Exhibit 10.47
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") is made as of
February 17, 1999 by and between XxXxxxxxx Technologies, Inc., a Delaware
corporation (the "Company") and Xxxxx X. Xxxxxxx (the "Employee").
WHEREAS, Company considers the maintenance of a motivated
management group to be essential to protecting and enhancing the best interests
of Company and its stockholders and to that end Company has determined to
provide benefits to certain management employees in the event their employment
is terminated following a Change in Control of Company; and
WHEREAS, Employee is a member of Company's management group
and Company has determined that to reinforce and encourage the continued
attention and dedication of Employee to his duties, free from distractions which
could arise in anticipation of or subsequent to a Change in Control of Company,
it should enter into this Agreement with the Employee;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, Company and Employee agree as follows:
1. TERM AND NATURE OF AGREEMENT. This Agreement shall commence as of the
date hereof and shall continue in effect until February 17, 2002. As of February
17, 2002 and each third February 17th occurring thereafter, this Agreement shall
be automatically renewed for a term of three (3) years unless Company gives
written notice to Employee at least 90 days prior to the renewal date that this
Agreement will not be extended. Notwithstanding the foregoing, if a Change in
Control (as hereinafter defined) occurs during the last two (2) years of any
term of this Agreement, the term of this Agreement shall automatically be
extended for a period of twenty-four (24) months after the end of the month in
which the Change in Control occurs. Furthermore, Employee may terminate this
Agreement at any time by giving Company 30 days' advance written notice. This
Agreement shall be construed and enforced under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") as an unfunded welfare benefit plan.
The Agreement shall be administered by the Compensation Committee of the Board
of Directors of the Company (the "Committee").
2. SEVERANCE BENEFITS FOLLOWING A CHANGE IN CONTROL. If Employee's
employment with Company is terminated within twenty-four (24) months following a
Change in Control, Employee shall be entitled to the following severance
benefits (in addition to any non-severance compensation and benefits provided
for under any of Company's employee benefit plans, policies and practices or
under the terms of any other contracts, but in lieu of any severance pay under
any Company employee benefit plan, policy and practice or under the terms of any
other contract including any employment contract):
(a) If Employee's employment is terminated by reason of Employee's
disability, retirement or death of by Employee other than for Good Reason, the
Company shall pay Employee his full base salary through the Date of Termination
at the rate in effect at the time of termination (or the date of death in the
case of Employee's death), plus any bonus or incentive compensation award which,
pursuant to the terms of any compensation or incentive plan, Employee is
entitled to receive but which has not yet been paid.
(b) If Employee's employment is terminated for Cause, Company shall pay
Employee his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given plus any bonus or incentive
compensation award which, pursuant to the terms of any compensation or incentive
plan, Employee is entitled to receive but which has not yet been paid.
(c) If Employee's employment is terminated by Company other than for Cause
or by Employee for Good Reason, then:
(i) Within five (5) days after the Date of Termination, Company shall
pay Employee his full base salary through the Date of Termination at the
greater of the rate in effect at the time the Change in Control occurred or
the rate in effect when the Notice of Termination was given plus an amount
equal to 100% of Employee's Target Annual Bonus (as defined below).
(ii) Company shall pay Employee a gross severance benefit equal to (i)
1 times Employee's Annual Base Salary at the greater of the rate in effect
at the time the Change in Control occurred or the rate in effect when
Notice of Termination was given plus (ii) 1 times Employee's Target Annual
Bonus. The severance benefit shall be paid in a lump sum within 30 days of
Employee's Termination. Employee's "Annual Base Salary" shall mean the
yearly salary rate established from time to time by Company as Employee's
regular salary for the next succeeding twelve (12) month period, payable
pursuant to the Company's payroll on a periodic basis and Employee's
"Target Annual Bonus" shall mean the maximum available normal bonus
Employee could earn under Company's bonus program for the year in which his
Date of Termination occurs.
(iii) Any outstanding options to purchase stock of Company held by
Employee shall immediately vest and become exercisable in full in
accordance with their terms and the provisions of the Company's 1994 Stock
Incentive Plan and 1996 Incentive Stock Plan and any other stock option
plan or arrangement of the Company.
(iv) The restrictions on any shares of restricted stock held by
Employee which have not yet terminated will terminate immediately.
(v) Company shall pay the costs of a reasonable outplacement service
until Employee is employed on a full time basis.
