AMENDED AND RESTATED AGREEMENT REGARDING EMPLOYMENT/COMPENSATION UPON CHANGE IN CONTROL
Exhibit
10.16
AMENDED
AND RESTATED AGREEMENT
REGARDING
EMPLOYMENT/COMPENSATION
UPON
CHANGE IN CONTROL
THIS
AMENDED AND RESTATED AGREEMENT is entered into as of September 15, 2005,
by and between APA ENTERPRISES, INC., a Minnesota corporation (herein
called the "Company"), and XXXX X. XXXX (herein called the
"Executive").
WHEREAS,
Executive has been employed by the Company for many years and is currently
its
President and Chief Executive Officer; and
WHEREAS,
Executive is a very important and valuable employee and the Company desires
to
keep Executive in its service; and
WHEREAS,
the Company desires to provide suitable compensation to the Executive should
Ms
employment be terminated or substantially changed as a result of a "Change
in
Control" as defined herein or otherwise without "Cause" as defined herein;
and
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, the parties hereto agree as follows:
1. Definitions.
For the purpose of this Agreement, the following words and phrases shall
have
the following meanings:
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(a)
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"Change
in Control" shall mean:
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(i) the
consummation of any consolidation or merger of the Company in which the Company
is not the continuing or surviving corporation or pursuant to which shares
of
the Company's common stock would be converted into cash, securities, or other
property, other than a merger of the Company in which the holders of the
Company's common stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger; or
(ii) 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
(iii) approval
by the shareholders of the Company of any plan or proposal for the liquidation
or dissolution of the Company; or
(iv) any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act)
of
30% or more of the Company's outstanding stock; or
(v) during
any period of two consecutive years, individuals who at the beginning of
such
period constitute the entire Board of Directors shall cease for any reason
to
constitute a majority thereof unless the election, or the nomination for
election by the Company's shareholders, of each new director was approved
by at
least two-thirds of the directors then still in office who were directors
at the
beginning of the two-year period.
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(b)
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"Cause"
shall mean clear and convincing evidence
of:
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(i) material
dishonesty by Executive involving the employer;
(ii) willful
violation of any law, rule, or regulation;
(iii) failure
or refusal to perform a material requirement of Executive's duties, or failure
or refusal to comply with a reasonable, important general policy of the Company
or its Board of Directors, after receipt by Executive of written notice
specifying in detail the failure or refusal, and a reasonable time in which
to
perform;
(iv) breach
of fiduciary duty to the employer; or
(v) Executive's
(a) death or (b) disability (by reason of physical or mental disease, defect,
accident or illness) such that Executive is or, in the opinion of two
independent physicians, one selected by the Company and one by Executive
or his
representative, for purposes of making this determination, will be unable
for an
aggregate of 180 or more days during any continuous 12-month period to render
the services required of him. In his then current position with the
Company.
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(c)
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"Competitive
Activities" shall mean:
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(i) directly
or indirectly engaging in, continuing in, or carrying on any business which
substantially competes with the business conducted by the
Company;
(ii) soliciting
or accepting orders for business on behalf of an entity other than the Company
from any persons (whether individuals or entities) who were customers or
bona
fide prospects of the Company during the one-year period prior to Executive's
termination of employment or inducing or attempting to induce such persons
to
terminate or modify their relationship with the Company for such business;
or
(iii) offering,
soliciting or agreeing to employ an employee of the Company, or inducing
or
attempting to induce such an employee to quit his or her employ with the
Company, without the prior written consent of the Company; Provided,
however, that the term "Competitive Activities" shall not include the ownership
of securities of corporations, which are listed on a national securities
exchange or quoted on a national over-the-counter market, by the Executive
in an
amount not exceeding 2% of the outstanding shares of any such
corporation.
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(d)
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"Date
of Termination" shall mean:
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(i) if
Executive's employment is terminated by the Company for disability, 90 days
after Notice of Termination is given to Executive (provided that Executive
shall
not have returned to the performance of Executive's duties on a full-time
basis
during such 90-day period); or
(ii) if
Executive's employment is terminated by the Company for any other reason,
90
days after Notice of Termination is given; provided, however, that if within
90
days after any Notice of Termination is given to Executive by the Company
Executive notifies the Company that a dispute exists concerning the termination,
the Date of Termination shall be the date the dispute is finally determined,
whether by mutual agreement by the parties or upon final judgment, order,
or
decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected).
