AGREEMENT
EXHIBIT
10-bb
This
Agreement (this “Agreement”),
effective as of December 18, 2000, is between Analysts International
Corporation, a Minnesota corporation located at 0000 Xxxx 00xx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000 (the “Company”)
and Xxxx X. Xxxxxxxxx (the “Executive”).
A. The
Executive is currently employed as the Company’s Senior Vice President.
B. The Board
considers the establishment and maintenance of a sound and vital management to
be essential to protecting and enhancing the best interests of the Company and
its shareholders, and in this connection recognizes that the possibility of a
Change in Control may raise uncertainty and questions among management which may
result in the departure or distraction of management personnel to the detriment
of the Company and its shareholders.
C. The
Company currently has in place various arrangements with certain categories of
executives that provide certain economic benefits to those executives in the
event of a Change in Control.
D. The Board
has put these arrangements in place to minimize the risk that Company executive
management will depart prior to a Change in Control, thereby leaving the Company
without adequate executive management personnel during such a critical period,
and to reinforce and encourage the continued attention and dedication of members
of the Company’s executive management to their assigned duties without
distraction in circumstances arising from the possibility of a Change in
Control.
E. The Board
has recognized that continuance of an executive’s position with the Company
involves a substantial commitment to the Company in terms of the executive’s
personal life and professional career and the possibility of foregoing present
and future career opportunities, for which the Company receives substantial
benefits.
F. The Board
believes that it is necessary and appropriate to harmonize the various currently
outstanding arrangements that provide economic benefits to executives in the
event of a Change in Control, update and revise these arrangements to include
additional provisions consistent with arrangements of this type and to enter
into such arrangements with executives who currently are not party to such
arrangements but who are at a level of responsibility or position similar to the
Company executives who are party to such arrangements.
G. To induce
the Executive to remain in the employ of the Company, this Agreement, which has
been approved by the Board, sets forth the benefits that the Company agrees will
be provided to the Executive in the event the Executive’s employment with the
Company is terminated in connection with a Change in Control under the
circumstances described below.
H. Certain
capitalized terms that are used in this Agreement are defined in Exhibit A,
which is an integral part of this Agreement.
Accordingly,
the Company and Employee each intending to be legally bound, agree as
follows:
1. Term
of Agreement. This
Agreement is effective immediately and will have an initial term ending on
December 31, 2003. After this initial term, this Agreement will automatically
continue for consecutive one-year terms (“Renewal Periods”) unless and until the
Company or the Executive has given notice to the other at least 90 calendar days
prior to the commencement of the next Renewal Period that this Agreement will
not be extended past such next Renewal Period. For example, if the Company
notifies the Executive on September 1, 2003 of its intent not to renew this
Agreement, the term of this Agreement will end at the end of the next Renewal
Period, which will be on December 31, 2004. Notwithstanding anything in the
foregoing to the contrary, if a Change in Control has occurred during the term
of this Agreement, this Agreement will continue in effect beyond the termination
date then in effect for a period of 36 months following the month during which
the Change in Control occurs or, if later, until the date on which the Company’s
obligations to the Executive arising under or in connection with this Agreement
have been satisfied in full.
2. Benefits
upon a Change in Control Termination. The
Executive will become entitled to the benefits described in this Section 2 if
and only if (i) the Executive terminates the Executive’s employment with the
Company for any reason within the period beginning on the first day of the
11th month
that begins after the month during which the Change in Control occurs and ending
on the last day of such month or (ii) (x) the Company terminates the Executive’s
employment for any reason other than the Executive’s death or Cause, or the
Executive terminates the Executive’s employment with the Company for Good
Reason, and (y) the termination occurs either within the period beginning on the
date of a Change in Control and ending on the last day of the 36th month
that begins after the month during which the Change in Control occurs or prior
to a Change in Control if the Executive’s termination was either a condition of
the Change in Control or was at the request or insistence of a Person related to
the Change in Control.
