EXHIBIT 10(iii)(e)
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CHANGE OF CONTROL AGREEMENT
WITH CHAIRMAN AND CHIEF EXECUTIVE OFFICER
AGREEMENT made as of January 1, 1996, between
XXXXXXXXX-XXXX COMPANY, a New Jersey corporation (the "Company"),
and ________________ (the "Employee"). Unless otherwise
indicated, terms used herein and defined in Schedule A hereto
shall have the meanings assigned to them in said Schedule.
The Company and the Employee agree as follows:
1. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its
execution and shall continue thereafter from year to year prior
to a Change of Control Event unless terminated as of any
anniversary of the date hereof by either party upon written
notice to the other party given at least 60 days, but not more
than 90 days, prior to such anniversary date. Notwithstanding
the foregoing, this Agreement may not be terminated after the
occurrence of a Change of Control Event.
2. AGREEMENT TERM.
The term of this Agreement shall begin on the date
hereof and, unless terminated pursuant to paragraph 1 prior to a
Change of Control Event, shall end on the fifth anniversary of
the occurrence of a Change of Control Event.
3. EMPLOYEE'S POSITION AND RESPONSIBILITIES.
(a) The Employee will continue to serve the Company
upon the occurrence of a Change of Control Event as the Chief
Executive Officer of the Company. In addition, the Company
shall, upon the occurrence of such event, make its best efforts
to insure the election and retention of the Employee as Chairman
of the Board of the Company and any successor or parent company.
(b) During the term of this Agreement the Employee
shall devote his entire business time and attention exclusively
to the business and affairs of the Company and shall use his best
efforts to promote the interests of the Company. The
participation of the Employee in outside directorships and civic
activities not otherwise inconsistent with Company policy and the
management of the Employee's personal investments in public
companies in which the Employee holdings do not exceed 5% of the
voting power or value of such companies shall not be deemed a
violation of this paragraph 3.
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4. COMPENSATION AND OTHER BENEFITS UPON CHANGE OF
CONTROL EVENT.
The Company and the Employee agree that, upon the
occurrence of any Change of Control Event, the Employee shall
receive basic annual salary, bonus and fringe and other benefits
as follows:
(a) Basic Annual Salary and Bonus. The
Employee's basic annual salary shall be at a rate not less
than the rate of annual salary, which has been paid to the
Employee immediately prior to the Change of Control Event,
with such annual increases (but not decreases) equal to the
greater of (i) salary increases as may be contemplated by
any salary adjustment programs of the Company in effect
immediately prior to the Change of Control Event and
applicable to the Employee and such further increases as
shall be determined from time to time by the Board or (ii) a
percentage equal to the percentage increase (if any) in the
"Consumer Price Index for All Urban Consumers" published by
the United States Department of Labor's Bureau of Labor
Statistics for the then most recently ended 12-month period.
In addition, the Employee shall be entitled to receive an
annual bonus in an amount not less than the highest annual
bonus received by, or accrued on behalf of, the Employee
during the lesser of (i) the five full Fiscal Years
immediately preceding the Change of Control Event, or (ii)
the number of full Fiscal Years immediately preceding the
Change of Control Event during which the Employee has been
employed by the Company.
(b) Fringe Benefits; Business Expenses. The
Employee shall be entitled to receive benefits, including
but not limited to pension (and supplemental pension),
savings and stock investment plan (and supplemental savings
and stock investment plan), stock award, stock option, and
insurance (including life insurance, medical and disability
income insurance and accident and personal liability
insurance) plans on terms no less favorable than those in
effect under each such plan immediately prior to the Change
of Control Event, and at no less than the same benefit
levels (and no more than the same employee contribution
levels) then in effect under each such plan and to receive
all other fringe benefits and perquisites (or their
equivalent) from time to time in effect for the benefit of
any executive, management or administrative group for which
the employment position then held by the Employee entitles
the Employee to participate. The Company shall provide for
the payment of, or reimburse the Employee for, all travel
and other out-of-pocket expenses reasonably incurred by him
in the performance of his duties hereunder.
