EXHIBIT 10(b)
CHANGE IN CONTROL AGREEMENT
AGREEMENT, effective as of January 1, 1998 (the "Effective Date")
between Stanhome Inc., a Massachusetts corporation (the "Company") and
Xxxxxx Xxxxxxxx (the "Employee").
WHEREAS, the Employee has been employed by Enesco Corporation, a
wholly-owned subsidiary of the Company, since 1959 and is, as of the
effective date of this Agreement, the Chairman and Chief Executive Officer
of Enesco Corporation (the "Employer"); and
WHEREAS, the parties deem it to be in the best interest of both the
Employee, the Employer and the Company for the Company to continue (as in
his recently expired employment agreement dated June 1, 1983, as amended)
to provide a severance payment in the event his employment terminates under
certain circumstances hereinafter described,
NOW, THEREFORE, in consideration of the mutual promises, covenants
and conditions and of the agreements hereinafter contained, the Company and
the Employee agree as follows:
1. Severance Benefit.
(a) Upon the termination of the Employee's employment by the Employer
for any reason other than death, Disability, termination for
Substantial Cause, or voluntary termination without Good Reason
within two years or less after a Change in Control as defined
below, the Company will pay him as a severance benefit an amount
equal to three times the annual rate of his Total Compensation at
the time of such termination.
(b) The Employee's employment is deemed to be terminated following a
Change in Control if the Employee's employment terminates prior to
a Change in Control at the direction of a person (as defined in
paragraph 4(a)(i) below) who has entered into an agreement with
the Company to effectuate a Change in Control and such employment
terminates for any other reason other than death, Disability,
termination for Substantial Cause, or voluntary termination
without Good Reason and the circumstances constituting Good Reason
occur at the direction of such person.
(c) Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received by an Employee in
connection with a Change in Control or the termination of the
Employee's employment (whether pursuant to the terms of this or
any other plan, arrangement or agreement with the Company, the
Employer, any Person (as defined in Section 4(a)(i) of this
Agreement) whose actions result in a Change in Control or any
Person affiliated with the Company or such Person) (all such
payments and benefits, including the severance benefit, being
hereinafter called "Total Payments") would be subject (in whole or
in part), to the excise tax imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (the
"Excise Tax"), then the severance benefit under this Agreement
shall be reduced to the extent necessary so that no portion of the
Total Payments is subject to the Excise Tax (after taking into
account any reduction in the Total Payments provided by reason of
Section 280G of the Code in such other plan, arrangement or
agreement) if (i) the net amount of such Total Payments, as so
reduced, (and after deduction of the net amount of federal, state
and local income tax on such reduced Total Payments) is greater
than (ii) the excess of (A) the net amount of such Total Payments,
without reduction (but after deduction of the net amount of
federal, state and local income tax on such Total Payments), over
(B) the amount of Excise Tax to which the Employee would be
subject in respect of such Total Payments. For purposes of
determining whether and the extent to which the Total Payments
will be subject to the Excise Tax, (A) no portion of the Total
Payments, the receipt or enjoyment of which the Employee shall
have effectively waived in writing prior to the date of
termination of the Employee's employment, shall be taken into
account, (B) no portion of the Total Payments shall be taken into
account which in the opinion of tax counsel selected by the
Company and reasonably acceptable to the Employee does not
constitute a "parachute payment" within the meaning of Section
280G(b) (2) of the Code, (including by reason of Section 280G(b)
(4) (A) of the Code) and, in calculating the Excise Tax, no
portion of such Total Payments shall be taken into account which
constitutes reasonable compensation for services actually
rendered, within the meaning of Section 280G(b) (4) (B) of the
Code, in excess of the base amount (within the meaning of Section
280G(b) (3) of the Code) allocable to such reasonable
compensation, and (C) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall
be determined by the Company in accordance with the principles of
Sections 280G(d) (3) and (4) of the Code. Prior to the payment
date set forth in subsection 1(a) hereof, the Company shall
provide the Employee with its calculation of the amounts referred
to in this subsection and such supporting materials as are
reasonably necessary for the Employee to evaluate the Company's
calculations. If the Employee objects to the Company's
calculations, the Company shall pay to the Employee such portion
of the severance benefit (up to 100% thereof) as the Employee
determines is necessary to result in the Employee receiving the
greater of clauses (i) and (ii) of this subsection.