(e) "Good
Reason" shall mean any of the following (without Executive's express written
consent):
(i) Assignment
to Executive by the Company of duties inconsistent with Executive's position,
duties, responsibilities, and status with the Company immediately prior to
a
Change in Control of the Company, or a change in Executive's titles or offices
as in effect immediately prior to a Change in Control of the Company, or
any
removal of Executive from or any failure to reelect or reappoint Executive
to
any of such positions, except in connection with the termination of his
employment for disability, Retirement, or Cause or as a result of Executive's
death or by Executive other than for Good Reasons;
(ii) A
reduction by the Company of Executive's base salary as in effect on the date
hereof or as the same may be increased from time to time during the term
of this
Agreement or the Company's failure to increase Executive's base salary (within
12 months of Executive's last increase in base salary) after a Change in
Control
of the Company in an amount which at least equals, on a percentage basis,
the
average percentage increase in base salary for all executive officers of
the
Company effected during the preceding 12 months;
(iii) Any
failure by the Company to continue in effect, or to provide a comparable
substitute for, any benefit plan or arrangement (including, without limitation,
any profit sharing plan, executive supplemental medical plan, group life
insurance plan, and medical, dental, accident, and disability plans) in which
Executive is participating at the time of a Change in Control of the Company
(or
any other plans providing Executive with substantially similar benefits)
(hereinafter referred to as "Benefit Plans"), the taking of any action by
the
Company that would adversely affect Executive's participation in or materially
reduce Executive's benefits under any such Benefit Plan or deprive Executive
of
any material fringe benefit enjoyed by Executive at the time of a Change
in
Control of the Company;
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(iv) Any
failure by the Company to continue in effect, or to provide a comparable
substitute for, any incentive plan or arrangement (including, without
limitation, any incentive compensation plan, long-term incentive plan, bonus
or
contingent bonus arrangements or credits, the right to receive performance
awards, or similar incentive compensation benefits) in which Executive is
participating, or is eligible to participate, at the time of a Change in
Control
of the Company (or any other plans or arrangements providing him with
substantially similar benefits) (hereinafter referred to as "Incentive Plans")
or the taking of any action by the Company which would adversely affect
Executive's participation in any such Incentive Plan, expressed as a percentage
of his base salary, by more than ten percentage points in any fiscal year
as
compared to the immediately preceding fiscal year;
(v) Any
failure by the Company to continue in effect, or to provide a comparable
substitute for, any plan or arrangement to receive securities of the Company
(including, without limitation, any stock option plan or any other plan or
arrangement to receive and exercise stock options, stock appreciation rights,
restricted stock, or grants thereof) in which Executive is participating,
or is
eligible to participate, at the time of a Change in Control of the Company
(or
plans or arrangements providing him with substantially similar benefits)
(hereinafter referred to as "Securities Plans") or the taking of any action
by
the Company which would adversely affect Executive's participation in or
materially reduce Executive's benefits under any such Securities
Plan;
(vi) If
at the time of a Change in Control of the Company Executive is employed at
the
Company's principal executive offices, a relocation of such principal executive
offices to a location more than fifty miles outside of the Minneapolis-St.
Xxxx
Metropolitan Area or, if Executive is not employed at the Company's principal
executive offices, Executive's relocation to any place other than the location
at which the Executive performed Executive's duties prior to a Change in
Control
of the Company, except for required travel by Executive on the Company's
business to an extent substantially consistent with Executive's business
travel
obligations at the tune of a Change in Control of the
Company;
(vii) Any
failure by the Company to provide Executive with at least the number of paid
vacation days to which the Executive is entitled at the time of a Change
in
Control of the Company;
(viii) Any
material breach
by the Company of any provision of this Agreement;
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(ix) Any
failure by the Company to obtain the assumption of this Agreement by any
successor or assign of the Company; or
(x) Any
purported termination of Executive's employment which is not effected pursuant
to a Notice of Termination satisfying the requirements of Section l(f)
hereof.
(f) "Notice
of Termination" shall mean a written notice which shall indicate those specific
termination provisions in this Agreement relied upon and which sets forth
in
reasonable detail the facts and circumstances claiming to provide a basis
for
termination of Executive's employment under the provisions so indicated.
