1
Exhibit 10.23
SEVERANCE COMPENSATION AGREEMENT
This Agreement (the "Agreement") is made as of this 2nd day of April,
1997, by and between Elek-Tek, Inc., a Delaware corporation (the "Company"),
and Xxxxxx X. Xxxxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Company desires to continue to employ Executive and Executive
is willing to continue such employment, in part upon the terms and conditions
hereinafter set forth;
WHEREAS, the Company's Board of Directors (the "Board") has determined
that it is appropriate to reinforce and encourage the continued attention and
dedication of members of the Company's management, including Executive, to
their assigned duties without distraction in potentially disturbing
circumstances arising from the possibility of a change in control of the
Company; and
WHEREAS, the parties desire to set forth the severance compensation which
the Company agrees it will pay to the Executive if the Executive's employment
with the Company terminates under one of the circumstances described herein
following a Change in Control of the Company (as defined herein).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. DEFINITIONS.
(a) Cause. "Cause" shall mean any one or more of the following:
i. engaging in a dishonest act, willful breach of
fiduciary duty, misappropriation or fraud against the Company or
any Subsidiary of the Company, or making any willful
misrepresentation to any holder of securities of the Company or
any member of the Board;
ii. any indictment or similar charge against an Executive
by a governmental office alleging the commission of a felony, or
a guilty plea or no-contest plea to a felony;
iii. repeated material failure by an Executive to follow
the Company's general policies, directives or orders applicable
to employees holding comparable positions; or
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iv. intentional destruction or theft of the Company's
property or falsification of the Company's documents.
Notwithstanding the foregoing, an Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution adopted by the affirmative vote of not
less than a majority of the members of the Company's Board who are not
employees of the Company (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's counsel, to be
heard before the Board), finding that in their opinion the Company had Cause to
terminate the Executive.
(b) Change in Control. A "Change in Control" shall be deemed to have
occurred on the first to occur (the "Effective Date") of any of the following:
i. an "acquisition" (other than directly from the Company) of
any voting securities of the Company (the "Voting
Securities") (a) by any "Person" or "Group" (as such terms are
used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")), that has
direct or indirect "Beneficial Ownership" (within the meaning of
Rule 13d-3 promulgated under the 0000 Xxx) of thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding Voting Securities immediately prior to such
acquisition, or (b) by any Person or Group that, immediately
after such acquisition, has direct or indirect Beneficial
Ownership of thirty percent (30%) or more of the combined voting
power of the Company's then outstanding Voting Securities;
ii. the individuals who, immediately prior to the Effective
Date, are members of the Board (the "Incumbent Board"), cease
for any reason to constitute at least two-thirds of the Board;
provided, however, that if the election, or nomination for
election by the Company's shareholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Agreement,
be considered as a member of the Incumbent Board; provided,
further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated
under the 0000 Xxx) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
iii. approval by shareholders of the Company of:
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(A) a merger, consolidation or reorganization involving the
Company, unless
(1) the shareholders of the Company immediately before
such merger, consolidation or reorganization, own or
will own, directly or indirectly, immediately
following such merger, consolidation or
reorganization, at least fifty-one percent (51%) of
the combined voting power of the outstanding Voting
Securities of the corporation resulting from such
merger or consolidation or reorganization (the
"Surviving Corporation") in substantially the same
proportion as their ownership of the Voting
Securities immediately before such merger,
consolidation or reorganization;
(2) the individuals who were members of the Incumbent
Board immediately prior to the execution of the
agreement providing for such merger, consolidation
or reorganization constitute at least two-thirds
of the members of the Board of Directors of the
Surviving Corporation; and
(3) no Person (other than the Company, any
Subsidiary, any employee benefit plan maintained by
the Company, the Surviving Corporation or any
Subsidiary (or any trust forming a part thereof), or
any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial
Ownership of fifteen percent (15%) or more of the
combined voting power of the Company's then
outstanding Voting Securities) has direct or indirect
Beneficial Ownership of fifteen percent (15%) or more
of the combined voting power of the Surviving
Corporation's then outstanding Voting Securities.
(B) a complete liquidation or dissolution of the Company; or
(C) an agreement for the sale or other disposition of all
or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
(c) Date of Termination. "Date of Termination" shall mean in the case of
an Executive's death, the date of death, in the case of Good Reason, the last
day of Executive's employment, and in all other cases, the date specified in
the Notice of Termination.
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(d) Disability. "Disability" shall occur if as a result of an Executive's
incapacity due to physical or mental illness, Executive shall have been absent
from the full-time performance of his or her duties with the Company for three
(3) consecutive months.
(e) Good Reason. "Good Reason" shall mean any one or more of the following
(without the Executive's express written consent):
i. a relocation of the Executive's principal place of
employment outside the Chicago metropolitan area, other than for
reasonably required travel on the business of the Company or a
Subsidiary of the Company;
ii. a material reduction in the Executive's base or
aggregate compensation, other than a general reduction
applicable to all or substantially all of the executive
employees of the Company or its Subsidiaries;
iii. a change in the Executive's status, title, position
or responsibilities (including reporting responsibilities) which
represents an adverse change from the Executive's prior status,
title, position or responsibilities; or
iv. the purported termination of the Executive for Cause
which does not comply with the terms of Section 1(a) hereof.
(f) Notice of Termination. Any termination by the Company shall be
communicated by a Notice of Termination. A "Notice of Termination" shall mean
a written notice which, if termination is for Cause or Disability, shall
indicate those specific termination provisions in this Agreement relied upon
and set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. No purported termination by the Company following a
Change in Control shall be effective without such Notice of Termination.
(g) Retirement. For purposes of this Agreement, "Retirement" shall mean
termination of the Executive's employment after the Executive has attained age
65.
(h) Subsidiary. For purposes of this Agreement, "Subsidiary" shall mean
any corporation, partnership, limited liability company, joint venture or other
entity in which another corporation, partnership, limited liability company,
joint venture or other entity (i) owns, or at any relevant time owned, directly
or indirectly, 50% or more of the outstanding voting securities or equity
interests or (ii) is a general partner.
2. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT.
(a) If, upon the first Change in Control of the Company following the
execution of this Agreement, (i) during the twelve month period thereafter, the
Company shall terminate the
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Executive's employment other than for Cause, Disability, Retirement or on
account of the Executive's death; or (ii) during the first six month period
thereafter, the Executive shall terminate employment for Good Reason; or (iii)
during the second six month period thereafter, the Executive shall terminate
employment for any reason, then:
(x) the Company shall pay to the Executive severance compensation
equal to the Executive's annual base salary in effect immediately prior to
the Change in Control, which compensation shall be payable in one lump sum
amount, subject to tax withholding, on or before the fifteenth day
following the Date of Termination; provided, however, that the Company
shall have no obligation to make any payments under this Agreement to the
Executive unless and until it shall receive from such Executive a full and
complete release of any and all liabilities, except for those provided
under this Agreement, in a form acceptable to the Company; and
(y) all stock options held by the Executive, without any further
action, shall be automatically exercisable in full, notwithstanding any
provisions to the contrary in Section 1 of the Elek-Tek, Inc. 1993
Incentive Stock Option Plan Incentive Stock Option Agreement dated April
22, 1996 between the Company and the Executive, which are hereby amended
to permit such exercise.
(b) An Executive's entitlement to any other compensation or benefits shall
be determined in accordance with the Company's employee benefit plans and other
applicable programs, policies and practices then in effect. The provisions of
this Agreement, and any payment provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish an Executive's existing
rights, or rights which accrue solely as a result of the passage of time, under
any benefit plan, stock option plan, employment agreement or other contract,
plan or arrangement.
(c) Notwithstanding anything contained in this Agreement to the contrary,
if an Executive's employment is terminated prior to a Change in Control and the
Executive reasonably demonstrates that such termination (i) 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 who effectuates a Change in
Control or (ii) otherwise occurred in connection with, or in anticipation of, a
Change in Control which actually occurs, then for all purposes of this
Agreement, the date of a Change in Control with respect to the Executive shall
mean the date immediately prior to the date of such termination of the
Executive's employment.
(d) Nothing in this Agreement limits or restricts in any way the right of
the Company to terminate an Executive's employment with the Company with or
without cause.
3. NO OBLIGATION TO MITIGATE DAMAGES. The Executive shall not be required
to mitigate damages or the amount of any payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the amount of any
payment provided for under this
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Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or otherwise.
4. SUCCESSOR TO THE COMPANY.
(a) The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, absolutely and
unconditionally to assume 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 or assignment had taken place. Any failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession or assignment shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined which executes and delivers the agreement or assumption provided for in
this Section 4 or which otherwise becomes bound by all terms and provisions of
this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive
should die while any amounts are still payable to him 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, or other designee
or, if there be no such designee, to the Executive's estate.
5. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
Secretary
Elek-Tek, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
If to the Executive:
Xxxxxx X. Xxxxxxxx
0000 X. Xxxxxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
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or 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.
6. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees and
expenses which the Executive may incur if the Executive prevails in collecting
any amount under this Agreement which has been contested by the Company. The
parties may agree in advance as to amounts which are not contested, and any
amount which the Company shall offer to pay to the Executive in settlement of
any claim shall be deemed to be a non-contested amount.
7. CONFIDENTIALITY. The Executive shall retain in confidence any and all
confidential information known to the Executive concerning the Company and its
business so long as such information is not publicly disclosed.
8. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and 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. 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. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.
9. VALIDITY. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ELEK-TEK, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
--------------------------------------
Xxxxxx X. Xxxxxxxx
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SEVERANCE COMPENSATION AGREEMENT
This Agreement (the "Agreement") is made as of this 2nd day of April,
1997, by and between Elek-Tek, Inc., a Delaware corporation (the "Company"),
and Xxxxx X. Xxxxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Company desires to continue to employ Executive and Executive
is willing to continue such employment, in part upon the terms and conditions
hereinafter set forth;
WHEREAS, the Company's Board of Directors (the "Board") has determined
that it is appropriate to reinforce and encourage the continued attention and
dedication of members of the Company's management, including Executive, to
their assigned duties without distraction in potentially disturbing
circumstances arising from the possibility of a change in control of the
Company; and
WHEREAS, the parties desire to set forth the severance compensation which
the Company agrees it will pay to the Executive if the Executive's employment
with the Company terminates under one of the circumstances described herein
following a Change in Control of the Company (as defined herein).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. DEFINITIONS.
(a) Cause. "Cause" shall mean any one or more of the following:
i. engaging in a dishonest act, willful breach of
fiduciary duty, misappropriation or fraud against the Company or
any Subsidiary of the Company, or making any willful
misrepresentation to any holder of securities of the Company or
any member of the Board;
ii. any indictment or similar charge against an Executive
by a governmental office alleging the commission of a felony, or
a guilty plea or no-contest plea to a felony;
iii. repeated material failure by an Executive to follow
the Company's general policies, directives or orders applicable
to employees holding comparable positions; or
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iv. intentional destruction or theft of the Company's
property or falsification of the Company's documents.
Notwithstanding the foregoing, an Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution adopted by the affirmative vote of not
less than a majority of the members of the Company's Board who are not
employees of the Company (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's counsel, to be
heard before the Board), finding that in their opinion the Company had Cause to
terminate the Executive.