2. Payment. The severance benefit shall be payable in a lump sum
on or before the date of the Employee's termination.
3. Term. The term of this Agreement shall be a period beginning
on the Effective Date and ending on the first to occur of (i) the
Employee's death, disability, retirement, termination for
substantial cause or voluntary termination without good reason; or
(ii) three years after written notification by the Employer of its
intention to terminate. All obligations and rights arising under
paragraph 1 at the time of the termination of this Agreement shall
survive such termination.
4. Change In Control; Potential Change In Control
(a) As used herein, "Change in Control" of the Company means a Change
in Control of a nature that would, in the opinion of Company
counsel, be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided
that, without limitation, such a Change in Control shall be deemed
to have occurred if
(i) any "Person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) (other than the Company or any subsidiary of
the Company, any trustee or fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries or
a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of the stock of the Company) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding securities; or
(ii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), 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 the
Company to effect a transaction described in Clause (i), (iii) or
(iv) of this paragraph) whose election by the Board or nomination
for election by the Company's stockholders was approved by a vote
of at least two-thirds (2/3) of the directors 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 a majority thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, at least 75% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person acquires 25%
or more of the combined voting power of the Company's then
outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the
Company's assets.
Notwithstanding the foregoing, no Change in Control of the
Company shall be deemed to have occurred if Employee is a member
of a management group which first announces a proposal which
constitutes a Potential Change in Control, unless otherwise
determined by a majority of the Board of Directors who are not
members of such management group.
(b) A "Potential Change in Control" shall be deemed to have occurred
if the conditions set forth in any one of the following paragraphs
shall have been satisfied:
(i) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
(ii) the Company or any Person publicly announces an intention to
take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(iii) any Person who is or becomes the beneficial owner, directly
or indirectly, of securities of the Company representing 10% or
more of the combined voting power of the Company's then outstanding
securities, increases such Person's beneficial ownership of such
securities by 5% or more over the percentage so owned by such
Person on the date hereof; or
(iv) the Board of Directors adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
5. Total Compensation. As used herein, "Total Compensation" means
the Employee's annual base salary rate at the time of termination
plus any bonus to which he is entitled under the Company's
Management Incentive Plan, or its successor or substitute plan or
policy. For purposes of the calculation to be made under paragraph
1(a) above, the Employee's annual base salary shall be the rate at
the time of termination but not less than the rate in effect
immediately prior to the Change in Control, and the bonus shall be
equal to 100% of the target bonus payable to the Employee under the
Company's Management Incentive Plan for the year in which his
termination occurs, but not less than 100% of the target bonus for
the year in which the Change of Control occurred.
6. Disability. As used herein, "Disability" means a medically
determinable physical or mental condition which renders the
Employee incapable of performing the work for which he was employed
at his normal place of employment for at least six consecutive
months. A termination by reason of Disability shall not be deemed
to have occurred unless the Employee fails to return to work at his
normal place of employment within thirty (30) days after receiving
written notice of termination from the Employer.
7. Substantial Cause. As used herein, "Substantial Cause" means (i)
the willful and continued failure by the Employee to substantially
perform the Employee's duties with the Employer (other than any
such failure resulting from the Employee's incapacity due to
physical or mental illness or any such actual or anticipated
failure after the issuance of a notice of termination for Good
Reason by the Employee) after a written demand for substantial
performance is delivered to the Employee by the Board, which demand
specifically identifies the manner in which the Board believes that
the Employee has not substantially performed the Employee's duties,
or (ii) the willful engaging by the Employee in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise. For purposes of clauses (i)
and (ii) of this definition, no act, or failure to act, on the
Employee's part shall be deemed "willful" unless done, or omitted
to be done, by the Employee not in good faith and without
reasonable belief that the Employee's act, or failure to act, was
in the best interest of the Company and the Employer.