(vi) For all purposes of Employee's participation in the Company's
Deferred Compensation Plan (the "Plan"): (a) the definition of Change in
Control contained in this Agreement shall govern and be deemed to be the
definition of "Change in Control" applicable to the Plan, notwithstanding
any provisions of the Plan, including Section 1.17, to the contrary, and
(b) the provisions of Section 3.9 (d) of the Plan and any similar successor
provisions shall not be applicable.
(vii) Until the earlier of the second anniversary of the Termination or
the date on which Employee becomes employed by a new employer, Company
shall, at its expense, provide Employee and Employee's family members with
medical, dental, life insurance, disability and accidental death and
dismemberment benefits at the highest level provided to Employee and
Employee's family members during the period beginning immediately prior to
the Change of Control and ending on the Date of Termination, PROVIDED,
HOWEVER, that if Employee become employed by a new employer which maintains
a major medical plan that either (i) does not cover Employee and Employee's
family members with respect to a pre-existing condition which was covered
under the Company's major medical plan, or (ii) does not cover Employee and
Employee's family members for a designated waiting period, Employee's
coverage under the Company's major medical plan 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
second anniversary of the Date of Termination.
3. EXCISE TAX 280G GROSS UP. In the event it shall be determined that any
payment or benefit provided under Paragraph 2(c) above together with any other
payments or benefits Employee is entitled to receive by reason of his
termination (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986 ("Code"), or any interest or penalties
are incurred by Employee with respect to such excise tax (such excise tax,
together with any such interest and penalties, hereinafter collectively referred
to as the "Excise Tax"), Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by Employee
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Employee retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payment. Payment of the Gross-Up Payment shall be subject
to the following:
(a) Subject to paragraph 3(b) below, the determination of whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment
shall be made by an accounting firm (the "Accounting Firm") selected by the
Company from among the following: Xxxxxx Xxxxxxxx & Co., KPMG Peat Marwick,
Price Waterhouse Coopers, and Deloitte & Touche. The Company will notify
Employee of the identity of the Accounting Firm within fifteen (15)
business days of Employee's Termination and the Accounting Firm shall
provide detailed supporting calculations to Company and Employee within
thirty (30) business days of being requested by Employee to make a Gross-Up
Payment determination. If the Accounting Firm determines that a Gross-Up
Payment is required, the Gross-Up Payment so determined shall be paid
within five (5) days after the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is
payable by Employee, it shall so advise Employee in writing. The Accounting
Firm's determinations shall be binding upon Company and Employee. If,
following the exhaustion of Company's remedies under paragraphs (b) and (c)
below, Employee is required to pay an Excise Tax, the Accounting Firm shall
make a determination of the amount of any underpayment in any previous
Gross-Up Payment and any underpayment shall be paid promptly by Company to
Employee.
(b) Employee shall notify Company in writing of any claim by the
Internal Revenue Service that, if successful, would require Company to make
a Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than ten (10) business days after Employee is informed in
writing of such claim and shall apprise Company of the nature of such claim
and the date on which such claim is requested to be paid. Employee shall
not pay such claim prior to the expiration of the thirty (30) day period
following the date on which it give such notice to Company (or such shorter
period ending on the date that any payment of taxes with respect to such
claim is due). If Company notifies Employee in writing prior to the
expiration of such period that it desires to contest such claim, Employee
shall (i) give Company any information reasonably requested by Company
relating to such claim, (ii) take such action in connection with contesting
such claim as Company shall reasonably request in writing, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by Company, (iii) cooperate with
Company in good faith in order to effectively contest such claim and (iv)
permit Company to participate in any proceedings relating to such claim;
provided, however, that Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Employee
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect hereto) imposed as a result
of such representation and payment of costs and expenses.
(c) Without limitation on the foregoing provisions of this Section 3,
Company shall control all proceedings taken in connection with contesting a
claim by the Internal Revenue Service 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 Employee to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner, and 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 Company shall determine; provided, however, that if Company
directs Employee to pay such claim and xxx for a refund, Company shall
advance the amount of such payment to Employee on an interest-free basis,
and shall indemnify and hold Employee harmless, on an after-tax basis, from
any Excise Tax or income 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
Employee is required to extend the statute
of limitations to enable Company to contest such claim, Employee may limit
this extension solely to such contested amount. Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and 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.
(d) If, after the receipt by Employee of an amount advanced by Company
pursuant to paragraph 3(c) above, Employee becomes entitled to receive any
refund with respect to such claim, Employee shall (subject to Company's
complying with the requirements of paragraphs 3(b) and (c)) promptly pay to
Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto).
