Exhibit 10.9
This
RETENTION AGREEMENT (the “Agreement”) is made this 12th day of March, 2004, by
and between Photo Control Corporation (the “Company”) and Xxxxxx Xxxxxxx
(“Employee”).
RECITALS
| A. |
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Employee
is currently employed as President with the Company. |
| B. |
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The Company
wants to recognize Employee’s past service with the Company and provide him
with a level of financial security as the Company explores strategic
alternatives. |
| C. |
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The Company also
believes it is in its best interests of the Company and its shareholders to
retain the services of Employee in the event of a Change in Control (as defined
in paragraph 2 below) and to ensure Employee’s continued dedication and
efforts in such event. |
| D. |
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The Company and
Employee desire to enter into this Agreement. |
AGREEMENT
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In consideration
of the above recitals and the promises set forth in this Agreement, the parties
agree as follows: |
1. Vesting
of Retirement Benefits. For the reasons set forth above, the Company
hereby amends the Company’s Executive Salary Continuation Plan dated August 9, 1985,
as amended (the “Plan”), as follows:
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(a) Except as provided in Sections 1(b) and 1(c), upon
Employee’s termination of his employment with the Company for any reason,
Employee will be entitled to immediately begin receiving the monthly installment
payments that the Plan currently provides would be paid beginning at age 67 if
Employee would have continued in employment with the Company until the age of at
least 65. In other words, this amendment to the Plan entitles Employee to
receive an annual benefit of $48,534 for 15 years paid on a monthly basis,
beginning the month after the month of termination. |
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(b) Upon a Change in Control (as defined below) after
termination of employment, the remaining payments due under the Plan will
increase by an aggregate of 3% each year over the prior year’s payments
beginning with the payments due the year after the Change in Control. For
example, if Employee terminates employment on June 1, 2004, and a Change of
Control occurs on August 1, 2005, Employee would receive $4,044.50 per
month from July, 2004 through August, 2005 and $4,165.84 per month the following
year beginning September, 2005, with each payment increasing by 3% per year
thereafter until all payments due under the Plan are made. |
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(c) Upon a Change in Control prior to termination of
employment, the Employee will begin receiving payments due under the Plan
beginning on the 31st month after a Change in Control. Payments made
in each year after the first year will increase by an aggregates of 3% each year
over the prior year’s payments. These payments will be made whether or not
Employee terminates employment before or after the 31st month after a
Change in Control. For example, if a Change in Control occurs on June 1, 2004,
Employee would receive $4,044.50 per month from January, 2007 through December,
2007 and $4,165.84 per month the following year, with each payment increasing by
3% per year thereafter until all payments due under the Plan are made.
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(d) Upon Change in Control before or after termination of
employment, the Company will establish a “Rabbi Trust” for the benefit
of Employee and fund such trust with an annuity purchased from a financially
sound insurance company sufficient to make the remaining payments due to
Employee under the Plan, as amended by Sections 1(a), 1(b) and 1(c) of
this Agreement. |
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(e) The amendment to the Plan set forth in this
Agreement applies only to the Employee. |
2.
Definition of “Change in Control.” For the
purposes of this Agreement, a “Change in Control” of the Company shall
be deemed to occur in the event:
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(a) that during any 24 consecutive months the individuals
who, at the beginning of such period, constitute the entire Board of Directors
of the Company (“Incumbent Directors”) cease for any reason other than
death to constitute at least a majority of the Board; provided, however, that
any individual who was not a director at the beginning of such 24-month period
whose election, or nomination for election by the Company’s stockholders,
was approved by a vote of at least a majority of the then Incumbent Directors
also shall be an Incumbent Director; |
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(b) any merger, consolidation or recapitalization of the
Company (each of the foregoing being an “Acquisition Transaction”)
where: |
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(i) the stockholders of the Company immediately prior to
such Acquisition Transaction would not immediately after such Acquisition
Transaction beneficially own, directly or indirectly, shares representing in the
aggregate more than 50% of (A) the then outstanding common stock of the
corporation surviving or resulting from such merger, consolidation or
recapitalization, as the case may be, or of its ultimate parent corporation, if
any (the “Surviving Corporation”) and (B) the Combined Voting
Power (as defined below) of the then outstanding Voting Securities (as defined
below) of the Surviving Corporation, or |
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(ii) the Incumbent Directors at the time of the initial
approval of such Acquisition Transaction would not immediately after such
Acquisition Transaction constitute a majority of the Board of Directors of the
Surviving Corporation; |
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(c) 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 or the liquidation or dissolution of the Company; or
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(d) any Person (as defined below) shall become the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of securities of the Company representing in the
aggregate 30% or more of either (i) the then outstanding shares of the
Company’s Common Stock or (ii) the Combined Voting Power of all then
outstanding Voting Securities of the Company; provided that, notwithstanding the
foregoing, a Change in Control shall not be deemed to have occurred solely as
the result of an acquisition of securities directly from the Company (not
including any conversion of a security that was not acquired directly from the
Company). |
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For purposes of this Paragraph 2: |
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(aa) “Person” shall mean any individual,
entity (including, without limitation, any corporation, partnership, trust,
joint venture, association or governmental body) or group (as defined in
Sections 13(d)(3) or 14(d)(2) of the Exchange Act and the rules and
regulations thereunder); provided that Person shall not include the Company or
any employee benefit plan of the Company; |
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(bb) “Voting Securities” shall mean all
securities of a corporation having the right under ordinary circumstances to
vote in an election of the Board of Directors of such corporation; and
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(cc) “Combined Voting Power” shall mean the
aggregate votes entitled to be cast generally in the election of directors of a
corporation by holders of then outstanding Voting Securities of such
corporation. |
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3. Retention
Severance Pay and Benefits.