(a) Cash
Payment. Not
more than 10 days following the Date of Termination, or, if later, not more than
10 days following the date of the Change in Control, the Company will make a
lump-sum cash payment to the Executive in an amount equal to (i) 2.99 times the
Executive’s Eligible Earnings, less (ii) any incentive compensation payments
made to the Executive for the year ending after the Executive’s Date of
Termination.
(b) Special
Executive Retirement Plan. The
termination of the Executive’s employment will be deemed a “separation from
service” pursuant to Section 5 of the Company’s Restated Special Executive
Retirement Plan and the Company will pay the applicable monthly benefit to the
Executive pursuant to Section 4 of the Company’s Restated Special Executive
Retirement Plan. The Company will provide for payment of the benefit pursuant to
this Section 2(b) and Section 4 of the Company’s Restated Special Executive
Retirement Plan through a trust. The trust must (1) be a grantor trust with
respect to which the Company is treated as the grantor, (2) not cause benefits
under this Section 2(b) to be funded for federal income tax purposes or for
purposes of ERISA, and (3) provide that trust assets will, upon the Company’s
insolvency, be used to satisfy the
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claims of
the Company’s general creditors. Neither the Executive nor the Executive’s
surviving spouse will have any interest in the assets of the trust.
(c) Group
Health and Dental Plans. During
the continuation period (as defined below), the Company will maintain a group
health and dental plan(s) which by its terms covers the Executive (and the
Executive’s family members and dependents who were eligible to be covered at any
time during the 90-day period immediately prior to the date of the Change in
Control for the period after the Change in Control in which such family members
and dependents would otherwise continue to be covered under the terms of the
plan in effect immediately prior to the Change in Control) under the same terms
and at the same cost to the Executive and the Executive’s family members and
dependents as similarly situated individuals who continue to be employed by the
Company (without regard to any reduction in such benefits that constitutes Good
Reason). The “continuation period” is the period beginning on the Executive’s
Date of Termination and ending on the earlier of (i) the last day of the
18th month
that begins after the Executive’s Date of Termination or (ii) the date after the
Executive’s Date of Termination on which the Executive first becomes eligible to
participate as an employee in a plan of another employer providing group health
and dental benefits to the Executive and the Executive’s eligible family members
and dependents which plan does not contain any exclusion or limitation with
respect to any pre-existing condition of the Executive or any eligible family
member or dependent who would otherwise be covered under the Company’s plan but
for this clause (ii). To the extent the Executive incurs a tax liability
(including federal, state and local taxes and any interest and penalties with
respect thereto) in connection with a benefit provided pursuant to this Section
2(c) which the Executive would not have incurred had the Executive been an
active employee of the Company participating in the Company’s group health and
dental plan, the Company will make a payment to the Executive in an amount equal
to such tax liability plus an additional amount sufficient to permit the
Executive to retain a net amount after all taxes (including penalties and
interest) equal to the initial tax liability in connection with the benefit. For
purposes of applying the foregoing, the Executive’s tax rate will be deemed to
be the highest statutory marginal state and federal tax rate (on a combined
basis) then in effect. The payment pursuant to this Section 2(c) will be made
within 10 days after the Executive’s remittal of a written request for payment
accompanied by a statement indicating the basis for and amount of the
liability.
