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EXHIBIT 10.17
EXECUTIVE SEVERANCE AGREEMENT
This EXECUTIVE SEVERANCE AGREEMENT ("Agreement") has been executed as
of the 8th day of November, 1999 between XXXXXX X. XXXXXXXXXX ("Executive") and
XxXXXXX, INC., a Delaware corporation (the "Company").
WHEREAS, Executive is the Vice President and Chief Financial Officer of
the Company; and
WHEREAS, the Company is willing, subject to the terms of this Agreement,
to provide certain benefits to the Executive in the event of termination of his
employment following a Change of Control (as defined below);
THEREFORE, the parties agree as follows:
1. Certain Definitions. For purposes of this Agreement the following
words shall have the following meanings:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Change of Control" shall mean:
(i) The purchase or other acquisition by any person,
entity or group of persons, within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (excluding, for this purpose, (i) the Company or
its subsidiaries, (ii) any employee benefit plan of the Company or
its subsidiaries or (iii) Xxxxxx X. XxXxxxx, Xx., Xxxxx X. XxXxxxx
or the spouse or lineal descendants of Xxxxx X. XxXxxxx), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either the
then-
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outstanding shares of common stock of the Company or the combined
voting power of the Company's then-outstanding voting securities
entitled to vote generally in the election of directors; or
(ii) When individuals who, as of the date hereof,
constitute the Board of Directors of the Company (the "Board" and,
as of the date hereof, the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board, provided that any
person who becomes a director subsequent to the date hereof whose
election or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an individual
whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall be, for
purposes of this section, considered as though such person were a
member of the Incumbent Board; or
(iii) Approval by the stockholders of the Company of (a)
a reorganization, merger or consolidation, in each case with
respect to which persons who were the stockholders of the Company
immediately prior to such reorganization, merger or consolidation
do not, immediately thereafter, own more than 50% of,
respectively, the common stock and the combined voting power
entitled to vote generally in the election of directors of the
reorganized, merged or consolidated corporation's then-outstanding
voting securities, or (b) a liquidation or dissolution of the
Company or of the sale of all or substantially all of the assets
of the Company.
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Notwithstanding the foregoing, an isolated sale, spin-off, joint
venture or other business combination by the Company, which involves
one or more divisions or subsidiaries of the Company and is approved by
a majority vote of the incumbent Board, shall not be deemed to be a
Change of Control.
(c) "Code"shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Effective Date" shall mean the first date on which a
Change of Control occurs, or such earlier date as the Human Resources
Committee of the Board may determine with respect to the Executive.
Anything in this Agreement to the contrary notwithstanding, if the
Executive's employment with the Company is terminated and if such
termination of employment (i) was at the request of a third party who
has taken steps reasonably calculated to affect a Change of Control, or
(ii) otherwise arose in connection with, or in anticipation of, a
Change of Control, then for all purposes of this Agreement the
"Effective Date" shall mean the date immediately prior to the date of
such termination of employment.
(e) "Employment Period" shall mean the period commencing on the
Effective Date and ending on the first anniversary of such date.
(f) "Fiscal Year" shall mean the fiscal year of the Company.
2. Terms of Employment.
(a) Location and Duties.
(i) The Company shall keep the Executive in its employ
for the Employment Period. During the Employment Period, the
Executive's services shall be required to be performed at the
location where the Executive was employed
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immediately preceding the Effective Date, or at any office or
location less than 50 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive will be expected to devote reasonable
attention and time during normal business hours to the business
and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive, to use
the Executive's reasonable beat efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it
shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long an such activities do not significantly interfere with the
performance of the Executive's assigned responsibilities. To the
extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature
and scope thereto) subsequent to the Effective Date shall not
hereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) Compensation. During the Employment Period, unless his
employment is earlier terminated pursuant to Section 3, the Executive
shall receive:
(i) Base Salary. A minimum base salary ("Base Salary"),
which shall be paid at a monthly rate, in an amount not less than
the annualized monthly base salary rate paid or payable to the
Executive during the month immediately preceding the
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month in which the Effective Date occurs, including any base
salary which was earned but payment of which was deferred and any
base salary which was paid or payable to the Executive by the
Company and its affiliated companies. As used in this Agreement,
the term "affiliated companies" shall include any company directly
or indirectly controlled by, controlling or under common control
with the Company.