(b) Change in Control. A "Change in Control" shall be deemed to have
occurred on the first to occur (the "Effective Date") of any of the following:
i. an "acquisition" (other than directly from the Company) of
any voting securities of the Company (the "Voting
Securities") (a) by any "Person" or "Group" (as such terms are
used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")), that has
direct or indirect "Beneficial Ownership" (within the meaning of
Rule 13d-3 promulgated under the 0000 Xxx) of thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding Voting Securities immediately prior to such
acquisition, or (b) by any Person or Group that, immediately
after such acquisition, has direct or indirect Beneficial
Ownership of thirty percent (30%) or more of the combined voting
power of the Company's then outstanding Voting Securities;
ii. the individuals who, immediately prior to the Effective
Date, are members of the Board (the "Incumbent Board"), cease
for any reason to constitute at least two-thirds of the Board;
provided, however, that if the election, or nomination for
election by the Company's shareholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Agreement,
be considered as a member of the Incumbent Board; provided,
further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated
under the 0000 Xxx) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
iii. approval by shareholders of the Company of:
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(A) a merger, consolidation or reorganization involving the
Company, unless
(1) the shareholders of the Company immediately
before such merger, consolidation or
reorganization, own or will own, directly or
indirectly, immediately following such merger,
consolidation or reorganization, at least fifty-one
percent (51%) of the combined voting power of the
outstanding Voting Securities of the corporation
resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership
of the Voting Securities immediately before such
merger, consolidation or reorganization;
(2) the individuals who were members of the
Incumbent Board immediately prior to the
execution of the agreement providing for such merger,
consolidation or reorganization constitute at least
two-thirds of the members of the Board of Directors
of the Surviving Corporation; and
(3) no Person (other than the Company, any
Subsidiary, any employee benefit plan maintained by
the Company, the Surviving Corporation or any
Subsidiary (or any trust forming a part
thereof), or any Person who, immediately prior to
such merger, consolidation or reorganization had
Beneficial Ownership of fifteen percent (15%) or more
of the combined voting power of the Company's then
outstanding Voting Securities) has direct or indirect
Beneficial Ownership of fifteen percent (15%) or more
of the combined voting power of the Surviving
Corporation's then outstanding Voting Securities.
(B) a complete liquidation or dissolution of the Company; or
(C) an agreement for the sale or other disposition of all
or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
(c) Date of Termination. "Date of Termination" shall mean in the case of
an Executive's death, the date of death, in the case of Good Reason, the last
day of Executive's employment, and in all other cases, the date specified in
the Notice of Termination.
(d) Disability. "Disability" shall occur if as a result of an Executive's
incapacity due to physical or mental illness, Executive shall have been absent
from the full-time performance
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of his or her duties with the Company for three (3) consecutive months.
(e) Good Reason. "Good Reason" shall mean any one or more of the following
(without the Executive's express written consent):
i. a relocation of the Executive's principal place of
employment outside the Chicago metropolitan area, other than for
reasonably required travel on the business of the Company or a
Subsidiary of the Company;
ii. a material reduction in the Executive's base or
aggregate compensation, other than a general reduction
applicable to all or substantially all of the executive
employees of the Company or its Subsidiaries;
iii. a change in the Executive's status, title, position
or responsibilities (including reporting responsibilities) which
represents an adverse change from the Executive's prior status,
title, position or responsibilities; or
iv. the purported termination of the Executive for Cause
which does not comply with the terms of Section 1(a) hereof.
(f) Notice of Termination. Any termination by the Company shall be
communicated by a Notice of Termination. A "Notice of Termination" shall mean
a written notice which, if termination is for Cause or Disability, shall
indicate those specific termination provisions in this Agreement relied upon
and set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. No purported termination by the Company following a
Change in Control shall be effective without such Notice of Termination.
(g) Retirement. For purposes of this Agreement, "Retirement" shall mean
termination of the Executive's employment after the Executive has attained age
65.
(h) Subsidiary. For purposes of this Agreement, "Subsidiary" shall mean
any corporation, partnership, limited liability company, joint venture or other
entity in which another corporation, partnership, limited liability company,
joint venture or other entity (i) owns, or at any relevant time owned, directly
or indirectly, 50% or more of the outstanding voting securities or equity
interests or (ii) is a general partner.
2. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT.
(a) If, upon the first Change in Control of the Company following the
execution of this Agreement, (i) during the twelve month period thereafter, the
Company shall terminate the Executive's employment other than for Cause,
Disability, Retirement or on account of the Executive's death; or (ii) during
the first six month period thereafter, the Executive shall
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terminate employment for Good Reason; or (iii) during the second six month
period thereafter, the Executive shall terminate employment for any reason,
then:
(x) the Company shall pay to the Executive severance compensation
equal to the Executive's annual base salary in effect immediately prior to
the Change in Control, which compensation shall be payable in one lump sum
amount, subject to tax withholding, on or before the fifteenth day
following the Date of Termination; provided, however, that the
Company shall have no obligation to make any payments under this Agreement
to the Executive unless and until it shall receive from such Executive a
full and complete release of any and all liabilities, except for those
provided under this Agreement, in a form acceptable to the Company; and
(y) all stock options held by the Executive, without any further
action, shall be automatically exercisable in full, notwithstanding any
provisions to the contrary in Section 1 of the Elek-Tek, Inc. 1993
Incentive Stock Option Plan Incentive Stock Option Agreement dated April
22, 1996 between the Company and the Executive, which are hereby amended
to permit such exercise.
(b) An Executive's entitlement to any other compensation or benefits shall
be determined in accordance with the Company's employee benefit plans and other
applicable programs, policies and practices then in effect. The provisions of
this Agreement, and any payment provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish an Executive's existing
rights, or rights which accrue solely as a result of the passage of time, under
any benefit plan, stock option plan, employment agreement or other contract,
plan or arrangement.
(c) Notwithstanding anything contained in this Agreement to the contrary,
if an Executive's employment is terminated prior to a Change in Control and the
Executive reasonably demonstrates that such termination (i) 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 who effectuates a Change in
Control or (ii) otherwise occurred in connection with, or in anticipation of, a
Change in Control which actually occurs, then for all purposes of this
Agreement, the date of a Change in Control with respect to the Executive shall
mean the date immediately prior to the date of such termination of the
Executive's employment.
(d) Nothing in this Agreement limits or restricts in any way the right of
the Company to terminate an Executive's employment with the Company with or
without cause.
3. NO OBLIGATION TO MITIGATE DAMAGES. The Executive shall not be required
to mitigate damages or the amount of any payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the amount of any
payment provided for under this Agreement be reduced by any compensation earned
by the Executive as the result of employment by another employer after the Date
of Termination, or otherwise.