(d) Other
Welfare Benefits. During
the period beginning on the Executive’s Date of Termination and ending on the
earlier of (i) the last day of the eighteenth (18th) month
that begins after the Executive’s Date of Termination, or (ii) the date after
the Executive’s Date of Termination on which the Executive first becomes
eligible to participate as an employee in a plan of another employer providing
substantially similar welfare benefits to the Executive in the aggregate (and
the Executive’s family members and dependents who were eligible to be covered at
any time during the 90-day period immediately prior to the date of a Change in
Control for the period after the Change in Control in which such family members
and dependents would otherwise continue to be covered under the terms of the
applicable Benefit Plan in effect immediately prior to the Change in Control),
the Company will provide, or arrange to provide, to the extent such policies or
coverages can be obtained on commercial reasonable terms, the same or
3
equivalent
accidental death and dismemberment, short and long-term disability, life
insurance coverages, and all other insurance policies and health and welfare
benefits (other than benefits pursuant to any cafeteria plan maintained by the
Company pursuant to Section 125 of the Code) to the Executive (and the
Executive’s family members and dependents who were eligible to be covered at any
time during the 90-day period immediately prior to the date of a Change in
Control for the period after the Change in Control in which such family members
and dependents would otherwise continue to be covered under the terms of the
applicable Benefit Plan in effect immediately prior to the Change in Control)
under the same terms and at the same cost to the Executive and the Executive’s
family members and dependents as similarly situated individuals who continue to
be employed by the Company (without regard to any reduction in such benefits
that constitutes Good Reason). To the extent the Executive incurs a tax
liability (including federal, state and local taxes and any interest and
penalties with respect thereto) in connection with a benefit provided pursuant
to this Section 2(d) which the Executive would not have incurred had the
Executive been an active employee of the Company participating in the Company’s
welfare benefit plans, the Company will make a payment to the Executive in an
amount equal to such tax liability plus an additional amount sufficient to
permit the Executive to retain a net amount after all taxes (including penalties
and interest) equal to the initial tax liability in connection with the benefit.
For purposes of applying the foregoing, the Executive’s tax rate will be deemed
to be the highest statutory marginal state and federal tax rate (on a combined
basis) then in effect. The payment pursuant to this Section 2(d) will be made
within 10 days after the Executive’s remittal of a written request for payment
accompanied by a statement indicating the basis for and amount of the
liability.
(e) Termination
of Non-Competition Agreements. All
non-competition agreements (or non-competition provisions within other
agreements) restricting the activities of the Executive after the termination of
the Executive’s employment with the Company will be null and void and of no
further force and effect.
If, on or
after the date of a Change in Control, an Affiliate is sold, merged, transferred
or in any other manner or for any other reason ceases to be an Affiliate or all
or any portion of the business or assets of an Affiliate are sold, transferred
or otherwise disposed of and the acquiror is not the Parent Corporation or an
Affiliate (a “Disposition”), and
the Executive remains or becomes employed by the acquiror or an “affiliate” of
the acquiror (as defined in this Agreement but substituting “acquiror” for
“Parent Corporation”) in connection with the Disposition, the Executive will be
deemed to have terminated employment on the effective date of the Disposition
for purposes of this Section 2 and will be entitled to the benefits described in
this Section 2 unless (x) the acquiror and its affiliates jointly and severally
expressly assume and agree, in a manner that is enforceable by the Executive, to
perform the obligations of this Agreement to the same extent that the Company
would be required to perform if the Disposition had not occurred and (y) the
Successor guarantees, in a manner that is enforceable by the Executive, payment
and performance by the acquiror.
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3. Gross-Up
Payments.
(a) Anything
in this Agreement to the contrary notwithstanding, in the event it will be
determined that any payments or distributions 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, but
determined without regard to any payments required under this Section 3)
(collectively, the “Payments”) would
be subject to the excise tax imposed by Section 4999 of the Code or any interest
or penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise
Tax”), then
the Executive will be entitled to receive an additional payment (a “Gross-Up
Payment”) in an
amount such that, after payment by the Executive of all taxes (and any interest
or penalties imposed with respect to such taxes), including any income taxes and
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject
to the provisions of Section 3(d), all determinations required to be made under
this Section 3, including whether and when a Gross-Up Payment is required and
the amount such Gross-Up Payment and the assumptions to be used in arriving at
such determination, must be made by the Company’s external auditors (the
“Accounting
Firm”), which
must provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the
Executive must appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm will then be referred
to as the “Accounting Firm” hereunder). All fees and expenses of the Accounting
Firm must be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 3, must be paid by the Company to the Executive within
five days of the receipt of the Accounting Firm’s determination. Any
determination by the Accounting Firm will be binding upon the Company and the
Executive.