(e) If, after the receipt by Employee of any amount advanced by Company
under paragraph 3(c), a determination is made that Employee shall not be
entitled to any refund with respect to such claim and Company does not
notify Employee in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
4. NON-SOLICITATION AND NON-COMPETITION. In consideration for the
severance benefits called for under paragraph 2(c) and Section 3 above, Employee
agrees that during the 12-month period following his Date of Termination (the
"Severance Period"), Employee:
(a) will not, without the prior written consent of Company, alone or in
association with others, solicit on behalf of Employee, or any other
person, firm, corporation or entity, any employee of Company, or any of its
operating divisions, subsidiaries or affiliates, for employment with a
person, firm, corporation or entity which competes with Company, or any of
its divisions, subsidiaries or affiliates.
(b) will not, without the prior written consent of Company, directly or
indirectly, engage or invest in, counsel or advise or be employed by any
other person, firm, corporation or entity engaged in or conducting business
which is the same as, or competing with, the business being conducted by
Company, or any of its operating divisions, subsidiaries or affiliates, in
any area or territory in which Company, or such operating divisions,
subsidiaries or affiliates, shall be conducting business during the
Severance Period. Notwithstanding the foregoing, Employee shall be entitled
to passively own not more than four and nine-tenths percent (4.9%) of any
publicly held entity engaged in any business in which Company, or any of
its operating divisions, subsidiaries or affiliates, shall be engaged
during said period.
Should Employee fail to comply with the non-solicitation and/or non-competition
restrictions contained in this Section 4, this Agreement shall immediately
terminate and Employee shall forfeit any remaining unpaid benefits under this
Agreement.
5. OTHER EMPLOYMENT. Employee shall not be required to mitigate the
amount of any payment or benefit provided for under this Agreement by seeking
other employment or otherwise nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by
Employee as a result of other employment. Payment to Employee pursuant to
this Agreement shall constitute the entire obligation of Company for
severance pay and full settlement of any claim for severance pay under law or
in equity that Employee might otherwise assert against Company or any of its
employees, officers or directors on account of Employee's termination.
6. CHANGE IN CONTROL. For purposes of this Agreement a "Change in
Control" shall have occurred if:
(a) any "Person" (as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended ("Exchange Act")) other
than Company, any corporation owned, directly or indirectly, by the
stockholders of Company in substantially the same proportions as their
ownership of stock of Company, and any trustee or other fiduciary holding
securities under a Company employee benefit plan or such proportionately
owned corporation, becomes the "beneficial owner" (as defined in rule 13d-3
under the Exchange Act), directly or indirectly, of securities of Company
representing 20% or more of the combined voting power of Company's then
outstanding securities;
(b) during any period of not more than 24 months, individuals who at
the beginning of such period constitute the Board of Directors of the
Company, and any new director (other than a director designated by a Person
who has entered into an agreement with Company to effect a transaction
described in paragraph (a), (c), or (d) of this Section 6) whose election
by the board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directs then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority thereof;
(c) the stockholders of Company approve a merger or consolidation of
Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 60% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of Company (or similar
transaction) in which no Person acquires more than 20% of the combined
voting power of Company's then outstanding securities; or
(d) the stockholders of Company approve a plan of compete liquidation
of Company or an agreement for sale or disposition by Company of all or
substantially all of its assets (or any transaction having a similar
effect).
Company may also determine, in its discretion, that a sale of a substantial
portion of its assets or one of its businesses constitutes a "Change of Control"
with respect to Employee if Employee is employed in the affected operation.
