SEVERANCE AND CHANGE IN CONTROL AGREEMENT
Exhibit 10.83
SEVERANCE
AND CHANGE IN CONTROL AGREEMENT effective as of January 3, 2011, by and between XXXXX &
WESSON HOLDING CORPORATION, a Nevada corporation (“Employer”), and XXXXXXX X. XXXXXXXX
(“Employee”).
WHEREAS, Employer desires to engage Employee as Executive Vice President, Treasurer, and Chief
Financial Officer of Employer.
WHEREAS, Employer and Employee desire to agree to the results of any termination of Employee’s
employment under certain circumstances.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants set forth in this
Agreement, the parties hereto agree as follows:
1. Definitions.
(a) “Cause” shall mean any termination of Employee’s employment by Employer as a result of
Employee engaging in an act or acts involving a crime, moral turpitude, fraud, or dishonesty;
Employee taking any action that may be injurious to the business or reputation of Employer; or
Employee willfully violating in a material respect Employer’s Corporate Governance Guidelines, Code
of Conduct, or any applicable Code of Ethics, including, without limitation, the provisions thereof
relating to conflicts of interest or related party transactions.
(b) “Change in Control” of Employer shall mean a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934 as in effect on the date of this Agreement or, if Item
6(e) is no longer in effect, any regulations issued by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934 that serve similar purposes; provided that, without
limitation, such a Change in Control shall be deemed to have occurred if and when (i) any person
(as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
directly or indirectly of equity securities of Employer representing 20 percent or more of the
combined voting power of Employer’s then-outstanding equity securities, except that this provision
shall not apply to any person currently owning at least five percent or more of the combined voting
power of Employer’s currently outstanding equity securities or to an acquisition of up to 20
percent of the then-outstanding voting securities that has been approved by at least 75 percent of
the members of the Board of Directors who are not affiliates or associates of such person; (ii)
during the period of this Agreement, individuals who, at the beginning of such period, constituted
the Board of Directors of Employer (the “Original Directors”), cease for any reason to constitute
at least a majority thereof unless the election or nomination for election of each new director was
approved (an “Approved Director”) by the vote of a Board of Directors constituted entirely of
Original Directors and/or Approved Directors; (iii) a tender offer or exchange offer is made
whereby the effect of such offer is to take over and control Employer, and such offer is
consummated for the equity securities of Employer representing 20 percent or more of the combined
voting power of
Employer’s then-outstanding voting securities; (iv) Employer is merged, consolidated, or
enters into a reorganization transaction with another person and, as the result of such merger,
consolidation, or reorganization, less than 75 percent of the outstanding equity securities of the
surviving or resulting person shall then be owned in the aggregate by the former stockholders of
Employer; or (v) Employer transfers substantially all of its assets to another person or entity
that is not a wholly owned subsidiary of Employer. Sales of Employer’s Common Stock beneficially
owned or controlled by Employee shall not be considered in determining whether a Change in Control
has occurred.
2. Result of
Termination Other than for Cause. In the event that Employer terminates Employee’s employment with Employer other than for Cause,
(a) Employer shall pay Employee’s base salary for a period of 12 months following the effective date of such termination; and (b) Employer
shall pay to Employee, at the
same time as cash incentive bonuses are paid to Employer’s other executives, a portion of the cash incentive bonus deemed by Employer’s
Compensation Committee in the exercise of its sole discretion to be earned by Employee pro rata for the period commencing on the first day of the fiscal year for which the cash incentive bonus is calculated and ending on the effective date of termination. The amounts payable under (a) above shall be paid on Employer’s
regular payroll schedule commencing on the first such payment date coincident with or following Employee’s “separation from service”
from Employer within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
and shall be treated as a series of separate payments under Treasury Regulations Section 1.409A-2(b)(2)(iii). The amounts payable under (b) above, if any, shall be made by March
15 of the year following the year to which the bonus applies and would otherwise be earned.