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EXHIBIT 10(iii)(e)
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(c) Management Incentive Unit Award Plan. The
Company and the Employee further agree that immediately upon
the occurrence of any Change of Control Event, all amounts
theretofore credited to the Employee under the Company's
Management Incentive Unit Award Plan, as amended (the "MIU
Plan"), shall become fully vested and all such amounts
thereafter credited shall become fully vested immediately
upon such crediting.
5. PAYMENTS AND BENEFITS UPON TERMINATION.
The Employee shall be entitled to the following
payments and benefits upon Termination:
(a) Salary and Bonus. The Company shall pay to
the Employee, in a cash lump sum on the Termination Date, an
amount equal to the sum of (i) the basic annual salary and
any annual bonus in respect of a completed fiscal year,
which have not yet been paid to, the Employee through the
Termination Date; (ii) an amount equal to the last annual
bonus received by, or awarded to, the Employee for the full
Fiscal Year immediately preceding the Termination Date
multiplied by a fraction the numerator of which shall be the
number of full months the Employee was employed by the
Company during the Fiscal Year containing the Employee's
Termination Date and the denominator of which shall be 12;
and (iii) an amount equal to the number of unused vacation
days to which the Employee is entitled as of the Termination
Date and any other amounts normally paid to an employee by
the Company upon termination of employment. For these
purposes, any partial month during which the Employee is
employed shall be deemed a full month.
(b) Severance. The Company shall pay to the
Employee, in a cash lump sum not more than 30 days following
the Termination Date, an amount equal to three times the sum
of (i) the highest basic annual salary in effect at any time
during the period beginning immediately prior to the Change
of Control Event and ending on the Termination Date; and
(ii) the highest annual bonus received by, or accrued on
behalf of, the Employee during the period beginning five
full Fiscal Years immediately preceding the Change of
Control Event and ending on the Termination Date.
(c) Employee Benefit Plans. For the three-year
period following the Termination Date (or, if sooner, until
the Employee is covered under a comparable plan offered by a
subsequent employer), the Company shall continue to cover
the Employee under those employee welfare benefit plans and
programs (including, but not limited to, life, medical,
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EXHIBIT 10(iii)(e)
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prescription drugs, dental, accidental death and travel
accident and disability coverage, but not including any
severance pay plan or program other than that provided
pursuant to this Agreement or any pension plan) applicable
to the Employee on the Termination Date at the same benefit
levels then in effect (or shall provide their equivalent);
provided, however, that if the Employee becomes employed by
a new employer that maintains any welfare plan that either
(i) does not cover the Employee with respect to a pre-
existing condition which was covered under the applicable
Company welfare plan, or (ii) does not cover the Employee
for a designated waiting period, the Employee's coverage
hereunder under the applicable Company welfare plan (or the
equivalent) shall continue (but shall be limited in the
event of noncoverage due to a preexisting condition, to the
preexisting condition itself) until the earlier of the end
of the applicable period of noncoverage under the new
employer's plan or the third anniversary of the Termination
Date.
(d) Savings and Retirement Account Plans. As
soon as practicable following the determination thereof (but
in any event no later than 30 days following the Termination
Date), the Company shall pay the Employee an amount (in one
lump sum cash payment) equal to the value (measured as of
the last day of the month containing the Employee's
Termination Date) of the sum of: (i) the number of Common
Stock equivalents credited to the Employee's account under
the Supplemental Savings and Stock Investment Plan at the
Termination Date multiplied by the Company Stock Value (as
defined in Section 5(g) below); (ii) the amount credited to
the Employee's account under the Supplemental Retirement
Account Plan at the Termination Date; (iii) all
contributions to, or amounts credited to, the Company's
Savings and Stock Investment Plan, Supplemental Savings and
Stock Investment Plan, Retirement Account Plan and
Supplemental Retirement Account Plan (and earnings and
appreciation attributable thereto) that theretofore were
made by the Company on behalf of the Employee and are
forfeited as a result of the Employee's Termination; and
(iv) three percent of the aggregate amount payable pursuant
to subparagraphs 5(a) and 5(b) for each of the Savings and
Stock Investment Plan and the Supplemental Savings and Stock
Investment Plan and two percent for each of the Retirement
Account and the Supplemental Retirement Account Plan.