Any
termination by the Company pursuant to this Agreement shall be communicated
by
Notice of Termination. For purposes of this Agreement, no such purported
termination by the Company shall be effective without such Notice of
Termination.
(g) "Retirement"
shall mean termination by the Company or Executive of Executive's employment
based on Executive's having reached age 65 or such other age or upon such
other
terms as shall have been fixed in any arrangement established with Executive's
consent.
2. Separate
Employment Arrangements. Executive is, and shall be, employed by the Company
solely upon the existing arrangements which are separate from this Agreement,
as
those employment arrangements hereafter may be amended by the parties. The
parties expressly acknowledge and agree that this Agreement is not intended
to
be an employment agreement.
3. Participation
in Other Executive Benefit Plans. Nothing in this Agreement shall in any
manner
modify, impair, or affect the existing or future rights or interests of
Executive (a) to receive any employee benefits from the Company to which
he
would otherwise be entitled or (b) as a participant in any incentive,
profit-sharing or bonus plan, stock option plan or pension plan of the Company.
The rights and interests of Executive to any employee benefits or as a
participant or beneficiary in or under any or all such plans shall continue
in
full force and effect. Executive shall have the right at any future time
to
become a participant or beneficiary under or pursuant to any and all such
plans.
Any compensation payable under this Agreement shall not be deemed salary
or
other compensation to Executive for purposes of any retirement plans maintained
by the Company or for purposes of any other fringe benefit obligations of
the
Company.
4. Nonassignability
of Benefits. Executive shall not transfer, assign, encumber, or otherwise
dispose of his right to receive payments hereunder and, in the event of any
attempted transfer or assignment, the Company shall have no further liability
to
Executive under this Agreement.
5. Payments
and Benefits upon a Change in Control. If Executive is employed by the
Company upon the occurrence of a Change in Control, the following provisions
shall govern:
(a) Executive
shall continue to be employed for at least thirty-six (36) months with
substantially the same duties, compensation, and benefits in the same geographic
location as existed just prior to the Change in Control.
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(b) Executive
may terminate his employment during the thirty-six (36) months following
the
Change in Control for Good Reason, as defined herein, and, upon such
termination, shall receive from the Company in a lump sum, in cash, on the
fifth
(5th) day
following the Date of Termination, an amount equal to two and one-half (2
1/2) times Executive's "annualized includible compensation for the base
period" (as defined in Section 280G(d) of the Internal Revenue Code of 1986,
as
amended (the "Code")), and shall not engage in any Competitive Activities
for
one year following the Date of Termination.
(c) If
Executive's employment is terminated within thirty-six (36) months following
the
Change in Control, other than for Cause as defined herein or as a result
of his
Retirement, disability, or death, the Executive shall receive as severance
pay
in a lump sum, in cash, on the fifth (5th) day
following the
Date of Termination, an amount equal to two and one-half (2 1/2) tunes
Executive's "annualized includible compensation for the base period" (as
defined
in Section 280G(d) of the Code), and shall not engage in any Competitive
Activities for one year following the Date of Termination.
(d) Executive
may terminate his employment other than for Good Reason upon at least three
months' notice following the Change in Control, thereby waiving any further
benefits hereunder except a severance benefit of three months' salary and
a
prorated portion of any annual bonus, provided that Executive then agrees
not to
engage in any Competitive Activities for six months following the Date of
Termination.
(e) If
Executive terminates his employment otherwise than under any of paragraphs
(b)
or (d) of this Section 5, Executive shall not be entitled to any payments
for
any period after the end of the employment and shall not receive any severance
benefit.
(f) If
the Executive holds any options to purchase stock of the Company after a
Change
in Control, Executive shall be entitled, upon involuntary termination except
for
Cause during the thirty-six (36) month period, to demand payment of the current
value of such options (fair market value as of the Date of Termination less
the
then effective exercise price).
(g) If
the lump sum severance payment provided for under this Section 5, calculated
as
set forth above, either alone or together with other payments which Executive
has the right to receive from the Company, would constitute an "excess parachute
payment" (as defined in Section 280G of the Code), such lump sum severance
payment shall be reduced to the largest amount as will result in no portion
of
the lump sum severance payment under this Section 5 being subject to the
excise
tax imposed by Section 4999 of the Code. The determination of any reduction
in
the lump sum severance payment under this Section 5(g) pursuant to the foregoing
sentence shall be made by Executive in good faith, and such determination
shall
be conclusive and binding on the Company.