(ii) Annual Bonus. A minimum annual bonus ("Annual
Bonus") in cash, payable in accordance with past practices of the
Company, calculated by multiplying the Base Salary defined in
Section 2(b)(i) times the Average Annual Bonus Percentage. The
"Average Annual Bonus Percentage" is the average of the
percentages of the Executive's Base Salary earned in a Fiscal Year
represented by his annual bonus earned in respect of that Fiscal
Year from the Company or its affiliated companies for each of the
five Fiscal Years most recently ended, after disregarding the
highest and lowest of such percentages; if the Executive has been
employed by the Company for three years or less, the Average
Annual Bonus Percentage is the average of the percentages of the
Executive's Base Salary earned in a Fiscal Year represented by his
Annual Bonus earned in respect of that Fiscal Year from the
Company or its affiliated companies for each of the three Fiscal
Years most recently ended. If the Executive has been employed by
the Company for less than one year, the Executive will be entitled
to the Bonus, if any, to which he would otherwise be entitled
irrespective of the terms of this Agreement.
(iii) Benefits. All pension, welfare and other employee
benefits, fringe benefits and perquisites in amounts and on terms
not less favorable than those to
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which the Executive was entitled on the Effective Date, subject
only to benefits reductions within the scope of Section 3(c)( i).
3. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith and as set
forth below that the Disability of the Executive has occurred or is
continuing during the Employment Period, it may give to the Executive
written notice of its intention to terminate the Executive's
Employment. In such event, the Executive's employment with the Company
shall terminate effective on the 30th day after receipt of such notice
by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the
Executive from the Executive's duties with the Company on a full-time
basis for 180 consecutive business days as a result of incapacity due
to mental or physical illness which is determined to be total, and
permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative
(such agreement as to acceptability not to be withhold unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For the sole and exclusive
purposes of this Agreement, "Cause" shall mean:
(i) The willful and continued failure of the Executive
to perform substantially the Executive's duties with the Company
or one of its affiliates (other
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than any such failure resulting from incapacity due to physical or
mental illness), after a written demand for such performance is
delivered to the Executive by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in
which the Board or Chief Executive Officer believes that the
Executive has not substantially performed the Executive's duties,
or
(ii) The willful engaging by the Executive in (A)
illegal conduct (other than minor traffic offenses), or (B)
conduct which is in breach of the Executive's fiduciary duty to
the Company and which is demonstrably injurious to the Company,
its reputation or its business prospects.
For purposes of this provision, no act or failure to act on the part of
the Executive shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable
belief that the Executive's action or omission was in the best
interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or
upon the instructions of the Chief Executive Officer of the Company or
based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good
faith and in the best interests of the Company. The cessation of
employment of the Executive shall not be deemed to be for Cause unless
and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice is
provided to the Executive and the Executive is given an opportunity to
be heard before the Board), finding that, in the good-faith opinion of
the
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Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) Good Reason. The Executive may voluntarily terminate
his employment for Good Reason. For the sole and exclusive
purposes of this Agreement, "Good Reason" shall mean:
(i) any failure by the Company to comply with any
of the provisions of this Agreement, other than an isolated
failure not occurring in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given
by the Executive and other than a failure to comply with
Section 2(b)(iii) solely by reason of a reduction in
benefits that applies to all salaried employees who are
exempt from the wage and hour provisions of the Fair Labor
Standards Act;
(ii) the Company's requiring the Executive to be
based at any office or location other than an provided in
Section 2(a)(i);
(iii) any purported termination by the Company of
the Executive's employment otherwise than as expressly
permitted by this Agreement; or
(iv) any failure by the Company to comply with and
satisfy Section 9(c).
(d) Notice of Termination. Any termination of employment
hereunder shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 10(c). For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the
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provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than
90 days after the giving of such notice). Any failure by the
Executive or the Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a show of Good
Reason or Cause shall not waive any right to the Executive or the
Company, respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i)
if the Executive's employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as
the case may be, (ii) if the Executive's employment is terminated
by the Company other than for Cause or Disability, the Date of
Termination shall be the date 90 days after the date on which the
Company notifies the Executive of such termination and (iii) if
the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, an the case may
be.