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EXHIBIT 10(iii)(e)
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(e) Pension Benefits.
(i) No later than 30 days following the
Termination Date, the Company shall pay the Employee an
amount (in one lump sum cash payment) equal to the Present
Value of the sum of the pension benefits the Employee is
entitled to receive under (A) the Restated Xxxxxxxxx-Xxxx
Company Supplemental Pension Plan (the "Section 415 Excess
Plan"), (B) the Xxxxxxxxx-Xxxx Company Elected Officers
Supplemental Program (the "Sixty-five Percent Program" or
the "Program"), and (C) the Executive Supplementary
Retirement Agreement (the "Ten Year Annuity"), all as in
effect immediately prior to the Change of Control Event
(collectively the "Pension Benefit").
(ii) In calculating the portion of the
Pension Benefit under section 1.1 of the Section 415 Excess
Plan the Company shall credit the Employee with five
additional years of Credited Service (within the meaning of
the Plan and including wage, vesting and age credit) and
five additional years of age for purposes of the Section 415
Excess Plan but not the Qualified Pension Plan. (If, after
crediting five years of age, the Employee is less than
fifty-five years old, it will be assumed that the benefit
commencement age is fifty-five).
(iii) In calculating the portion of the
Pension Benefit under the Sixty-five Percent Program, the
Company shall: (A) credit the Employee with an additional
five Years of Service and an additional five years of age
for purposes of computing the amount of the Pension Benefit;
(B) reduce age 65 to age 62 in Section 5.1 (b) (i) of the
Program; (C) define "Final Average Salary" in Section 1.8 of
the Program as 1/3 of the severance amount determined
pursuant to Section 5(b) of this Agreement; and (D) for
purposes of benefit offset determinations compute retirement
account amounts invested in Company stock and the account
balance from employer matching contributions made in Company
stock in Appendix A, paragraph (a)(2) and (3) of the Program
using the lowest closing sale price of the Company stock on
the New York Stock Exchange during the twelve months
preceding the Change in Control Event.
(iv) In calculating the portion of the
Pension Benefit under the Ten-Year Annuity the Company shall
credit the Employee with five additional years of age but to
an age no greater than 65.
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(v) The Present Value of the Pension Benefit
and the annuity value of the offsets referred to in
paragraph (e) (iii)(D) above shall be calculated using (A)
an interest rate equal to the product of (I) the 10-year
Treasury Note rate as used in the Sixty-five Percent
Program's definition of Actuarial Equivalent and (II) 1
minus the federal income tax rate at the highest bracket of
income for individuals in effect for the year containing the
date of payment, (B) the mortality rate used to determine
lump sum values in the Sixty-five Percent Program, and (C)
actual age without the five year addition to age except that
the Ten-Year Annuity Present Value shall be calculated using
no mortality assumption and actual age plus the additional
five years.
(vi) Calculation of all pension benefits
amounts hereunder shall be made, at the expense of the
Company, by the Wellesley Hills, Massachusetts office of
Xxxxxx Xxxxx (or the Company's then actuary immediately
prior to the change of Control Event).
(f) Retiree Welfare Benefits. For purposes of
determining the Employee's eligibility for post-retirement
benefits under any welfare benefit plan (as defined in
section 3(1) of the Employee Retirement Income Security Act
of 1974, as amended) maintained by the Company prior to the
occurrence of a Change of Control Event, the Employee shall
be credited with an additional five years of service and
five years of age (or any combination of years of service
and age not exceeding 10 years, to the extent necessary to
qualify for benefits). If, after taking into account such
additional age and service, the Employee is eligible for the
Company's post-retirement welfare benefits (or would have
been eligible under the terms of such plans as in effect
prior to the occurrence of the Change of Control Event), the
Employee shall receive, commencing on the third anniversary
of the Termination Date, post-retirement welfare benefits no
less favorable than the benefits the Employee would have
received under the terms and conditions of the applicable
plans in effect immediately prior to the occurrence of the
Change of Control Event.