3. Result of Termination Following Change in Control. In the event of a “Change in Control” of
Employer, Employee, at Employee’s option and upon written notice to Employer, may terminate
Employee’s employment effective on the date of the notice unless (a) the Change in Control shall
have been approved by the Board of Directors of the Company, (b) the provisions of this Agreement
remain in full force and effect as to Employee, and (c) Employee suffers no reduction in Employee’s
status, duties, authority, or compensation following such Change in Control, provided that Employee
will be considered to suffer a reduction in Employee’s status, duties, authority, or compensation,
only if, after the Change in Control, (i) Employee is not the Chief Financial Officer of the
company that succeeds to the business conducted by Employer and its subsidiaries immediately prior
to the Change in Control, (ii) such company’s common stock is not listed on a national stock
exchange (such as the New York Stock Exchange, the Nasdaq National Market, or the American Stock
Exchange), (iii) such company terminates Employee or in any material respect reduces Employee’s
status, duties, authority, or base compensation within one year of the Change in Control, or (iv)
as a result of such Change in Control, Employee is required to relocate out of Springfield,
Massachusetts (or surrounding areas). In the event of a termination following a Change in Control
as provided in this Section 3, (A) Employer shall pay Employee’s base salary for a period of 18
months following the effective date of such termination; (B) Employer shall pay to Employee
an amount equal to the average of Employee’s cash bonus paid for
each of the two fiscal years immediately preceding Employee’s
termination, such amount to be paid and received upon the effective
date of the termination (provided such termination constitutes a
“separation from service” from Employer within the meaning of Section 409A of the Code); and (C) all unvested stock-based
compensation held by Employee in his capacity as Employee on the effective date of the termination
shall vest as of the effective date of termination.
The amounts payable under Section 3(A) shall be paid on
Employer’s regular payroll schedule commencing on the first such
payment date coincident with or following Employee’s
“separation from service” from Employer within the meaning
of Section 409A of the Code and shall be treated as a series of
separate payments under Treasury Regulations Section
1.409A-2(b)(2)(iii).
2
4. Competition and Confidential Information.
(a) Interests to be Protected. The parties acknowledge that Employee will perform essential
services for Employer, its employees, and its stockholders during the term of Employee’s employment
with Employer. Employee will be exposed to, have access to, and work with, a considerable amount
of Confidential Information (as defined below). The parties also expressly recognize and
acknowledge that the personnel of Employer have been trained by, and are valuable to, Employer and
that Employer will incur substantial recruiting and training expenses if Employer must hire new
personnel or retrain existing personnel to fill vacancies. The parties expressly recognize that it
could seriously impair the goodwill and diminish the value of Employer’s business should Employee
compete with Employer in any manner whatsoever. The parties acknowledge that this covenant has an
extended duration; however, they agree that this covenant is reasonable and it is necessary for the
protection of Employer, its stockholders, and employees. For these and other reasons, and the fact
that there are many other employment opportunities available to Employee if his employment is
terminated, the parties are in full and complete agreement that the following restrictive covenants
are fair and reasonable and are entered into freely, voluntarily, and knowingly. Furthermore, each
party was given the opportunity to consult with independent legal counsel before entering into this
Agreement.
(b) Non-Competition. For the period equal to 12 months after the termination of Employee’s
employment with Employer for any reason, Employee shall not (whether directly or indirectly, as
owner, principal, agent, stockholder, director, officer, manager, employee, partner, participant,
or in any other capacity) engage or become financially interested in any competitive business
conducted within the Restricted Territory (as defined below). As used herein, the term
“competitive business” shall mean any business that sells or provides or attempts to sell or
provide products or services the same as or substantially similar to the products or services sold
or provided by Employer during Employee’s employment, and the term “Restricted Territory” shall
mean any state or other geographical area in which Employer sells products or provides services
during Employee’s employment.
(c) Non-Solicitation of Employees. For a period of 24 months after the termination of Employee’s
employment with Employer for any reason, Employee shall not directly or indirectly, for Employee,
or on behalf of, or in conjunction with, any other person, company, partnership, corporation, or
governmental entity, solicit for employment, seek to hire, or hire any person or persons who is
employed by or was employed by Employer within 12 months of the termination of Employee’s
employment for the purpose of having any such employee engage in services that are the same as or
similar or related to the services that such employee provided for Employer.