(h) In
the event of termination of Executive's employment for any reason, Executive
shall be entitled to continue to participate in the Company's group health
plan
for employees following such termination. Executive shall be responsible
for
payment of premiums. This benefit shall be available until Executive's
death or his election not to continue such participation.
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6. Payments
and Benefits Without a Change in Control. In the event that Executive's
employment with the Company is terminated by the Company without Cause before
a
Change in Control or more man 36 months after a Change in Control, Employee
shall be paid any bonus accrued at the Date of Termination and continuation
of
his salary for 24 months, payable at the end of every 3-month period after
the
Date of Termination.
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7.
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No
Obligation to Mitigate Damages; No Effect on Other Contractual
Rights.
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(a) Executive
shall not be required to mitigate damages or the amount of any payment provided
for under Section 5 hereof by seeking other employment or otherwise, nor
shall
the amount of any payment provided for under Section 5 be reduced by
any compensation earned by Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
(b) The
provisions of Section 5, and any payment provided for thereunder, shall
not reduce any amounts otherwise payable, or in any way diminish Executive's
existing rights, or rights which would accrue solely as a result of the passage
of tune, under any Benefit Plan, Incentive Plan, Securities Plan, employment
agreement, or other contract, plan, or arrangement.
8. Entire
Agreement; Headings. This Agreement is the entire Agreement between the
parties on its subject matter and shall be deemed to supersede any other
agreements allegedly made between the parties regarding the subject matter.
Without limitation of the foregoing, this Agreement amends, restates and
supersedes the Agreement Regarding Employment/ Compensation Upon Change in
Control dated August 20, 1997. Headings shall not be utilized in any
interpretation of this Agreement.
9. Notices.
Any notice or other communication provided for herein or given hereunder
shall
be in writing and shall be delivered in person or, in the case of the Company,
to the Board of Directors, or mailed by first class registered or certified
mail, postage prepaid, addressed to the Company at its registered office
in the
State of Minnesota and addressed to the Executive or any other person at
the
last known address of such person appearing on the books of the
Company.
10. Amendment.
This Agreement may not be changed, modified or amended except in writing
signed
by both parties.
11. Waiver
of Breach. The waiver by either party of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach
by either party.
12. Invalidity
of Any Provision. The provisions of this Agreement are severable, it being
the intention of the parties hereto that should any provision hereof by invalid
or unenforceable, such invalidity or unenforceability of any provision shall
not
affect the remaining provisions hereof, but the same shall remain in full
force and effect as if such invalid or unenforceable provision or provisions
were omitted.
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13. Resolution
of Disputes. Any dispute or claim arising out of this Agreement, or breach
thereof, shall be decided by arbitration, under the commercial arbitration
rules
of the American Arbitration Association (the "AAA"), and shall be conducted
in
the Minneapolis, Minnesota metropolitan area. Demand for arbitration hereunder
may be made by either party hereto upon written notification to the other
party.
The arbitration shall be by a single arbitrator mutually selected by Executive
and the Company. If the parties do not agree upon an arbitrator within 20
days
after the date of a demand for arbitration, the selection of the single
arbitrator shall be made in accordance with the rules of the AAA. This agreement
to arbitrate shall be specifically enforceable. Any decision rendered by
the
arbitrator shall be final and binding, and judgment may be entered upon it
by
any court having jurisdiction. The arbitrator shall assess arbitration fees,
expenses, attorneys' fees, and compensation in accordance with the applicable
AAA rules. Nothing herein contained shall bar either party from seeking
equitable remedies in a court of appropriate jurisdiction.
14. Successors
and Assigns. This Agreement shall be binding upon, and inure to the benefit
of, the Company, its successors and assigns, and Executive, his heirs, legal
representatives and assigns.
15. Governing
Law. This Agreement is being delivered and is intended to
be
performed in the State of Minnesota and shall be construed and enforced in
accordance with the laws of such state.
16. Counterparts.
This Agreement may be executed simultaneously in two or more counterparts,
each
of which shall be deemed an original, but all of which together shall constitute
but one and the same instrument.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
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By:
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/s/
Xxxx X. Xxxxxx
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Its:
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Director
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EXECUTIVE:
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/s/
Xxxx X. Xxxx
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Xxxx
X. Xxxx
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