(g) Employee Stock Awards, Options, SARs and
MIUs. No later than 30 days following the Termination Date,
the Company shall pay the Employee an amount (in one lump
sum cash payment) equal to the aggregate Company Stock Value
(defined below) of 100% of the Employee's then outstanding
and unpaid stock and stock based awards under the Company's
Incentive Stock Plan of 1990, the Incentive Stock Plan of
1995, the MIU Plan and any similar plans of the Company (or
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EXHIBIT 10(iii)(e)
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any other company) hereafter adopted (at which time such
stock and stock based awards shall be cancelled and be of no
further force or effect). In addition, all options to
purchase shares of Common Stock of the Company (or the stock
of any company in respect of which options have been granted
to the Employee) ("Company Stock") and all stock
appreciation rights held by the Employee immediately prior
to Termination shall become exercisable at any time on and
after the Termination Date, whether or not otherwise
exercisable in accordance with the terms of the employee
benefit plans pursuant to which such options and stock
appreciation rights were granted. For purposes of this
Agreement, Company Stock Value shall be deemed to be the
highest of: (i) the closing sale price of the Company Stock
on the New York Stock Exchange on the Change of Control
Event; (ii) the closing sale price of the Company Stock on
the New York Stock Exchange on the Termination Date; and
(iii) the highest closing sale price of the Company Stock on
the New York Stock Exchange during the 30 trading days
immediately preceding the acquisition of more than 50% of
the outstanding Company Stock by any person or group
(including affiliates of such person or group). If, as of
any valuation date, the Company Stock is not traded on the
New York Stock Exchange, the Company Stock Value shall be
the closing sale price of the Company Stock on the principal
national securities exchange on which the Common Stock is
traded or, if the Common Stock is not traded on any national
securities exchange, the closing bid price of the Common
Stock in the over-the-counter market.
(h) Valuation of Common Stock Equivalents. The
Employee's Common Stock Equivalents under the MIU Plan
shall, for purposes of payments pursuant thereto, be valued
at the Company Stock Value.
(i) Outplacement Expenses. For the three year
period following the Termination Date, the Company shall
reimburse the Employee for all reasonable expenses (up to a
maximum of $15,000 per 12 month period) incurred by the
Employee for professional outplacement services by qualified
consultants selected by the Employee.
(6) PARACHUTE EXCISE TAX GROSS-UP.
(a) If, as a result of any payment or benefit
provided under this Agreement, either alone or together with
other payments and benefits which the Employee receives or
is then entitled to receive from the Company, the Employee
becomes subject to the excise tax imposed under Section 4999
of the Internal Revenue Code of 1986, as amended (the
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EXHIBIT 10(iii)(e)
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"Code"), (together with any income, employment or other
taxes, interest and penalties thereon an "Excise Tax"), the
Company shall pay the Employee an amount (the "Gross-Up
Payment") sufficient to place the Employee in the same
after-tax financial position that he would have been in if
he had not incurred any tax liability under Section 4999 of
the Code. For purposes of determining whether the Employee
is subject to an Excise Tax, (i) any payments or benefits
received by the Employee (whether pursuant to the terms
hereof or pursuant to any plan, arrangement or other
agreement with the Company or any entity affiliated with the
Company) which payments ("Contingent Payments") are deemed
to be contingent on a change described in Section
280G(b)(2)(A)(i) of the Code shall be taken into account,
(ii) the amount of payments or benefits under this Agreement
treated as subject to the Excise Tax shall be equal to the
lesser of (A) the total amount of all such payments and
benefits hereunder as are Contingent Payments and (B) the
amount of excess parachute payments within the meaning of
280G(b)(1) of the Code payable to the Employee, and (iii)
the Employee shall be deemed to pay the taxes at the highest
marginal applicable rates of such taxation for the calendar
year in which the Gross-Up Payment is to be made, net of the
maximum deduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(b) The determination of whether the Employee is
subject to Excise Tax and the amounts of such Excise Tax and
Gross-Up Payment, as well as other calculations hereunder,
shall be made at the expense of the Company by the