4. Obligations of the Company Upon Termination.
(a) Good Reason; Other Than for Cause, Death or
Disability. If, during the Employment Period, the Company shall
terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good
Reason:
(i) The Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of
Termination the aggregate of the following amounts:
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(A) To the extent not theretofore paid, the
Executive's current base salary; plus
(B) All previously deferred base salary,
bonuses and other compensation (together with any
accrued interest thereon) not yet paid by the
Company; plus
(C) A bonus equal to the Base salary earned
from the beginning of the Fiscal Year in which the
termination occurred to the Date of Termination
multiplied by the Average Annual Bonus Percentage
defined in Section 2(b)(ii); plus
(D) The product of three (3) times Final
Compensation. "Final Compensation" is the sum of (x)
the Base Salary defined in Section 2(b)(i), plus (y)
the Average Annual Bonus Percentage defined in
Section 2(b)(ii) multiplied by such Base Salary; plus
(E) Vacation pay equal to Final Compensation
per day multiplied by the number of days of earned
vacation not taken as of the Date of Termination.
(ii) The Company shall continue to provide to the
Executive, or reimburse the Executive for the cost of, all
medical, hospitalization, disability, [DENTAL, LIFE
INSURANCE, CLUB MEMBERSHIP AND AUTOMOBILE BENEFITS], in
amounts and on terms not less favorable than those to which
the Executive was entitled on the Date of Termination, for
three years after the Date of Termination, and shall pay or
provide any other amounts or benefits required by law to be
paid or provided to the Executive
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or which the Executive is entitled to receive under any
Agreement, program, policy, practice, contract or agreement
of the Company or any of its affiliated companies.
(iii) If the aggregate amounts under (i) above are
not paid to the Executive when due, interest thereon shall
accrue and be paid to the Executive at the rate of the
lesser of (A) 15% per annum, compounded monthly or (B) the
maximum rate allowed by law.
(iv) As a condition of receiving payments and
benefits under this Section 4(a), the Executive must
provide the Company with a release, satisfactory to the
Company in its sole discretion, of all claims, charges and
causes of action the Executive may have arising out of or
relating in any way to the Executive's employment by the
Company and its affiliated companies and the termination of
such employment, including, but not limited to, ADEA
waivers.
(b) Termination in Other Cases. If the Executive's
employment is terminated during the Employment Period by reason of
the Executive's death or Disability, for Cause, or as a result of
the Executive's termination thereof without Good Reason, this
Agreement shall terminate with respect to the Executive without
further obligations to the Executive or the Executive's legal
representative under this Agreement.
5. Non-exclusivity of Rights. Nothing shall herein limit or
otherwise affect such rights as the Executive may have under any other
contract or agreement with the Company or any of its affiliated
companies or by law. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any other Agreement,
policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the
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Date of Termination shall be payable in accordance with its terms,
unless explicitly modified by this Agreement.
6. No Obligation to Mitigate. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive. Except as otherwise
provided in this Section 6, in no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment. Notwithstanding
the foregoing, if the Executive obtains other employment, the Company's
obligation to provide medical, hospitalization, disability, [DENTAL OR
LIFE INSURANCE] benefits under Section 4(a)(ii) shall be reduced to the
extent such benefits are provided to the Executive as a result of such
other employment.
7. Legal Expenses. The Company and its affiliated companies
shall pay promptly upon submission of appropriate invoices, to the full
extent permitted by law, all reasonable attorneys' fees and related
expenses which the Executive reasonably deems necessary to incur in
connection with any dispute with respect to the validity or
enforceability of, or liability under, any provision of this Agreement
(including without limitation any dispute as to the amount of any
payment pursuant to this Agreement); provided, however, that if the
Company is advised by independent counsel that it will probably prevail
if the dispute is litigated on a motion for summary judgment, the
Company may refrain from such payments so long as the Company actively
pursues a decision on such motion, and it such motion is granted and
becomes a final, non-appealable order, the Company shall have
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no obligation under this Section 7 with respect to the Executive's
attorneys' fees and related expenses in connection with such dispute.
However, if such motion for summary judgment is denied and if such
denial becomes a final, non-appealable order, the Company shall pay
such attorneys' fees and related expenses, or, if the Executive has
already paid such attorneys' fees and related expenses, the Company
shall reimburse the Executive for such payment, together with interest,
from the date of such payment to the date of reimbursement, at the rate
of the lesser of (A) 15% per annum, compounded monthly or (B) the
maximum rate allowed by law.
8. Provisions Relating to Taxation of Payments.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of
the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise) would be subject to the excise tax imposed by Section
4999 of the Code (or any other provision of the Code relating to
excise taxes or "excess parachute payments") or any interest or
penalty is imposed on the Executive with respect to such excise
tax, the Executive shall not be entitled to receive any additional
payment in any amount to compensate for such tax, interest or
penalty.
