Executive within fifteen (15)
business days of the receipt of notice from the Company or the Executive that
there has been a Payment, or such earlier time as is requested by the Company
(collectively, the "Determination"). All fees and expenses of the Accounting
Firm shall be borne solely by the Company and the Company shall enter into any
agreement requested by the Accounting Firm in connection with the performance of
the services hereunder. The Gross-up Payment under this Section 5 with respect
to any Payments shall be made no later than thirty (30) days following such
Payment. If the Accounting Firm determines that no Excise Tax is payable by
Executive, it shall furnish Executive with a written opinion to such effect, and
to the effect that failure to report the Excise Tax, if any, on Executive's
applicable federal income tax return will not result in the imposition of a
negligence or similar penalty. In the event the Accounting Firm determines that
the Payments shall be reduced to the Safe Harbor Cap, it shall furnish Executive
with a written opinion to such effect. The Determination by the Accounting Firm
shall be binding upon the Company and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the Determination,
it is
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possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment") or Gross-up Payments are made by the
Company which should not have been made ("Overpayment"), consistent with the
calculations required to be made hereunder. In the event that the Executive
thereafter is required to make payment of any Excise Tax or additional Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment (together with interest at the rate provided
in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to
or for the benefit of Executive. In the event the amount of the Gross-up Payment
exceeds the amount necessary to reimburse the Executive for his Excise Tax, the
Accounting Firm shall determine the amount of the Overpayment that has been made
and any such Overpayment (together with interest at the rate provided in Section
1274(b)(2) of the Code) shall be promptly paid by Executive (to the extent he
has received a refund if the applicable Excise Tax has been paid to the Internal
Revenue Service) to or for the benefit of the Company. Executive shall
cooperate, to the extent his expenses are reimbursed by the Company, with any
reasonable requests by the Company in connection with any contests or disputes
with the Internal Revenue Service in connection with the Excise Tax.
6. Confidential Information and Non-Solicitation.
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(a) Executive agrees to keep secret and retain in the strictest
confidence all Confidential Information, which relates to the Company, its
Subsidiaries and affiliates. Confidential Information (a) means information (i)
that is learned by Executive from the Company or any of its Subsidiaries or
affiliates before or after the date of this Agreement (other than Confidential
Information that was known by Executive on a nonconfidential basis prior to the
disclosure thereof), (ii) that is commercially valuable to the Company and (iii)
that is not published or of public record or otherwise generally known (other
than through failure of Executive to fully perform his obligations hereunder)
and (b) includes, without limitation, customer lists, client lists, trade
secrets, pricing policies and other business affairs of the Company, its
Subsidiaries and affiliates. Executive agrees not to disclose any such
Confidential Information to anyone outside the Company or any of its
subsidiaries or affiliates, whether during or after his period of services with
the Company, except (x) as such disclosure may be required or appropriate in
connection with his service or (y) when required to do so by a court of law, by
any governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order him to divulge, disclose or make
accessible such information. Executive agrees to give the Company advance
written notice of any disclosure pursuant to clause (y) of the preceding
sentence and to cooperate with any efforts by the Company to limit the extent of
such disclosure. Upon request by the Company, Executive agrees to deliver
promptly to the Company upon termination of his services from the Company, or at
any
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reasonable time thereafter as the Company may request, all Company, subsidiary
or affiliate memoranda, notes, records, reports, manuals, drawings, designs,
computer files in any media and other documents (and all copies thereof)
relating to the Company's or any Subsidiary's or affiliate's business and all
property of the Company or any Subsidiary or affiliate associated therewith,
which he may then possess or have under his direct control.
(b) Executive hereby covenants and agrees that, at all times during
the term of this Agreement and for a one year period following his Date of
Termination for any reason, Executive shall not employ or seek to employ any
person employed at that time by the Company or any of its Subsidiaries or its
affiliates who is engaged in or concerned with or interested in a business which
conducts the same or similar business in any way or degree in competition with
the Company, or otherwise encourage or entice such person or entity to leave
such employment.
7. Withholding Taxes. The Company may withhold from all payments
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due to Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
8. Reimbursement of Expenses. If any contest or dispute shall arise
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under this Agreement involving termination of Executive's employment with the
Company or involving the failure or refusal of the Company to perform fully in
accordance with the terms hereof, the Company shall reimburse Executive, on a
current basis, for all reasonable legal fees and expenses, if any, incurred by
Executive in connection with such contest or dispute (regardless of the result
thereof), together with interest in an amount equal to the prime rate of Bank of
America from time to time in effect, but in no event higher than the maximum
legal rate permissible under applicable law, such interest to accrue from the
date the Company receives Executive's statement for such fees and expenses
through the date of payment thereof, regardless of whether or not Executive's
claim is upheld by a court of competent jurisdiction; provided, however,
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Executive shall be required to repay any such amounts to the Company to the
extent that a court issues a final and non-appealable order setting forth the
determination that the position taken by Executive was frivolous or advanced by
Executive in bad faith.