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4. SUCCESSOR TO THE COMPANY.
(a) The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, absolutely and
unconditionally to assume 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 or assignment had taken place. Any failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession or assignment shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined which executes and delivers the agreement or assumption provided for in
this Section 4 or which otherwise becomes bound by all terms and provisions of
this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive
should die while any amounts are still payable to him 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, or other designee
or, if there be no such designee, to the Executive's estate.
5. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
Secretary
Elek-Tek, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
If to the Executive:
Xxxxx X. Xxxxxxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
or 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.
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6. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees and
expenses which the Executive may incur if the Executive prevails in collecting
any amount under this Agreement which has been contested by the Company. The
parties may agree in advance as to amounts which are not contested, and any
amount which the Company shall offer to pay to the Executive in settlement of
any claim shall be deemed to be a non-contested amount.
7. CONFIDENTIALITY. The Executive shall retain in confidence any and all
confidential information known to the Executive concerning the Company and its
business so long as such information is not publicly disclosed.
8. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and 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. 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. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.
9. VALIDITY. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ELEK-TEK, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
--------------------------------------
Xxxxx X. Xxxxxxxx
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SEVERANCE COMPENSATION AGREEMENT
This Agreement (the "Agreement") is made as of this 2nd day of April,
1997, by and between Elek-Tek, Inc., a Delaware corporation (the "Company"),
and Xxxxx X. Xxxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Company desires to continue to employ Executive and Executive
is willing to continue such employment, in part upon the terms and conditions
hereinafter set forth;
WHEREAS, the Company's Board of Directors (the "Board") has determined
that it is appropriate to reinforce and encourage the continued attention and
dedication of members of the Company's management, including Executive, to
their assigned duties without distraction in potentially disturbing
circumstances arising from the possibility of a change in control of the
Company; and
WHEREAS, the parties desire to set forth the severance compensation which
the Company agrees it will pay to the Executive if the Executive's employment
with the Company terminates under one of the circumstances described herein
following a Change in Control of the Company (as defined herein).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. DEFINITIONS.
(a) Cause. "Cause" shall mean any one or more of the following:
i. engaging in a dishonest act, willful breach of
fiduciary duty, misappropriation or fraud against the Company or
any Subsidiary of the Company, or making any willful
misrepresentation to any holder of securities of the Company or
any member of the Board;
ii. any indictment or similar charge against an Executive
by a governmental office alleging the commission of a felony, or
a guilty plea or no-contest plea to a felony;
iii. repeated material failure by an Executive to follow
the Company's general policies, directives or orders applicable
to employees holding comparable positions; or
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16
iv. intentional destruction or theft of the Company's
property or falsification of the Company's documents.
Notwithstanding the foregoing, an Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution adopted by the affirmative vote of not
less than a majority of the members of the Company's Board who are not
employees of the Company (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's counsel, to be
heard before the Board), finding that in their opinion the Company had Cause to
terminate the Executive.
(b) Change in Control. A "Change in Control" shall be deemed to have
occurred on the first to occur (the "Effective Date") of any of the following:
i. an "acquisition" (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") (a) by any "Person" or "Group" (as such terms are
used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")), that has
direct or indirect "Beneficial Ownership" (within the meaning of
Rule 13d-3 promulgated under the 0000 Xxx) of thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding Voting Securities immediately prior to such
acquisition, or (b) by any Person or Group that, immediately
after such acquisition, has direct or indirect Beneficial
Ownership of thirty percent (30%) or more of the combined voting
power of the Company's then outstanding Voting Securities;
ii. the individuals who, immediately prior to the
Effective Date, are members of the Board (the "Incumbent
Board"), cease for any reason to constitute at least two-thirds
of the Board; provided, however, that if the election, or
nomination for election by the Company's shareholders, of any
new director was approved by a vote of at least two-thirds of
the Incumbent Board, such new director shall, for purposes of
this Agreement, be considered as a member of the Incumbent
Board; provided, further, however, that no individual shall be
considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 0000 Xxx) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board (a "Proxy Contest") including by reason of
any agreement intended to avoid or settle any Election Contest
or Proxy Contest; or
iii. approval by shareholders of the Company of:
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17
(A) a merger, consolidation or reorganization involving the
Company, unless
(1) the shareholders of the Company immediately
before such merger, consolidation or reorganization,
own or will own, directly or indirectly, immediately
following such merger, consolidation or
reorganization, at least fifty-one percent (51%) of
the combined voting power of the outstanding Voting
Securities of the corporation resulting from such
merger or consolidation or reorganization (the
"Surviving Corporation") in substantially the same
proportion as their ownership of the Voting
Securities immediately before such merger,
consolidation or reorganization;
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution
of the agreement providing for such merger,
consolidation or reorganization constitute at least
two-thirds of the members of the Board of Directors
of the Surviving Corporation; and
(3) no Person (other than the Company, any
Subsidiary, any employee benefit plan maintained by
the Company, the Surviving Corporation or any
Subsidiary (or any trust forming a part thereof), or
any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial
Ownership of fifteen percent (15%) or more of the
combined voting power of the Company's then
outstanding Voting Securities) has direct or indirect
Beneficial Ownership of fifteen percent (15%) or more
of the combined voting power of the Surviving
Corporation's then outstanding Voting Securities.
(B) a complete liquidation or dissolution of the Company; or
(C) an agreement for the sale or other disposition of all
or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
(c) Date of Termination. "Date of Termination" shall mean in the case of
an Executive's death, the date of death, in the case of Good Reason, the last
day of Executive's employment, and in all other cases, the date specified in
the Notice of Termination.
(d) Disability. "Disability" shall occur if as a result of an Executive's
incapacity due to physical or mental illness, Executive shall have been absent
from the full-time performance
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of his or her duties with the Company for three (3) consecutive months.