7. TERMINATIONS FOR CAUSE AND GOOD REASON. Employee will be considered
to have been terminated for "Cause" if the termination is by reason of Employee
willfully engaging in conduct demonstrably and materially injurious to the
Company, Employee being convicted of or pleading guilty or nolo contendre to a
crime involving moral turpitude or Employee's willful and continued failure for
a significant period of time to perform Employee's duties after a demand for
substantial performance has been delivered to Employee by the Board of Directors
of Company which demand specifically identifies the manner in which the Boar
believes that Employee has not substantially performed his duties. Employee's
termination shall be considered to have been for "Good Reason" if Employee's
termination is by reason of the occurrence of any of the following events within
24 moths following a Change in Control without Employee's express written
consent:
(a) any change in Employee's authorities, duties, responsibilities
(including reporting responsibilities) or performance criteria or
objectives or a change of more than 20 miles in Employee's place of
employment which, in Employee's judgment, represents an adverse change; the
assignment to Employee of any duties or work responsibilities which, in his
reasonable judgment, are inconsistent with such authorities or
responsibilities; or any removal of Employee from, or failure to reappoint
or reelect him to any of such positions, except if any such changes are
because of disability, retirement or Cause;
(b) a reduction in or failure to pay any portion of Employee's Annual
Base Salary as in effect on the date of the Change in Control or as the
same may be increased from time to time thereafter;
(c) the failure by Company to provide Employee with compensation and
benefits (including, without limitation, incentive, bonus and other
compensation plans and any vacation, medical, hospitalization, life
insurance, dental or disability benefit plan), or cash compensation in lieu
thereof, which are, in the aggregate, no less favorable than those provided
by Company to Employee immediately prior to the occurrence of the Change in
Control;
(d) any breach by Company of any provision of this Agreement; and
(e) the failure of Company to obtain a satisfactory agreement from any
successor or assign of Company to assume and agree to perform this
Agreement, as required in Section 9 of this Agreement.
Employee's continued employment after the expiration of six months from any
action which would constitute Good Reason under paragraph 7(a) above shall
constitute a waiver of rights with respect to such action constituting Good
Reason under this Agreement.
8. NOTICE OF TERMINATION. Any purported termination of employment by
Company or by Employee shall be communicated by a written Notice of Termination
to the other party which notice is given in accordance with Section 11 of this
Agreement. No termination shall be effective without such a Notice of
Termination. The Notice of Termination shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of Employee's
employment and shall specify the Date of Termination. The "Date of Termination"
shall mean the date specified in the Notice of Termination provided that in no
case shall the date be less than thirty (30) days or more than sixty (60) days
after the date of Notice of Termination is given. If within thirty (30) days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined wither by mutual written agreement of the parties, or by the
final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been taken).
9. SUCCESSORS. Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Company to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
Company would be required to perform if no such succession or assignment had
taken place. As used in this Agreement, "Company" shall include any successor or
assign to its business and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise. This Agreement shall inure to the
benefit of and be enforceable by Employee's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Employee should die while any amounts would still be payable to him
hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Employee's named beneficiary and if there is no such named beneficiary, to
Employee's estate in a lump sum.
10. FEES AND EXPENSES. Company shall pay all reasonable legal fees and
related expenses (including the reasonable costs of experts, evidence and
counsel), when and as incurred by Employee, as a result of contesting or
disputing any termination of employment of Employee following a Change in
Control whether or not such contest or dispute is resolved in Employee's favor
but only if Employee was seeking in good faith to obtain or enforce any right or
benefit provided by this Agreement or by any other plan or arrangement
maintained by the Company under with Employee is or may be entitled to receive
benefits.
11. NOTICE. Any notice or other communication provided for or required
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by
each party to the other or to such other address as either party may have
furnished to the other in writing.
12. MODIFICATIONS, WAIVERS AND SURVIVAL OF OBLIGATIONS. No provision of
this Agreement may be modified, waived or discharged unless such modification,
waiver or discharge is agreed to in writing and signed by Employee and Company.
A waiver of any condition or provision of this Agreement shall be limited to the
terms an conditions of such waiver and shall not be construed as a waiver of any
similar or dissimilar provisions or conditions at any time. The obligations of
Company under Sections 2 and 3 shall survive the expiration of the term of this
Agreement.
13. CLAIMS PROCEDURE. Any claim for benefits under this Agreement by
Employee shall be made in writing.
14. GOVERNING LAW. The laws of Illinois shall be controlling in all
matters relating to this Agreement to the extent not preempted by ERISA.
15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. ENTIRE AGREEMENT. The Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreement, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.
17. ACTION BY COMPANY. Any action required of or permitted by Company
under this Agreement shall be by resolution of its Board of Directors, by
resolution of a duly authorized committee of its Board of Directors, or by a
person or persons authorized by resolutions of its Board of Directors or such
committee.
18. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
19. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit Employee's continuing or future participation in any benefit, bonus,
incentive or other plan or program provide by Company and for which Employee may
qualify, nor shall anything herein limit or reduce such rights as Employee may
have under any other agreements with Company. Amounts which are vested benefits
or which Employee is otherwise entitled to receive under any plan or program of
Company shall be payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
XxXXXXXXX TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Its: President and Chief Executive Officer
/s/ Xxxxx X. Xxxxxxx
Employee