(d) Confidential Information. Employee shall maintain in strict secrecy all confidential or trade
secret information relating to the business of Employer (the “Confidential Information”) obtained
by Employee in the course of Employee’s employment, and Employee shall not, unless first authorized
in writing by Employer, disclose to, or use for Employee’s benefit or for the benefit of, any
person, firm, or entity at any time either during or subsequent to the term of Employee’s
employment, any Confidential Information, except as required in the performance of Employee’s
duties on behalf of Employer. For purposes hereof,
3
Confidential Information shall include without limitation any materials, trade secrets,
knowledge, or information with respect to management, operational, or investment policies and
practices of Employer; any business methods or forms; any names or addresses of customers or data
on customers or suppliers; and any business policies or other information relating to or dealing
with the management, operational, or investment policies or practices of Employer.
(e) Return of Books, Records, Papers, and Equipment. Upon the termination of Employee’s
employment with Employer for any reason, Employee shall deliver promptly to Employer all files,
lists, books, records, manuals, memoranda, drawings, and specifications; all cost, pricing, and
other financial data; all other written or printed materials and computers, cell phones, PDAs, and
other equipment that are the property of Employer (and any copies of them); and all other materials
that may contain Confidential Information relating to the business of Employer, which Employee may
then have in Employee’s possession or control whether prepared by Employee or not.
(f) Disclosure of Information. Employee shall disclose promptly to Employer, or its nominee, any
and all ideas, designs, processes, and improvements of any kind relating to the business of
Employer, whether patentable or not, conceived or made by Employee, either alone or jointly with
others, during working hours or otherwise, during the entire period of Employee’s employment with
Employer or within six months thereafter.
(g) Assignment. Employee hereby assigns to Employer or its nominee, the entire right, title, and
interest in and to all inventions, discoveries, and improvements, whether patentable or not, that
Employee may conceive or make during Employee’s employment with Employer, or within six months
thereafter, and which relate to the business of Employer.
(h) Equitable Relief. In the event a violation of any of the restrictions contained in this
Section occurs, Employer shall be entitled to preliminary and permanent injunctive relief as well
as damages and an equitable accounting of all earnings, profits, and other benefits arising from
such violation, which right shall be cumulative and in addition to any other rights or remedies to
which Employer may be entitled. In the event of a violation of any provision of subsection (b),
(c), (f), or (g) of this Section, the period for which those provisions would remain in effect
shall be extended for a period of time equal to that period beginning when such violation commenced
and ending when the activities constituting such violation shall have been finally terminated in
good faith.
(i) Restrictions Separable. If the scope of any provision of this Agreement (whether in this
Section 4 or otherwise) is found by a Court to be too broad to permit enforcement to its full
extent, then such provision shall be enforced to the maximum extent permitted by law. The parties
agree that the scope of any provision of this Agreement may be modified by a judge in any
proceeding to enforce this Agreement, so that such provision can be enforced to the maximum extent
permitted by law. Each and every restriction set forth in this Section 4 is independent and
severable from the others, and no such restriction shall be rendered unenforceable by virtue of the
fact that, for any reason, any other or others of them may be unenforceable in whole or in part.
4
5. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the parties hereto; provided that because the obligations of Employee
hereunder involve the performance of personal services, such obligations shall not be delegated by
Employee. For purposes of this Agreement successors and assigns shall include, but not be limited
to, any individual, corporation, trust, partnership, or other entity that acquires a majority of
the stock or assets of Employer by sale, merger, consolidation, liquidation, or other form of
transfer. Employer will require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or assets of Employer
to expressly assume and agree to perform this Agreement in the same manner and to the same extent
that Employer would be required to perform it if no such succession had taken place. Without
limiting the foregoing, unless the context otherwise requires, the term “Employer” includes all
subsidiaries of Employer.