(e) Good Reason. "Good Reason" shall mean any one or more of the following
(without the Executive's express written consent):
i. a relocation of the Executive's principal place of
employment outside the Chicago metropolitan area, other than for
reasonably required travel on the business of the Company or a
Subsidiary of the Company;
ii. a material reduction in the Executive's base or
aggregate compensation, other than a general reduction
applicable to all or substantially all of the executive
employees of the Company or its Subsidiaries;
iii. a change in the Executive's status, title, position
or responsibilities (including reporting responsibilities) which
represents an adverse change from the Executive's prior status,
title, position or responsibilities; or
iv. the purported termination of the Executive for Cause
which does not comply with the terms of Section 1(a) hereof.
(f) Notice of Termination. Any termination by the Company shall be
communicated by a Notice of Termination. A "Notice of Termination" shall mean
a written notice which, if termination is for Cause or Disability, shall
indicate those specific termination provisions in this Agreement relied upon
and set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. No purported termination by the Company following a
Change in Control shall be effective without such Notice of Termination.
(g) Retirement. For purposes of this Agreement, "Retirement" shall mean
termination of the Executive's employment after the Executive has attained age
65.
(h) Subsidiary. For purposes of this Agreement, "Subsidiary" shall mean
any corporation, partnership, limited liability company, joint venture or other
entity in which another corporation, partnership, limited liability company,
joint venture or other entity (i) owns, or at any relevant time owned, directly
or indirectly, 50% or more of the outstanding voting securities or equity
interests or (ii) is a general partner.
2. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT.
(a) If, upon the first Change in Control of the Company following the
execution of this Agreement, (i) during the twelve month period thereafter, the
Company shall terminate the Executive's employment other than for Cause,
Disability, Retirement or on account of the Executive's death; or (ii) during
the first six month period thereafter, the Executive shall
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19
terminate employment for Good Reason; or (iii) during the second six month
period thereafter, the Executive shall terminate employment for any reason,
then:
(x) the Company shall pay to the Executive severance compensation
equal to the Executive's annual base salary in effect immediately prior to
the Change in Control, which compensation shall be payable in one lump sum
amount, subject to tax withholding, on or before the fifteenth day
following the Date of Termination; provided, however, that the Company
shall have no obligation to make any payments under this Agreement to the
Executive unless and until it shall receive from such Executive a full and
complete release of any and all liabilities, except for those provided
under this Agreement, in a form acceptable to the Company; and
(y) all stock options held by the Executive, without any further
action, shall be automatically exercisable in full, notwithstanding any
provisions to the contrary in Section 1 of the Elek-Tek, Inc. 1993
Incentive Stock Option Plan Incentive Stock Option Agreement dated April
22, 1996 between the Company and the Executive, which are hereby amended
to permit such exercise.
(b) An Executive's entitlement to any other compensation or benefits shall
be determined in accordance with the Company's employee benefit plans and other
applicable programs, policies and practices then in effect. The provisions of
this Agreement, and any payment provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish an Executive's existing
rights, or rights which accrue solely as a result of the passage of time, under
any benefit plan, stock option plan, employment agreement or other contract,
plan or arrangement.
(c) Notwithstanding anything contained in this Agreement to the contrary,
if an Executive's employment is terminated prior to a Change in Control and the
Executive reasonably demonstrates that such termination (i) 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 who effectuates a Change in
Control or (ii) otherwise occurred in connection with, or in anticipation of, a
Change in Control which actually occurs, then for all purposes of this
Agreement, the date of a Change in Control with respect to the Executive shall
mean the date immediately prior to the date of such termination of the
Executive's employment.
(d) Nothing in this Agreement limits or restricts in any way the right of
the Company to terminate an Executive's employment with the Company with or
without cause.
3. NO OBLIGATION TO MITIGATE DAMAGES. The Executive shall not be required
to mitigate damages or the amount of any payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the amount of any
payment provided for under this Agreement be reduced by any compensation earned
by the Executive as the result of employment by another employer after the Date
of Termination, or otherwise.
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4. SUCCESSOR TO THE COMPANY.
(a) The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, absolutely and
unconditionally to assume 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 or assignment had taken place. Any failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession or assignment shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined which executes and delivers the agreement or assumption provided for in
this Section 4 or which otherwise becomes bound by all terms and provisions of
this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive
should die while any amounts are still payable to him 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, or other designee
or, if there be no such designee, to the Executive's estate.
5. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
Secretary
Elek-Tek, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
If to the Executive:
Xxxxx X. Xxxxxxx
0 Xxx Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
or 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.
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21
6. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees and
expenses which the Executive may incur if the Executive prevails in collecting
any amount under this Agreement which has been contested by the Company. The
parties may agree in advance as to amounts which are not contested, and any
amount which the Company shall offer to pay to the Executive in settlement of
any claim shall be deemed to be a non-contested amount.
7. CONFIDENTIALITY. The Executive shall retain in confidence any and all
confidential information known to the Executive concerning the Company and its
business so long as such information is not publicly disclosed.
8. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and 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. 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. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.
9. VALIDITY. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ELEK-TEK, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
---------------------------------------
Xxxxx X. Xxxxxxx
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22
SEVERANCE COMPENSATION AGREEMENT
This Agreement (the "Agreement") is made as of this 2nd day of April,
1997, by and between Elek-Tek, Inc., a Delaware corporation (the "Company"),
and Xxxx X. XxXxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Company desires to continue to employ Executive and Executive
is willing to continue such employment, in part upon the terms and conditions
hereinafter set forth;
WHEREAS, the Company's Board of Directors (the "Board") has determined
that it is appropriate to reinforce and encourage the continued attention and
dedication of members of the Company's management, including Executive, to
their assigned duties without distraction in potentially disturbing
circumstances arising from the possibility of a change in control of the
Company; and
WHEREAS, the parties desire to set forth the severance compensation which
the Company agrees it will pay to the Executive if the Executive's employment
with the Company terminates under one of the circumstances described herein
following a Change in Control of the Company (as defined herein).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. DEFINITIONS.