9. Scope of Agreement. Nothing in this Agreement shall be deemed to
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entitle Executive to continued employment with the Company or its Subsidiaries,
and if Executive's employment with the Company shall terminate prior to a Change
in Control, Executive shall have no further rights under this Agreement (except
as otherwise provided hereunder); provided, however, that any termination of
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Executive's employment during the Termination Period shall be subject to all of
the provisions of this Agreement.
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10. Successors; Binding Agreement.
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(a) This Agreement shall not be terminated by any Business
Combination. In the event of any Business Combination, the provisions of this
Agreement shall be binding upon the Surviving Corporation, and such Surviving
Corporation shall be treated as the Company hereunder.
(b) The Company agrees that in connection with any Business
Combination, it will cause any successor entity to the Company unconditionally
to assume (and for any Parent Corporation in such Business Combination to
guarantee), by written instrument delivered to Executive (or his beneficiary or
estate), all of the obligations of the Company hereunder. Failure of the
Company to obtain such assumption and guarantee prior to the effectiveness of
any such Business Combination that constitutes a Change in Control, shall be a
breach of this Agreement and shall constitute Good Reason hereunder and shall
entitle Executive to compensation and other benefits from the Company in the
same amount and on the same terms as Executive would be entitled hereunder if
Executive's employment were terminated following a Change in Control by reason
of a Qualifying Termination. For purposes of implementing the foregoing, the
date on which any such Business Combination becomes effective shall be deemed
the date Good Reason occurs, and shall be the Date of Termination if requested
by Executive.
(c) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive shall die
while any amounts would be payable to Executive hereunder had Executive
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to such person or persons
appointed in writing by Executive to receive such amounts or, if no person is so
appointed, to Executive's estate.
11. Notice. (a) For purposes of this Agreement, all notices and
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other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered or five (5) days after
deposit in the United States mail, certified and return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Xxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
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If to the Company:
Global Industrial Technologies, Inc.
0000 Xxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(b) A written notice of Executive's Date of Termination by the Company
or Executive, as the case may be, to the other, shall (i) indicate the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the provision
so indicated and (iii) specify the termination date (which date shall be not
less than fifteen (15) (thirty (30), if termination is by the Company for
Disability) nor more than sixty (60) days after the giving of such notice). The
failure by Executive or the Company to set forth in such notice any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of Executive or the Company hereunder or preclude Executive or
the Company from asserting such fact or circumstance in enforcing Executive's or
the Company's rights hereunder.
12. Full Settlement. The Company's obligation to make any payments
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provided for in this Agreement and otherwise to perform its obligations
hereunder shall be in lieu and in full settlement of all other severance
payments to Executive under any other severance or employment agreement between
Executive and the Company, and any severance plan of the Company. The Company's
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against Executive or others. In no event shall Executive be obligated to seek
other employment or take other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement and, except
as provided in Section 4(b), such amounts shall not be reduced whether or not
Executive obtains other employment.
13. Employment with Subsidiaries. Employment with the Company for
----------------------------
purposes of this Agreement shall include employment with any Subsidiary.
14. Survival. The respective obligations and benefits afforded to
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the Company and Executive as provided in Sections 4 (to the extent that payments
or benefits are owed as a result of a termination of employment that occurs
during
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the term of this Agreement), 5 (to the extent that Payments are made to
Executive as a result of a Change in Control that occurs during the term of this
Agreement), 6, 7, 8, 10(c) and 12 shall survive the termination of this
Agreement.
15. GOVERNING LAW; VALIDITY. THE INTERPRETATION, CONSTRUCTION AND
-----------------------
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE
PRINCIPLE OF CONFLICTS OF LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY
PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF
ANY OTHER PROVISION OF THIS AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN
FULL FORCE AND EFFECT.
16. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
17. Miscellaneous. No provision of this Agreement may be modified or
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waived unless such modification or waiver is agreed to in writing and signed by
Executive and by a duly authorized officer of the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by Executive
or the Company to insist upon strict compliance with any provision of this
Agreement or to assert any right Executive or the Company may have hereunder,
including without limitation, the right of Executive to terminate employment for
Good Reason, shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement. Except as otherwise
specifically provided herein, the rights of, and benefits payable to, Executive,
his estate or his beneficiaries pursuant to this Agreement are in addition to
any rights of, or benefits payable to, Executive, his estate or his
beneficiaries under any other employee benefit plan or compensation program of
the Company.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer of the Company and Executive has executed
this Agreement as of the day and year first above written.
Global Industrial Technologies, Inc.
By: /s/ X. X. Xxxxxxx
-----------------
X. X. Xxxxxxx
Title: Chairman and
Chief Executive Officer
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
Title: Senior Vice President
General Counsel and Secretary
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