(c) As a
result of uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which should have been made by the Company will not have
been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 3(d) and the
Executive thereafter is required to make a payment of any additional Excise Tax,
the Accounting Firm must determine the amount of the Underpayment that has
occurred and any such Underpayment must be promptly paid by the Company to or
for the benefit of the Executive.
(d) The
Executive must notify the Company in writing of any claim by the Internal
Revenue Service or any other taxing authority that, if successful, would require
the payment by the Company of any Gross-Up Payment. Such notification must be
given as soon as practicable but no later than 10 business days after the
Executive knows of
5
such
claim and must apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Executive must not pay such claim
prior to the expiration of the 30-day period following the date on which it
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive must:
(i) give the
Company any information reasonably requested by the Company relating to such
claim;
(ii) take such
action in connection with contesting such claim as the Company will reasonably
request in writing from time to time, including accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company;
(iii) cooperate
with the Company in good faith in order to effectively contest such claim;
and
(iv) permit
the Company to participate in any proceedings relating to such
claim;
provided,
however, that the Company will bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and will indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses. Without limitation on the foregoing provisions of this Section
3(d), the Company will control all proceedings taken in connection with such
contest 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 the Executive
to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive 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 the Company will determine;
provided further, however, that if the Company directs the Executive to pay such
claim and xxx for a refund, the Company will advance the amount of such payment
to the Executive on an interest-free basis and will indemnify and hold the
Executive 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 any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest will be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive will 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.
6
(e) If, after
the receipt by the Executive of an amount advanced by the Company pursuant to
Section 3(d), the Executive becomes entitled to receive any refund with respect
to such claim, the Executive must (subject to the Company’s complying with the
requirements of Section 3(d)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 3(d), a determination is made that
the Executive will not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of thirty days after such
determination, then such advance will be forgiven and will not be required to be
repaid and the amount of such advance will offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
4. Indemnification.
Following a Change in Control, the Company will indemnify and advance expenses
to the Executive for damages, costs and expenses (including, without limitation,
judgments, fines, penalties, settlements and reasonable fees and expenses of the
Executive’s counsel) incurred in connection with all matters, events and
transactions relating to the Executive’s service to or status with the Company
or any other corporation, employee benefit plan or other Person for which the
Executive served at the request of the Company to the extent that the Company
would have been required to do so under applicable law, corporate articles,
bylaws or agreements or instruments of any nature with or covering the
Executive, as in effect immediately prior to the Change in Control and to any
further extent as may be determined or agreed upon following the Change in
Control.
5. Miscellaneous.
(a) Successors. The
Parent Corporation must seek to have any Successor, by agreement in form and
substance satisfactory to the Executive, assent to the fulfillment by the
Company of the Company’s obligations under this Agreement. Failure of the Parent
Corporation to obtain such assent at least three business days prior to the time
a Person becomes a Successor (or where the Parent Corporation does not have at
least three business days’ advance notice that a Person may become a Successor,
within one business day after having notice that such Person may become or has
become a Successor) will constitute Good Reason for termination by the Executive
of the Executive’s employment. The date on which any such succession becomes
effective will be deemed the Date of Termination, and Notice of Termination will
be deemed to have been given on that date. A Successor has no rights, authority
or power with respect to this Agreement prior to a Change in
Control.
(b) Binding
Agreement. This
Agreement inures to the benefit of, and is enforceable by, the Executive, the
Executive’s personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive dies
while any amount would still be payable to the Executive under this Agreement if
the Executive had continued to live, all such amounts, unless otherwise provided
in this Agreement, will be paid in accordance with the terms of this Agreement
to the Executive’s devisee, legatee or other designee or, if there be no such
designee, to the Executive’s estate.