(a) Cause. "Cause" shall mean any one or more of the following:
i. engaging in a dishonest act, willful breach of fiduciary
duty, misappropriation or fraud against the Company or any
Subsidiary of the Company, or making any willful
misrepresentation to any holder of securities of the Company or
any member of the Board;
ii. any indictment or similar charge against an Executive by a
governmental office alleging the commission of a felony, or a
guilty plea or no-contest plea to a felony;
iii. repeated material failure by an Executive to follow the
Company's general policies, directives or orders applicable to
employees holding comparable positions; or
22
23
iv. intentional destruction or theft of the Company's
property or falsification of the Company's documents.
Notwithstanding the foregoing, an Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution adopted by the affirmative vote of not
less than a majority of the members of the Company's Board who are not
employees of the Company (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's counsel, to be
heard before the Board), finding that in their opinion the Company had Cause to
terminate the Executive.
(b) Change in Control. A "Change in Control" shall be deemed to have
occurred on the first to occur (the "Effective Date") of any of the following:
i. an "acquisition" (other than directly from the Company) of
any voting securities of the Company (the "Voting
Securities") (a) by any "Person" or "Group" (as such terms are
used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")), that has
direct or indirect "Beneficial Ownership" (within the meaning of
Rule 13d-3 promulgated under the 0000 Xxx) of thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding Voting Securities immediately prior to such
acquisition, or (b) by any Person or Group that, immediately
after such acquisition, has direct or indirect Beneficial
Ownership of thirty percent (30%) or more of the combined voting
power of the Company's then outstanding Voting Securities;
ii. the individuals who, immediately prior to the Effective
Date, are members of the Board (the "Incumbent Board"), cease
for any reason to constitute at least two-thirds of the Board;
provided, however, that if the election, or nomination for
election by the Company's shareholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Agreement,
be considered as a member of the Incumbent Board; provided,
further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated
under the 0000 Xxx) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
iii. approval by shareholders of the Company of:
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24
(A) a merger, consolidation or reorganization involving the
Company, unless
(1) the shareholders of the Company immediately
before such merger, consolidation or reorganization,
own or will own, directly or indirectly, immediately
following such merger, consolidation or
reorganization, at least fifty-one percent (51%) of
the combined voting power of the outstanding Voting
Securities of the corporation resulting from such
merger or consolidation or reorganization (the
"Surviving Corporation") in substantially the same
proportion as their ownership of the Voting
Securities immediately before such merger,
consolidation or reorganization;
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution of
the agreement providing for such merger,
consolidation or reorganization constitute at least
two-thirds of the members of the Board of Directors
of the Surviving Corporation; and
(3) no Person (other than the Company, any
Subsidiary, any employee benefit plan maintained by
the Company, the Surviving Corporation or any
Subsidiary (or any trust forming a part thereof), or
any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial
Ownership of fifteen percent (15%) or more of the
combined voting power of the Company's then
outstanding Voting Securities) has direct or indirect
Beneficial Ownership of fifteen percent (15%) or more
of the combined voting power of the Surviving
Corporation's then outstanding Voting Securities.
(B) a complete liquidation or dissolution of the Company; or
(C) an agreement for the sale or other disposition of
all or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
(c) Date of Termination. "Date of Termination" shall mean in the case of
an Executive's death, the date of death, in the case of Good Reason, the last
day of Executive's employment, and in all other cases, the date specified in
the Notice of Termination.
(d) Disability. "Disability" shall occur if as a result of an Executive's
incapacity due to physical or mental illness, Executive shall have been absent
from the full-time performance
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25
of his or her duties with the Company for three (3) consecutive months.
(e) Good Reason. "Good Reason" shall mean any one or more of the following
(without the Executive's express written consent):
i. a relocation of the Executive's principal place of
employment outside the Chicago metropolitan area, other than for
reasonably required travel on the business of the Company or a
Subsidiary of the Company;
ii. a material reduction in the Executive's base or
aggregate compensation, other than a general reduction
applicable to all or substantially all of the executive
employees of the Company or its Subsidiaries;
iii. a change in the Executive's status, title, position
or responsibilities (including reporting responsibilities) which
represents an adverse change from the Executive's prior status,
title, position or responsibilities; or
iv. the purported termination of the Executive for Cause
which does not comply with the terms of Section 1(a) hereof.
(f) Notice of Termination. Any termination by the Company shall be
communicated by a Notice of Termination. A "Notice of Termination" shall mean
a written notice which, if termination is for Cause or Disability, shall
indicate those specific termination provisions in this Agreement relied upon
and set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. No purported termination by the Company following a
Change in Control shall be effective without such Notice of Termination.
(g) Retirement. For purposes of this Agreement, "Retirement" shall mean
termination of the Executive's employment after the Executive has attained age
65.
(h) Subsidiary. For purposes of this Agreement, "Subsidiary" shall mean
any corporation, partnership, limited liability company, joint venture or other
entity in which another corporation, partnership, limited liability company,
joint venture or other entity (i) owns, or at any relevant time owned, directly
or indirectly, 50% or more of the outstanding voting securities or equity
interests or (ii) is a general partner.
2. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT.
(a) If, upon the first Change in Control of the Company following the
execution of this Agreement, (i) during the twelve month period thereafter, the
Company shall terminate the Executive's employment other than for Cause,
Disability, Retirement or on account of the Executive's death; or (ii) during
the first six month period thereafter, the Executive shall
25
26
terminate employment for Good Reason; or (iii) during the second six month
period thereafter, the Executive shall terminate employment for any reason,
then:
(x) the Company shall pay to the Executive severance compensation
equal to the Executive's annual base salary in effect immediately prior to
the Change in Control, which compensation shall be payable in one lump sum
amount, subject to tax withholding, on or before the fifteenth day
following the Date of Termination; provided, however, that the Company
shall have no obligation to make any payments under this Agreement to the
Executive unless and until it shall receive from such Executive a full and
complete release of any and all liabilities, except for those provided
under this Agreement, in a form acceptable to the Company; and
(y) all stock options held by the Executive, without any further
action, shall be automatically exercisable in full, notwithstanding any
provisions to the contrary in Section 1 of the Elek-Tek, Inc. 1993
Incentive Stock Option Plan Incentive Stock Option Agreement dated April
22, 1996 between the Company and the Executive, which are hereby amended
to permit such exercise.