independent auditors of the Company immediately prior to the
Change of Control Event, which shall provide the Employee
with prompt written notice (the "Company Notice") setting
forth their determinations and calculations. Within 30 days
following the receipt by the Employee of the Company Notice,
the Employee may notify the Company in writing (the
"Employee Notice") if the Employee disagrees with such
determinations or calculations, setting forth the reasons
for any such disagreement. If the Company and the Employee
do not resolve such disagreement within 10 business days
following receipt by the Company of the Employee Notice, the
Company and the Employee shall agree upon a nationally
recognized accounting or compensation firm (the "Resolving
Firm") to make a determination with respect to such
disagreement. If the Employee and the Company are unable to
agree upon the Resolving Firm within 20 business days
following the Employee Notice, the New York office of
Towers, Xxxxxx shall be the Resolving Firm. Within 30
business days following the Employee Notice, if the
disagreement is not resolved by such time, each of the
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EXHIBIT 10(iii)(e)
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Employee and the Company shall submit its position to the
Resolving Firm, which shall make a determination as to all
such disagreements within 30 days following the last of such
submissions, which determination shall be binding upon the
Employee and the Company. The Company shall pay all
reasonable expenses incurred by either party in connection
with the determinations, calculations, disagreements or
resolutions pursuant to this paragraph, including, but not
limited to, reasonable legal, consulting or other similar
fees.
(c) The Employee shall notify the Company in
writing of any claim by the Internal Revenue Service that,
if successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the
Employee is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the 30
day period following the date on which the Employee gives
such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Employee in
writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:
(i) give the Company any information
reasonably requested by the Company relating to such claim;
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including, without
limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company
and reasonably satisfactory to the Employee;
(iii) cooperate with the Company in good
faith in order to effectively contest such claim; and
(iv) permit the Company to participate in
any proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including, but not limited
to, additional interest and penalties and related consulting
or other similar fees) incurred in connection with such
contest and shall indemnify and hold the Employee harmless,
on an after-tax basis, for any Excise Tax or other tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses.
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(d) The Company shall control all proceedings
taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its
sole option, either direct the Employee to pay the tax
claimed and xxx for a refund or contest the claim in any
permissible manner, and the Employee agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Employee
to pay such claim and xxx for a refund, the Company shall
advance the amount of such payment to the Employee on an
interest-free basis, and shall indemnify and hold the
Employee harmless, on an after-tax basis, from any Excise
Tax or other tax (including interest or penalties with
respect thereto) imposed with respect to such advance or
with respect to any imputed income with respect to such
advance; and provided, further, that if the Employee is
required to extend the statute of limitations to enable the
Company to contest such claim, the Employee may limit this
extension solely to such contested amount. The Company's
control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority. In
addition, no position may be taken nor any final resolution
be agreed to by the Company without the Employee's consent
if such position or resolution could reasonably be expected
to adversely affect the Employee (including any other tax
position of the Employee unrelated to the matters covered
hereby).
(e) As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Company or the Resolving Firm
hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that the Company
exhausts its remedies and the Employee thereafter is
required to pay to the Internal Revenue Service an
additional amount in respect of any Excise Tax, the Company
or the Resolving Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall promptly be paid by the Company to or for the benefit
of the Employee.