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(a) If
Employee satisfies all of the conditions of paragraph 3(b) below, the
Company shall provide Employee the following retention severance pay and
benefits upon a termination of his employment following a Change in Control:
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(i) Severance
pay equal to twenty-four (24) months of Employee’s gross monthly base
salary at the time of termination, which severance pay will be paid to Employee,
at the Company’s election, either in a lump-sum amount or in installments
in accordance with the Company’s then existing regular payroll practices;
and
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(ii) For
a period of eighteen (18) months following Employee’s date of termination
(the “Premium Payment Period”), the Company shall pay the monthly
health, dental and life insurance premiums for Employee to continue his
insurance under the Company’s group plans subject to these plans’
eligibility requirements. The Premium Payment Period shall run concurrently with
Employee’s COBRA and state benefits continuation period. In order to
receive these benefits, Employee must execute all documentation necessary to
elect insurance continuation. |
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(iii) Transfer
of the Company vehicle then driven by Employee at no cost to Employee other than
income tax and employee payroll taxes. |
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(b) Employee
shall receive the retention severance pay and benefits described in
paragraph 3(a) above only if all of the following conditions are satisfied:
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(i) Employee
was an employee of the Company on the date the Change in Control occurred;
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(ii) Employee
complied with any request by the Company or its successor to remain employed for
up to six (6) months following the effective date of any Change in Control;
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(iii) Employee’s
employment with the Company or its successor is terminated by the Company
or voluntarily by Employee following the Change of Control for a reason other
than one set forth in paragraph 3(c) below; and |
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(iv) Employee
signs a Separation and Release Agreement at the time of termination in providing
for the following: (a) Employee’s general release of the Company, any
of its respective predecessors, subsidiaries, affiliates, successors, assigns,
and any of their respective current and former officers, agents, directors,
employees, independent contractors, shareholders, attorneys, accountants,
insurers, representatives; (b) Employee’s return of all corporate
property in his possession; (c) nondisparagement of the Company and any
successor and their respective representatives; (d) confidentiality of the
terms of the Separation Agreement; and (e) affirmation of any continuing
obligations of Employee, such as, but not limited to non-competition or
confidentiality obligations. |
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(c) Notwithstanding
the provisions of any part of paragraph 2 above, Employee shall not be
entitled to any retention severance pay or benefits under paragraph 3(a)
above in the event Employee is terminated for any of the following reasons:
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(ii) Employee
refuses to comply with the request of the Company or its successor that he
remain employed for a period of up to six (6) months following the
effective date of the Change in Control, unless Employee’s refusal to
remain employed for up to this six (6) month period is due to his work
location being relocated to a location that is more than fifty (50) miles
from Employee’s work location in effect prior to the effective date of the
Change in Control.
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4. Taxes. Any
payments made to Employee pursuant to this Agreement shall be subject to the
normal withholdings which the Company is obligated by law to deduct, or which
the Company in good faith believes it is obligated by law to deduct.
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5. No
Guaranty of Future Employment. Nothing in this Agreement shall be
deemed to be a contract of employment for a specified period of time. The terms
of Employee’s employment shall remain unmodified, and unless otherwise
agreed to in a separate written agreement between Employee and the Company
signed by both of them, Employee’s employment with the Company shall remain
at-will.
6. Confidentiality. By
signing this Agreement, Employee agrees to keep strictly confidential the fact
of and all terms and conditions of this Agreement and any related documents.
Employee agrees not to disclose to anyone anything about this Agreement, except
that he may tell his spouse, attorney, or tax advisors, if any, about this
Agreement provided that he obtains these individuals’ agreement to abide by
this confidentiality provision.
7. Successors
and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the Company, its Successors and Assigns, and the Company shall
require any Successors and Assigns to expressly assume and agree to perform the
Company’s obligation under this Agreement. Neither this Agreement nor any
right or interest thereunder shall be assignable or transferable by Employee,
his/her beneficiaries or legal representatives, except by will or by the laws of
descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Employee’s personal representative.
8. Miscellaneous.
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(a) Integration. This
Agreement embodies the entire agreement and understanding among the parties
relative to Employee’s right to receive retention pay or benefits. This
Agreement supersedes any and all prior retention agreements between the parties,
and any other agreements between the parties relating to the subject matter
herein. |
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(b) Modification
and Termination. The terms and conditions of this Agreement may be
amended or terminated only upon written agreement signed by the Company and
Employee. |
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(c) Applicable
Law. This Agreement shall be governed by and construed and enforced
in accordance with the laws of the state of Minnesota. |
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(d) Counterparts. This
Agreement may be executed in several counterparts and as so executed shall
constitute one agreement binding on the parties hereto. |
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(e) Severability. The
invalidity or partial invalidity of any portion of this Agreement shall not
invalidate the remainder thereof, and said remainder shall remain in full force
and effect to the maximum extent compatible with then applicable law.
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(f) Recitals
and Headings. The recital and section headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement. |
IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date herein first above written.
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