(b) An Executive's entitlement to any other compensation or benefits shall
be determined in accordance with the Company's employee benefit plans and other
applicable programs, policies and practices then in effect. The provisions of
this Agreement, and any payment provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish an Executive's existing
rights, or rights which accrue solely as a result of the passage of time, under
any benefit plan, stock option plan, employment agreement or other contract,
plan or arrangement.
(c) Notwithstanding anything contained in this Agreement to the contrary,
if an Executive's employment is terminated prior to a Change in Control and the
Executive reasonably demonstrates that such termination (i) 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 who effectuates a Change in
Control or (ii) otherwise occurred in connection with, or in anticipation of, a
Change in Control which actually occurs, then for all purposes of this
Agreement, the date of a Change in Control with respect to the Executive shall
mean the date immediately prior to the date of such termination of the
Executive's employment.
(d) Nothing in this Agreement limits or restricts in any way the right of
the Company to terminate an Executive's employment with the Company with or
without cause.
3. NO OBLIGATION TO MITIGATE DAMAGES. The Executive shall not be required
to mitigate damages or the amount of any payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the amount of any
payment provided for under this Agreement be reduced by any compensation earned
by the Executive as the result of employment by another employer after the Date
of Termination, or otherwise.
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27
4. SUCCESSOR TO THE COMPANY.
(a) The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, absolutely and
unconditionally to assume 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 or assignment had taken place. Any failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession or assignment shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined which executes and delivers the agreement or assumption provided for in
this Section 4 or which otherwise becomes bound by all terms and provisions of
this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive
should die while any amounts are still payable to him 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, or other designee
or, if there be no such designee, to the Executive's estate.
5. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
Secretary
Elek-Tek, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
If to the Executive:
Xxxx X. XxXxxxxx
000 Xxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
or 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.
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28
6. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees and
expenses which the Executive may incur if the Executive prevails in collecting
any amount under this Agreement which has been contested by the Company. The
parties may agree in advance as to amounts which are not contested, and any
amount which the Company shall offer to pay to the Executive in settlement of
any claim shall be deemed to be a non-contested amount.
7. CONFIDENTIALITY. The Executive shall retain in confidence any and all
confidential information known to the Executive concerning the Company and its
business so long as such information is not publicly disclosed.
8. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and 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. 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. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.
9. VALIDITY. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ELEK-TEK, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
--------------------------------------
Xxxx X. XxXxxxxx
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29
SEVERANCE COMPENSATION AGREEMENT
This Agreement (the "Agreement") is made as of this 2nd day of April,
1997, by and between Elek-Tek, Inc., a Delaware corporation (the "Company"),
and Xxxxx X. Xxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Company desires to continue to employ Executive and Executive
is willing to continue such employment, in part upon the terms and conditions
hereinafter set forth;
WHEREAS, the Company's Board of Directors (the "Board") has determined
that it is appropriate to reinforce and encourage the continued attention and
dedication of members of the Company's management, including Executive, to
their assigned duties without distraction in potentially disturbing
circumstances arising from the possibility of a change in control of the
Company; and
WHEREAS, the parties desire to set forth the severance compensation which
the Company agrees it will pay to the Executive if the Executive's employment
with the Company terminates under one of the circumstances described herein
following a Change in Control of the Company (as defined herein).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. DEFINITIONS.
(a) Cause. "Cause" shall mean any one or more of the following:
i. engaging in a dishonest act, willful breach of
fiduciary duty, misappropriation or fraud against the Company or
any Subsidiary of the Company, or making any willful
misrepresentation to any holder of securities of the Company or
any member of the Board;
ii. any indictment or similar charge against an Executive
by a governmental office alleging the commission of a felony, or
a guilty plea or no-contest plea to a felony;
iii. repeated material failure by an Executive to follow
the Company's general policies, directives or orders applicable
to employees holding comparable positions; or
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30
iv. intentional destruction or theft of the Company's
property or falsification of the Company's documents.
Notwithstanding the foregoing, an Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution adopted by the affirmative vote of not
less than a majority of the members of the Company's Board who are not
employees of the Company (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's counsel, to be
heard before the Board), finding that in their opinion the Company had Cause to
terminate the Executive.
(b) Change in Control. A "Change in Control" shall be deemed to have
occurred on the first to occur (the "Effective Date") of any of the following:
i. an "acquisition" (other than directly from the Company) of
any voting securities of the Company (the "Voting
Securities") (a) by any "Person" or "Group" (as such terms
are used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")),
that has direct or indirect "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the 0000 Xxx) of thirty
percent (30%) or more of the combined voting power of the
Company's then outstanding Voting Securities immediately prior
to such acquisition, or (b) by any Person or Group that,
immediately after such acquisition, has direct or indirect
Beneficial Ownership of thirty percent (30%) or more of the
combined voting power of the Company's then outstanding Voting
Securities;
ii. the individuals who, immediately prior to the Effective
Date, are members of the Board (the "Incumbent Board"), cease
for any reason to constitute at least two-thirds of the Board;
provided, however, that if the election, or nomination for
election by the Company's shareholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Agreement,
be considered as a member of the Incumbent Board; provided,
further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated
under the 0000 Xxx) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
iii. approval by shareholders of the Company of:
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(A) a merger, consolidation or reorganization involving the
Company, unless
(1) the shareholders of the Company immediately
before such merger, consolidation or reorganization,
own or will own, directly or indirectly, immediately
following such merger, consolidation or
reorganization, at least fifty-one percent (51%) of
the combined voting power of the outstanding Voting
Securities of the corporation resulting from such
merger or consolidation or reorganization (the
"Surviving Corporation") in substantially the same
proportion as their ownership of the Voting
Securities immediately before such merger,
consolidation or reorganization;
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution
of the agreement providing for such merger,
consolidation or reorganization constitute at least
two-thirds of the members of the Board of Directors
of the Surviving Corporation; and
(3) no Person (other than the Company, any
Subsidiary, any employee benefit plan maintained by
the Company, the Surviving Corporation or any
Subsidiary (or any trust forming a part thereof), or
any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial
Ownership of fifteen percent (15%) or more of the
combined voting power of the Company's then
outstanding Voting Securities) has direct or indirect
Beneficial Ownership of fifteen percent (15%) or more
of the combined voting power of the Surviving
Corporation's then outstanding Voting Securities.