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(f) If, after the receipt by Employee of an
amount advanced by the Company in connection with the
contest of Excise Tax claim, the Employee becomes entitled
to receive any refund with respect to such claim, the
Employee shall promptly pay to the Company the amount of
such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the
receipt by the Employee of an amount advanced by the Company
in connection with an Excise Tax claim, a determination is
made that Employee shall not be entitled to any refund with
respect to such claim and the Company does not notify the
Employee in writing of its intent to contest the denial of
such refund prior to the expiration of 30 days after such
determination, such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance
shall be offset, to the extent thereof, by the amount of the
Gross-Up Payment.
7. EFFECT ON OTHER ARRANGEMENTS.
Except to the extent expressly provided herein, no
provision of this Agreement shall affect or limit any interests
or rights vested in the Employee under any other agreement or
arrangement with the Employee or under any pension, profit-
sharing, medical or other insurance or other benefit plans of the
Company which may be in effect and in which the Employee may be
participating at any time.
8. CONFIDENTIALITY.
The Employee agrees to hold in confidence any and all
confidential information known to him concerning the Company and
its businesses so long as such information is not otherwise
publicly disclosed.
9. MISCELLANEOUS.
(a) Legal Expenses. The Company shall pay all
costs and expenses, including attorneys' fees, of the
Company and, at least quarterly, the Employee, in connection
with any legal proceedings, whether or not instituted by the
Company, relating to the interpretation or enforcement of
this Agreement. In the event that the provisions of this
paragraph shall be determined to be invalid or unenforceable
in any respect, such declaration shall not affect the
remaining provisions of this Agreement, which shall continue
in full force and effect.
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(b) Mitigation. All payments or benefits
required by the terms of this Agreement shall be made or
provided without offset, deduction, or mitigation on account
of income the Employee may receive from other employment or
otherwise and the Employee shall not have any obligation or
duty to seek any other employment or otherwise earn any
amounts to reduce or mitigate any payments required
hereunder.
(c) Death of the Employee. In the event of the
Employee's death subsequent to Termination, all payments
called for hereunder shall be paid to the Employee's
designated beneficiary or beneficiaries, or to his estate if
he has not designated a beneficiary or beneficiaries.
(d) Notices. Any notice or other communication
provided for in this Agreement or contemplated hereby shall
be sufficiently given if given in writing and delivered by
certified mail, return receipt requested, and addressed, in
the case of the Company, to the Company at:
000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Chairman of the Board
of Directors
and, in the case of the Employee, to the Employee at:
Either party may designate a different address by giving
notice of change of address in the manner provided above.
(e) Waiver. No waiver or modification in whole
or in part of this Agreement, or any term or condition
hereof, shall be effective against any party unless in
writing and duly signed by the party sought to be bound.
Any waiver of any breach of any provision hereof or any
right or power by any party on one occasion shall not be
construed as a waiver of, or a bar to, the exercise of such
right or power on any other occasion or as a waiver of any
subsequent breach.
(f) Binding Effect; Successors. This Agreement
shall be binding upon and shall inure to the benefit of the
Company and the Employee and their respective heirs, legal
representatives, successors and assigns. If the Company
shall be merged into or consolidated with another entity,
the provisions of this Agreement shall be binding upon and
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EXHIBIT 10(iii)(e)
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inure to the benefit of the entity surviving such merger or
resulting from such consolidation. The Company will require
any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially
all of the business or assets of the Company, by agreement
in form and substance satisfactory to the Employee, to
expressly 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 had taken
place. The provisions of this paragraph shall continue to
apply to each subsequent employer of the Employee hereunder
in the event of any subsequent merger, consolidation or
transfer of assets of such subsequent employer.
(g) Plan Limitations. In the event the Company
is unable to provide any benefit required to be provided
under this Agreement through a plan sponsored by the Company
or its Affiliates, the Company shall, at its own cost and
expense, take appropriate actions to insure that alternative
arrangements are made so that equivalent benefits can be
provided to the Employee, including to the extent
appropriate purchasing for the benefit of the Employee (and
if applicable the Employee's dependents) individual policies
of insurance providing benefits, which on an after-tax
basis, are equivalent to the benefits required to be
provided hereunder.
(h) Controlling Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New Jersey applicable to contracts made and to be
performed therein.
10. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding
between the parties hereto and supersedes in all respects any
prior employment or severance agreement or understanding between
the Company (or any affiliate thereof) and the Employee.
IN WITNESS WHEREOF, the Company and the Employee have
executed this Agreement as of the day and year first above
written.
XXXXXXXXX-XXXX COMPANY
By
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Schedule A
CERTAIN DEFINITIONS
As used in this Agreement, and unless the context
requires a different meaning, the following terms have the
meanings indicated:
"Affiliate", used to indicate a relationship with a
specified person, means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled
by, or is under common control with, such a specified person.
"Associate", used to indicate a relationship with a
specified person, means (i) any corporation, partnership, or
other organization of which such specified person is an officer
or partner; (ii) any trust or other estate in which such
specified person has a substantial beneficial interest or as to
which such specified person serves as trustee or in a similar
fiduciary capacity; (iii) any relative or spouse of such
specified person, or any relative of such spouse who has the same
home as such specified person, or who is a director or officer of
the Company or any of its parents or subsidiaries; and (iv) any
person who is a director, officer, or partner of such specified
person or of any corporation (other than the Company or any
wholly-owned subsidiary of the Company), partnership or other
entity which is an Affiliate of such specified person.
"Beneficial Owner" means the same as such term is
defined by Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (or any successor provision at the time in effect);
provided, however, that any individual, corporation, partnership,
group, association, or other person or entity which has the right
to acquire any of the Company's outstanding securities entitled
to vote generally in the election of directors at any time in the
future, whether such right is contingent or absolute, pursuant to
any agreement, arrangement, or understanding or upon exercise of
conversion rights, warrants or options, or otherwise, shall be
deemed the Beneficial Owner of such securities.
"Board" means the Board of Directors of the Company
(or, if the Company is then a subsidiary of any other company, of
the ultimate parent company).
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EXHIBIT 10(iii)(e)
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"Cause" means (i) any action by the Employee involving
willful malfeasance or willful gross misconduct having a
demonstrable adverse effect on the Company; (ii) substantial and
continuing refusal by the Employee in willful breach of this
Agreement to perform his employment duties hereunder; or
(iii) the Employee being convicted of a felony under the laws of
the United States or any state.
Termination of the Employee for Cause shall be
communicated by a Notice of Termination given within one year
after the Board (i) has knowledge of conduct or an event
allegedly constituting Cause; and (ii) has reason to believe that
such conduct or event could be grounds for Cause. For purposes
of this Agreement a "Notice of Termination" shall mean delivery
to the Employee of a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Company's Board at a meeting of that Board
called and held for the purpose (after reasonable notice to the
Employee ("Preliminary Notice") and reasonable opportunity for
the Employee, together with the Employee's counsel, to be heard
before the Board prior to such vote) of finding, in the good
faith opinion of the Board, that the Employee has engaged in the
conduct constituting Cause and specifying the particulars thereof
in detail. Upon the receipt of the Preliminary Notice, the
Employee shall have 30 days in which to appear with counsel or
take such other action as he desires on his behalf, and such 30-
day period is hereby agreed to by the parties as a reasonable
opportunity for the Employee to be heard. The Board shall no
later than 45 days after the receipt of the Preliminary Notice by
the Employee communicate its findings to Employee. A failure by
the Board to make its finding of Cause or to communicate its
conclusion within such 45-day period shall be deemed to be a
finding that the Employee has not engaged in the conduct
described herein. Any termination of the Employee's employment
(other than by death or Permanent Disability) within 45 days
after the date that the Preliminary Notice has been given to the
Employee shall be deemed to be a termination for Cause; provided,
however, that if during such period the Employee voluntarily
terminates other than for Good Reason or the Company terminates
the Employee other than for Cause, and the Employee is found (or
is deemed to be found) not to have engaged in the conduct
described herein, such termination shall not be deemed to be for
Cause.