8. Good Reason. A voluntary termination under any of the following
circumstances shall be considered to be for "Good Reason":
(a) assignment to the Employee of duties or title inconsistent with his
status as an officer, or removal of the Employee from involvement
in management decision-making functions consistent with his prior
experience with the Employer;
(b) failure to continue the Employee's participation in the Company's
Management Incentive Plan or in any successor or substitute plan or
policy and, if such termination follows a Change in Control,
equivalent to the management incentive plan as in effect
immediately prior to the Change in Control;
(c) failure to pay when due the Employee's base salary, or any
installment of deferred compensation when due, or a reduction in
the Employee's base salary, or a failure to continue in effect for
the Employee's benefit fringe benefits in which he now
participates, including retirement plans, health and insurance
plans, vacation plans, and automobile programs, or the taking of
any action which materially reduces such benefits, provided that,
unless such reduction in base salary or failure to continue
benefits occurs within two years after a Change in Control, it will
not be considered Good Reason if taken in connection with a general
reduction applicable to all officers;
(d) assignment of the Employee to any location other than within fifty
(50) miles of his present office location; or
(e) within two years after a Change in Control, a requirement that the
Employee travel away from his office location more than 25% of the
working days in the year, provided that Employee may be required to
increase his travel by 10% of his working days if the Employee had
been travelling more than 15% of his working days at the time of
the Change in Control. Working days for these purposes shall
exclude vacation days.
9. Fringe Benefits. For a period of thirty six (36) months (the
"Extended Period") following any termination giving rise to
benefits under this Agreement, the Employee shall continue to
participate fully in those fringe benefits of the Employer in which
he is a participant prior to such termination, including the group
insurance programs (i.e. medical insurance, including dependent
coverage; life insurance; accidental death and dismemberment
insurance), but excluding the Employer's automobile program;
provided, however, that if the Employee is barred from
participating in a particular plan or arrangement under such
program's terms, the Company shall arrange to provide the Employee
for the Extended Period with a substitute benefit substantially
equivalent to the affected plan or arrangement. The coverage set
forth in the preceding sentence shall be subject only to such
periodic review as may be required by the group insurance carrier
to determine whether he has become a participant in a comparable
program of another employer, in which case continuance or
discontinuance of coverage will be determined in accordance with
the terms and conditions of the group insurance policy and the
benefits payable under this provision will be secondary to the
comparable program of the other employer.
All benefits covered by this paragraph 9 shall be provided
at no cost to the Employee and subject to the benefit limitation
provision of paragraph 1.
10. Legal Fees. In the event legal fees and expenses must be
incurred by the Employee in seeking to obtain or enforce any right
or benefit provided by this Agreement, the Company shall reimburse
the Employee for such cost, provided, however, that fees and
expenses incurred in connection with that portion of a claim that
is determined by a court or arbitrator to be frivolous shall not be
paid by the Company.
11. Mitigation. Inasmuch as the severance benefit provided for in
this Agreement is in recognition of past services rendered to the
Employer, the Employee will not be required to mitigate the amount
of any payment provided for by this Agreement by seeking other
employment nor shall the amount of any payment so provided be
reduced by any compensation earned by the Employee as the result of
employment by another employer after the date of termination or
otherwise.
12. Other Compensation. The lump sum severance benefit payable
pursuant to this Agreement shall be in addition to and not in
substitution for any amounts of compensation accrued in favor of
the Employee up to the date of termination, including a pro-rated
portion of any incentive compensation to which he is entitled,
based upon the number of days of employment during such year prior
to such termination date, and shall also be in addition to and not
in substitution for any amount or benefit to which the Employee may
otherwise be entitled under any insurance policy, profit-sharing
plan, employee stock ownership plan, stock option plan or written
employment contract between the Employee and the Employer, or the
Company, or any regular or supplemental retirement plan or contract
maintained by the Employer or the Company on the Employee's behalf.
Notwithstanding the foregoing, the benefits payable hereunder shall
be in substitution for any account or benefit to which the Employee
may otherwise be entitled under (i) the Employer's regular
severance policy; or (ii) any other severance agreement between the
Employee and the Employer.
13. Confidential Information. The Employee agrees that he will not
use or disclose to anyone (other than for the benefit of the
Employer or the Company) either during the term of his employment
or at any time thereafter, any confidential information obtained by
or made known to him while employed by the Employer. As used
herein, "Confidential Information" includes, but is not limited to,
trade secrets of the Employer or the Company or of any other
organization associated or affiliated with or owned by or owning
the Employer or the Company.
14. Covenant Not to Proselyte. For a period of thirty-six (36)
months after termination giving rise to benefits under this
Agreement, the Employee agrees that he will not attempt, directly
or indirectly, to induce any employee of the Employer or the
Company to terminate his or her employment with the Employer or the
Company.