(B) a complete liquidation or dissolution of the Company; or
(C) an agreement for the sale or other disposition of
all or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
(c) Date of Termination. "Date of Termination" shall mean in the case of
an Executive's death, the date of death, in the case of Good Reason, the last
day of Executive's employment, and in all other cases, the date specified in
the Notice of Termination.
(d) Disability. "Disability" shall occur if as a result of an Executive's
incapacity due to physical or mental illness, Executive shall have been absent
from the full-time performance
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of his or her duties with the Company for three (3) consecutive months.
(e) Good Reason. "Good Reason" shall mean any one or more of the following
(without the Executive's express written consent):
i. a relocation of the Executive's principal place of
employment outside the Chicago metropolitan area, other than for
reasonably required travel on the business of the Company or a
Subsidiary of the Company;
ii. a material reduction in the Executive's base or
aggregate compensation, other than a general reduction
applicable to all or substantially all of the executive
employees of the Company or its Subsidiaries;
iii. a change in the Executive's status, title, position
or responsibilities (including reporting responsibilities) which
represents an adverse change from the Executive's prior status,
title, position or responsibilities; or
iv. the purported termination of the Executive for Cause
which does not comply with the terms of Section 1(a) hereof.
(f) Notice of Termination. Any termination by the Company shall be
communicated by a Notice of Termination. A "Notice of Termination" shall mean
a written notice which, if termination is for Cause or Disability, shall
indicate those specific termination provisions in this Agreement relied upon
and set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. No purported termination by the Company following a
Change in Control shall be effective without such Notice of Termination.
(g) Retirement. For purposes of this Agreement, "Retirement" shall mean
termination of the Executive's employment after the Executive has attained age
65.
(h) Subsidiary. For purposes of this Agreement, "Subsidiary" shall mean
any corporation, partnership, limited liability company, joint venture or other
entity in which another corporation, partnership, limited liability company,
joint venture or other entity (i) owns, or at any relevant time owned, directly
or indirectly, 50% or more of the outstanding voting securities or equity
interests or (ii) is a general partner.
2. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT.
(a) If, upon the first Change in Control of the Company following the
execution of this Agreement, (i) during the twelve month period thereafter, the
Company shall terminate the Executive's employment other than for Cause,
Disability, Retirement or on account of the Executive's death; or (ii) during
the first six month period thereafter, the Executive shall
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terminate employment for Good Reason; or (iii) during the second six month
period thereafter, the Executive shall terminate employment for any reason,
then:
(x) the Company shall pay to the Executive severance compensation
equal to the Executive's annual base salary in effect immediately prior to
the Change in Control, which compensation shall be payable in one lump sum
amount, subject to tax withholding, on or before the fifteenth day
following the Date of Termination; provided, however, that the Company
shall have no obligation to make any payments under this Agreement to the
Executive unless and until it shall receive from such Executive a full and
complete release of any and all liabilities, except for those provided
under this Agreement, in a form acceptable to the Company; and
(y) all stock options held by the Executive, without any further
action, shall be automatically exercisable in full, notwithstanding any
provisions to the contrary in Section 1 of the Elek-Tek, Inc. 1993
Incentive Stock Option Plan Incentive Stock Option Agreement dated April
22, 1996 between the Company and the Executive, which are hereby amended
to permit such exercise.
(b) An Executive's entitlement to any other compensation or benefits shall
be determined in accordance with the Company's employee benefit plans and other
applicable programs, policies and practices then in effect. The provisions of
this Agreement, and any payment provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish an Executive's existing
rights, or rights which accrue solely as a result of the passage of time, under
any benefit plan, stock option plan, employment agreement or other contract,
plan or arrangement.
(c) Notwithstanding anything contained in this Agreement to the contrary,
if an Executive's employment is terminated prior to a Change in Control and the
Executive reasonably demonstrates that such termination (i) 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 who effectuates a Change in
Control or (ii) otherwise occurred in connection with, or in anticipation of, a
Change in Control which actually occurs, then for all purposes of this
Agreement, the date of a Change in Control with respect to the Executive shall
mean the date immediately prior to the date of such termination of the
Executive's employment.
(d) Nothing in this Agreement limits or restricts in any way the right of
the Company to terminate an Executive's employment with the Company with or
without cause.
3. NO OBLIGATION TO MITIGATE DAMAGES. The Executive shall not be required
to mitigate damages or the amount of any payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the amount of any
payment provided for under this Agreement be reduced by any compensation earned
by the Executive as the result of employment by another employer after the Date
of Termination, or otherwise.
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4. SUCCESSOR TO THE COMPANY.
(a) The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, absolutely and
unconditionally to assume 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 or assignment had taken place. Any failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession or assignment shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined which executes and delivers the agreement or assumption provided for in
this Section 4 or which otherwise becomes bound by all terms and provisions of
this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive
should die while any amounts are still payable to him 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, or other designee
or, if there be no such designee, to the Executive's estate.
5. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
Secretary
Elek-Tek, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
If to the Executive:
Xxxxx X. Xxxxxx
000 Xxxxxx Xxxx Xxxxx
Xxxx, Xxxxxxxx 00000
or 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.
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6. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees and
expenses which the Executive may incur if the Executive prevails in collecting
any amount under this Agreement which has been contested by the Company. The
parties may agree in advance as to amounts which are not contested, and any
amount which the Company shall offer to pay to the Executive in settlement of
any claim shall be deemed to be a non-contested amount.
7. CONFIDENTIALITY. The Executive shall retain in confidence any and all
confidential information known to the Executive concerning the Company and its
business so long as such information is not publicly disclosed.
8. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and 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. 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. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.
9. VALIDITY. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ELEK-TEK, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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Xxxxx X. Xxxxxx
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