"Change of Control Event" means the date (i) any
individual, corporation, partnership, group, association or other
person or entity, together with its Affiliates and Associates
(other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company), is or becomes the
Beneficial Owner of securities of the Company representing 20% or
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EXHIBIT 10(iii)(e)
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more of the combined voting power of the Company's then
outstanding securities entitled to vote generally in the election
of directors, unless a majority of the Continuing Directors
determines in their sole discretion that a Change of Control
Event has not occurred; (ii) the Continuing Directors fail to
constitute a majority of the members of the Board; (iii) of any
sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of
the assets of the Company, other than any sale, lease, exchange
or other transfer to any person or entity where the Company owns,
directly or indirectly, at least 80 percent of the outstanding
voting securities of such person or entity after any such
transfer.
"Continuing Director" means a director who either was a
member of the Board on the date hereof or who became a member of
the Board subsequent to such date and whose election, or
nomination for election by the Company's shareholders, was Duly
Approved by the Continuing Directors on the Board at the time of
such nomination or election, either by a specific vote or by
approval of the proxy statement issued by the Company on behalf
of the Board in which such person is named as nominee for
director, without due objection to such nomination.
"Duly Approved by the Continuing Directors" means an
action approved by the vote of at least a majority of the
Continuing Directors then on the Board, except, if the votes of
such Continuing Directors in favor of such action would be
insufficient to constitute an act of the Board if a vote by all
of its members were to have been taken, then such term shall mean
an action approved by the unanimous vote of the Continuing
Directors then on the Board so long as there are at least three
Continuing Directors on the Board at the time of such unanimous
vote.
"Fiscal Year" means the fiscal year of the Company.
"Good Reason" means (i) a material adverse change in
the Employee's job responsibilities, title or status from those
in effect prior to the Change of Control Event which change
continues for a period of at least 15 days after written notice
from the Employee; (ii) a reduction of the Employee's base salary
or target bonus, the failure to pay Employee's salary or bonus
when due, or the failure to maintain on behalf of the Employee
(and his or her dependents) benefits which are at least as
favorable in the aggregate to those provided for in paragraph
4(b); (iii) the relocation of the principal place of the
Employee's employment to a location that is more than 35 miles
further from the Employee's residence than such principal place
of employment immediately prior to the Change of Control Event,
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EXHIBIT 10(iii)(e)
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or the imposition of travel requirements on the Employee not
substantially consistent with such travel requirements existing
immediately prior to the Change of Control Event; (iv) the
failure of the Company to obtain the assumption of, and the
agreement to perform, this Agreement by any successor as
contemplated in paragraph 8(f); (v) any voluntary resignation of
Employee's employment following a Change of Control Event or (vi)
the failure of the Company to perform any of its other material
obligations under this Agreement and the continuation of such
failure for a period of 15 days after written notice from the
Employee.
"Permanent Disability", as applied to the Employee,
means that (i) he has been totally incapacitated by bodily injury
or disease so as to be prevented thereby from performing his
duties hereunder; (ii) such total incapacity shall have continued
for a period of six consecutive months; and (iii) such total
incapacity will, in the opinion of a qualified physician, be
permanent and continuous during the remainder of the Employee's
life.
"Termination" means (i) following the occurrence of a
Change of Control Event, (A) the termination of the Employee's
employment without Cause or (B) the resignation by an Employee
for Good Reason upon ten days' prior written notice (or such
shorter period as may be agreed upon between the Employee and the
Company), and (ii) prior to the occurrence of a Change of Control
Event, the termination of the Employee's employment or a material
adverse change in the Employee's job responsibilities, title or
status at the request of any individual or entity acquiring
ownership and control of the Company; provided, that such term
shall not include any termination of employment for Cause, any
resignation without Good Reason, or any termination of employment
on account of an Employee's death or Permanent Disability.
"Termination Date" shall mean the effective date of an
Employee's Termination; provided, that with respect to a
Termination that occurs prior to a Change of Control Event, the
effective date of such Termination shall be deemed to be the date
immediately following the Change of Control Event.
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