(b) For purposes of this section, (i) "Payment" shall
mean any payment or distribution in the nature of compensation to
or for the benefit of the Executive, whether paid or payable
pursuant to this Agreement or otherwise; (ii) "Present Value"
shall mean such value determined in accordance with Section
280G(d)(4) of the Code; and (iii) "Reduced Amount," shall mean the
largest aggregate amount of Payments which results in no tax being
imposed upon the Executive under Section 4999 of the Code.
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(c) Anything in this Agreement to the contrary
notwithstanding, in the event a certified public accounting firm
designated by the Company (the " Accounting Firm") shall determine
that receipt of all Payments would subject the Executive to tax
under Section 4999 of the Code, it shall determine whether some
amount of Payments would meet the definition of a "Reduced
Amount." If the Accounting Firm determines that there is a Reduced
Amount, the Payments under this Agreement shall be reduced so that
the aggregate Payments shall equal such Reduced Amount. Any
reduction of Payments shall be made out of the lump sum otherwise
payable under Section 4(a)(i).
(d) While it is the intention of the Company that the
amount of Payments to the Executive shall result in the maximum
aggregate amounts being paid to the Executive without the
imposition of tax under Section 4999 of the Code, as a result of
the uncertainty in the application of Section 4999 at the time of
the initial determination by the Accounting Firm hereunder, it is
possible that amounts will have been paid or distributed by the
Company to or for the benefit of the Executive pursuant to this
Agreement which should not have been so paid or distributed
("Overpayment") or that additional amounts which will have not
been paid or distributed by the Company to or for the benefit of
the Executive pursuant to this Agreement could have been so paid
or distributed ("Underpayment"), in each case, consistent with the
calculation of the Reduced Amount hereunder. In the event that the
Accounting Firm, based either upon the assertion of a deficiency
by the Internal Revenue Service against the Company or the
Executive which the Accounting Firm believes has high probability
of success or controlling precedent or other substantial
authority, determines that an Overpayment has been made, any such
Overpayment paid or distributed by the Company
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to or for the benefit of the Executive shall be treated for all
purposes as a loan ab initio to the Executive which the Executive
shall repay to the Company together with interest at the
applicable federal rate provided for in Section 787 2(f )(2) of
the Code; provided, however, that no such loan shall be deemed to
have been made and no amount shall be payable by the Executive to
the Company if and to the extent such deemed loan and payment
would not either reduce the amount on which the Executive is
subject to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes. In the event that the Accounting
Firm, based upon controlling precedent or other substantial
authority, determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive together with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code.
9. Successors.
(a) This Agreement shall inure to the benefit of and be
enforceable by the Executive and the Executive's legal
representative.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, sale of
assets or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company"
shall mean the Company as herein before defined and any successor
to its business and/or
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assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
10. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no
force or effect.
(b) This Agreement may be amended, changed or ratified
by the Company prior to the Effective Date in any manner by
written notice to the Executive given in accordance with
subparagraph (c) below; provided, however, that unless the first
anniversary of the giving of such notice occurs prior to the
Effective Date, no such amendment, change or modification adverse
to the rights of the Executive hereunder shall become effective.
This Agreement is intended to benefit and create a binding
contractual relationship between the Executive and the Company,
and to be enforceable by the Executive, with respect to the
Executive, according to its terms.
(c) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
At the current home address of the Executive
identified in the personnel records of the Company.
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If to the Company:
Xx. Xxxxx X. XxXxxxx
Chief Executive Officer and President
XxXxxxx, Inc.
0000X Xxxxxxx Xxxx
Xx. Xxxxx, XX 00000
Notices and communications shall be effective at the time they are
given in the foregoing manner.
(d) The Company shall withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as may be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of
the Executive to terminate employment for Good Reason of this
Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(f) Except as may otherwise be provided under any other written
agreement between the Executive and the Company the employment of the
Executives by the Company is "at will" and, prior to the Effective
Date, the Executive's employment may be terminated by either the
Executive or the Company, in which case the Executive shall have no
further rights under this Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
XXXXXXX, INC.
By: /s/ Xxxxx X. XxXxxxx
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Xxxxx X. XxXxxxx
Chief Executive Officer and President
/s/ Xxxxxx X. Xxxxxxxxxx
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XXXXXX X. XXXXXXXXXX
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