6. Release of Claims and Non-Disparagement. Employer’s obligations under this Agreement are
contingent upon Employee executing (and not revoking during any applicable revocation period) a
valid and enforceable full and unconditional release of any claims Employee may have against
Employer (whether known or unknown) as of the termination of Employee’s employment. Employer shall
present the release to Employee within 10 days of termination, and Employee shall have up to 45
days to consider whether to execute the release; in the event Employee executes the release,
Employee shall have an additional eight calendar days in which to expressly revoke his execution of
the release in writing. In the event that Employee fails to execute the release within the 45 day
period, or in the event Employee formally revokes his execution of the release within eight
calendar days of his execution of the release, then this Agreement shall be null and void.
Employee shall not be entitled to any payments or benefits under this Agreement after termination
of his employment if he does not execute the release or if he revokes the release during any
statutory revocation period, and to the extent that Employer has made any payments to Employee
prior to Employee’s failure to execute the release within the 45 day period or prior to his
revocation, then Employee shall immediately reimburse Employer for any and all such payments.
Employer’s obligations and all payments under this Agreement shall cease if Employee makes any
written or oral statement or takes any action that Employee knows or reasonably should know
constitutes an untrue, disparaging, or negative comment concerning Employer.
7. Miscellaneous.
(a) Notices. All notices, requests, demands, and other communications required or permitted under
this Agreement shall be in writing and shall be deemed to have been duly given, made, and received
(i) if personally delivered, on the date of delivery, (ii) if by facsimile or e-mail transmission,
upon receipt, (iii) if mailed, three days after deposit in the United States mail, registered or
certified, return receipt requested, postage prepaid, and addressed as provided below, or (iv) if
by a courier delivery service providing overnight or “next-day” delivery, on the next business day
after deposit with such service addressed as follows:
5
(1) | If to Employer: 0000 Xxxxxxxxx Xxxxxx Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000 Attention: Chief Executive Officer Phone: (000) 000-0000 Facsimile: (000) 000-0000 E-Mail: xxxxxxx@xxxxx-xxxxxx.xxx |
||
(2) | If to Employee: 0000 Xxxxxxxxx Xxxxxx Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000 Phone: (000) 000-0000 E-Mail: xxxxxxxxx@xxxxx-xxxxxx.xxx |
Either party may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this Section 5 for the giving
of notice.
(b) Indulgences; Waivers. Neither any failure nor any delay on the part of either party to
exercise any right, remedy, power, or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege
preclude any other or further exercise of the same or of any other right, remedy, power, or
privilege, nor shall any waiver of any right, remedy, power, or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power, or privilege with respect to any
other occurrence. No waiver shall be binding unless executed in writing by the party making the
waiver.
(c) Controlling Law. This Agreement and all questions relating to its validity, interpretation,
performance and enforcement, shall be governed by and construed in accordance with the laws of the
state of Massachusetts, notwithstanding any Massachusetts or other conflict-of-interest provisions
to the contrary. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of
the courts of the state of Massachusetts located in Hampden County and the United States District
Court for the District of Massachusetts for the purpose of any suit, action, proceeding or judgment
relating to or arising out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action, or proceeding may be served on each party hereto
anywhere in the world by the same methods as are specified for the giving of notices under this
Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court
in any such suit, action, or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
(d) Binding Nature of Agreement. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, personal
6
representatives, successors, and assigns, except that no party may assign or transfer such
party’s rights or obligations under this Agreement without the prior written consent of the other
party.
(e) Execution in Counterpart. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original as against any party whose signature appears thereon,
and all of which shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken together, shall bear the
signatures of the parties reflected hereon as the signatories.
(f) Provisions Separable. The provisions of this Agreement are independent of and separable from
each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of
the fact that for any reason any other or others of them may be invalid or unenforceable in whole
or in part.
(g) Entire Agreement. This Agreement contains the entire understanding between the parties hereto
with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements
and understandings, inducements, and conditions, express or implied, oral or written, except as
herein contained. The express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified
or amended other than by an agreement in writing.
(h) No Participation in Severance Plans. Except as contemplated by this Agreement, Employee
acknowledges and agrees that the compensation and other benefits set forth in this Agreement are
and shall be in lieu of any compensation or other benefits that may otherwise be payable to or on
behalf of Employee pursuant to the terms of any severance pay arrangement of Employer or any
affiliate thereof, or any other similar arrangement of Employer or any affiliates thereof providing
for benefits upon involuntary termination of employment.