15. Entirety of Agreement and Amendment. This Agreement constitutes
the entire Agreement between the parties and no amendment, waiver,
alteration or modification of this Agreement shall be valid unless
in each instance such amendment, waiver, alteration or modification
is agreed to in writing by both parties. Mere delay by the Employee
in exercising any rights under this Agreement will in no event be
deemed a waiver of such rights. This Agreement supersedes all
previous severance agreements that may have been made between the
Company or the Employer and the Employee.
16. Notices and Statements. All notices and statements hereunder
shall be in writing, and, if directed to the Company, shall be
deemed given if deposited postage prepaid in the U.S. Mail or
delivered to the Company, Attention: President at 000 Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx, 00000, or, if directed to the
Employee, shall be deemed given if delivered to him personally or
deposited postage prepaid in the U.S. Mail addressed to him at his
then current personal residence as it appears on the Company
records, or to such other addresses as either party may hereafter
designate in writing for the purpose. Written notice of termination
of employment by the Employer or the Employee after a Change in
Control must specify the provision(s) in the Agreement relied upon
and detail the facts and circumstances alleged as the basis for
termination of employment. Any such notice shall be effective
thirty (30) days after receipt by the appropriate party (except for
termination for Substantial Cause).
17. Applicable Law. To the extent permitted by law, this Agreement
shall be deemed to have been made in the Commonwealth of
Massachusetts, and its validity, construction and performance shall
be determined in accordance with the laws of said Commonwealth.
18. Assignment. Neither party may assign this Agreement or any of
the rights or duties hereunder, except that the Company may assign
any of its rights and duties under this Agreement to (1) a
successor or assignee of all or substantially all of the business
or assets of the Company, or (2) any corporation with which the
Company merges or with which the Company may be consolidated,
provided that any such successor or assignee or surviving entity of
a merger or consolidation must expressly assume in writing such
rights, duties and obligations of the Company, and except further
that the rights and obligations of the Employee under this
Agreement shall inure to the benefit of and be enforceable by the
Employee's personal or legal representative, executor, etc.
19. Not an Employment Contract. The parties agree that this
Agreement is not intended as, and is not, an employment contract
with the Company or the Employer. The Employer may terminate the
Employee's employment at any time during the term of this Agreement
subject to providing such benefits as may be specified in the
Agreement.
20. Arbitration. At the election of either the Company or the
Employee, all controversies in connection with, or related to, any
alleged breach of this Agreement or any of its provisions requiring
ongoing action or interpretation, including, without limitation,
injunctive relief, shall be settled by binding arbitration in
Boston, Massachusetts in accordance with the rules of the American
Arbitration Association then in effect. Company or Employee may
demand arbitration upon ten (10) days notice to the other. The
arbitration panel shall consist of three (3) members, one to be the
Employee's nominee, one to be the Company's nominee and a third to
be selected by the other two. In the event the two arbitrators
cannot agree on a third within seven (7) days after the demand for
arbitration, the third shall be chosen by the American Arbitration
Association in Boston, Massachusetts pursuant to its rules and
regulations. In the event of the death or incapacity of Employee,
his duly authorized executor or representative or its nominee shall
be or choose one arbitrator in his stead. Judgment upon any award,
including injunctive relief, rendered may be entered in any court
having jurisdiction thereof. The fees and expenses of the
arbitrators shall be borne by the parties hereto in proportion to
the questions answered adversely to their several questions and
interpretations, as determined by the arbitrators, and the parties
agree that the findings of a majority of such three (3) arbitrators
shall be conclusive on them, and their respective heirs, successors
and assigns, executors, administrators, and personal
representatives.
21. Invalidity of any Provision. If any provision of this Agreement
or the application thereof to any party or circumstance is held
invalid or unenforceable, in whole or in part, the remaining
provisions of this Agreement and the application of such provisions
to the other party or circumstances will not be affected thereby,
the provisions of this Agreement being severable or modifiable in
any such instance.
IN WITNESS WHEREOF, this Agreement has been executed by a duly
authorized officer of the Company and by the Employee.
Dated: May 1, 1998
STANHOME INC.
by /s/ H. L. Tower
_____________________
H. L. Tower
Chairman and C.E.O.
/s/ Xxxxxx Xxxxxxxx
_______________________
(Employee)