(i) Paragraph Headings. The paragraph headings in this Agreement are for convenience only;
they form no part of this Agreement and shall not affect its interpretation.
(j) Gender. Words used herein, regardless of the number and gender specifically used, shall
be deemed and construed to include any other number, singular or plural, and any other gender,
masculine, feminine, or neuter, as the context requires.
(k) Number of Days. In computing the number of days for purposes of this Agreement, all days
shall be counted, including Saturdays, Sundays, and holidays; provided, however, that if the final
day of any time period falls on a Saturday, Sunday, or holiday, then the final day shall be deemed
to be the next day that is not a Saturday, Sunday, or holiday.
(l) Specified Employee. Notwithstanding any provision of this Agreement to the contrary, if
Employee is a “specified employee” as defined in Section 409A of the Code, Employee shall not be
entitled to any payments or benefits the right to which provides for a “deferral of compensation”
within the meaning of Section 409A, and whose payment or
7
provision is triggered by Employee’s termination of employment (whether such payments or
benefits are provided to Employee under this Agreement or under any other plan, program or
arrangement of the Employer), until (and any payments or benefits suspended hereby shall be paid in
a lump sum on) the earlier of (i) the date which is the first business day following the six-month
anniversary of Employee’s “separation from service” (within the meaning of Section 409A of the
Code) for any reason other than death or (ii) Employee’s date of death, and such payments or
benefits that, if not for the six-month delay described herein, would be due and payable prior to
such date shall be made or provided to Employee on such date. Employer shall make the
determination as to whether Employee is a “specified employee” in good faith in accordance with its
general procedures adopted in accordance with Section 409A of the Code and, at the time of the
Employee’s “separation of service” will notify the Employee whether or not he is a “specified
employee.”
(m) Savings Clause. This Agreement is intended to satisfy the requirements of Section 409A of
the Code with respect to amounts subject thereto, and shall be interpreted and construed consistent
with such intent; provided that, notwithstanding the other provisions of this subsection and the
paragraph above entitled, “Specified Employee”, with respect to any right to a payment or benefit
hereunder (or portion thereof) that does not otherwise provide for a “deferral of compensation”
within the meaning of Section 409A of the Code, it is the intent of the parties that such payment
or benefit will not so provide. Furthermore, if either party notifies the other in writing that,
based on the advice of legal counsel, one or more of the provisions of this Agreement contravenes
any regulations or Treasury guidance promulgated under Section 409A of the Code or causes any
amounts to be subject to interest or penalties under Section 409A of the Code, the parties shall
promptly and reasonably consult with each other (and with their legal counsel), and shall use their
reasonable best efforts, to reform the provisions hereof to (a) maintain to the maximum extent
practicable the original intent of the applicable provisions without violating the provisions of
Section 409A of the Code or increasing the costs to the Employer of providing the applicable
benefit or payment and (b) to the extent practicable, to avoid the imposition of any tax, interest
or other penalties under Section 409A of the Code upon Employee or the Employer.
(n) Reimbursements. Except as expressly provided otherwise herein, no reimbursement payable
to Employee pursuant to any provisions of this Agreement or pursuant to any plan or arrangement of
Employer shall be paid later than the last day of the calendar year following the calendar year in
which the related expense was incurred, and no such reimbursement during any calendar year shall
affect the amounts eligible for reimbursement in any other calendar year, except, in each case, to
the extent that the right to reimbursement does not provide for a “deferral of compensation” within
the meaning of Section 409A.
8
IN WITNESS WHEREOF, the parties have executed this Agreement
effective
as of the date first above
written.
XXXXX & WESSON HOLDING CORPORATION |
||||
By: | /s/ Xxxxxxx X. Xxxxxx | |||
Xxxxxxx X. Xxxxxx | ||||
President and Chief Executive Officer | ||||
/s/ Xxxxxxx X. Xxxxxxxx | ||||
Xxxxxxx X. Xxxxxxxx | ||||
9