7
(c) No
Mitigation. The
Executive will not be required to mitigate the amount of any benefits the
Company becomes obligated to provide to the Executive in connection with this
Agreement by seeking other employment or otherwise. The benefits to be provided
to the Executive in connection with this Agreement may not be reduced, offset or
subject to recovery by the Company by any benefits the Executive may receive
from other employment or otherwise.
(d) No
Setoff. The
Company has no right to setoff benefits owed to the Executive under this
Agreement against amounts owed or claimed to be owed by the Executive to the
Company under this Agreement or otherwise.
(e) Taxes. All
benefits to be provided to the Executive in connection with this Agreement will
be subject to required withholding of federal, state and local income, excise
and employment-related taxes. The Company’s good faith determination with
respect to its obligation to withhold such taxes relieves it of any obligation
that such amounts should have been paid to the Executive.
(f) Notices. For the
purposes of this Agreement, notices and all other communications provided for
in, or required under, this Agreement must be in writing and will be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid and
addressed to each party’s respective address set forth on the first page of this
Agreement (provided that all notices to the Company must be directed to the
attention of the chair of the Board), or to such other address as either party
may have furnished to the other in writing in accordance with these provisions,
except that notice of change of address will be effective only upon
receipt.
(g) Disputes. If the
Executive so elects, any dispute, controversy or claim arising under or in
connection with this Agreement will be settled exclusively by binding
arbitration administered by the American Arbitration Association in Minneapolis,
Minnesota in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect; provided that the Executive may seek
specific performance of the Executive’s right to receive benefits until the Date
of Termination during the pendency of any dispute or controversy arising under
or in connection with this Agreement. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction. If any dispute, controversy
or claim for damages arising under or in connection with this Agreement is
settled by arbitration, the Company will pay, or if elected by the Executive,
reimburse, all fees, costs and expenses incurred by the Executive related to
such arbitration unless the arbitrators decide that the Executive’s claim was
frivolous or advanced by the Executive in bad faith. If the Executive does not
elect arbitration, the Executive may pursue all available legal remedies. The
Company will pay, or if elected by the Executive, reimburse the Executive for,
all fees, costs and expenses incurred by the Executive in connection with any
actual, threatened or contemplated litigation relating to this Agreement to
which the Executive is or reasonably expects to become a party, whether or not
initiated by the Executive, if the Executive is successful in recovering any
benefit under this Agreement as a result of such action. The parties agree that
any litigation arising under or in connection with this Agreement must
8
be
brought in a court of competent jurisdiction in the State of Minnesota, and
hereby consent to the exclusive jurisdiction of said courts for this purpose and
agree not to assert that such courts are an inconvenient forum. The Company will
not assert in any dispute or controversy with the Executive arising under or in
connection with this Agreement the Executive’s failure to exhaust administrative
remedies.
(h) Effect
of Plan Benefits on Other Severance Plans. In the
event the Executive receives any payment under the terms of this Agreement, the
Executive will not be eligible to receive benefits under any other severance pay
plan sponsored or maintained by the Company, including without limitation the
Analysts International, Inc. Executive Change in Control Severance Pay Plan and
the Analysts International, Inc. Change in Control Severance Pay
Plan.
(i) Other
Arrangements. This
Agreement, including Exhibit A attached hereto and incorporated as an integral
part of this Agreement, constitutes the entire agreement of the parties with
respect to the subject matter hereof, and no agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter to this
Agreement have been made by any party which are not expressly set forth in this
Agreement. To the extent that any provision of any Other Arrangement limits,
qualifies or is inconsistent with any provision of this Agreement, then for
purposes of this Agreement, while such Other Arrangement remains in force, the
provision of this Agreement will control and such provision of such Other
Arrangement will be deemed to have been superseded, and to be of no force or
effect, as if such Other Arrangement had been formally amended to the extent
necessary to accomplish such purpose. Nothing in this Agreement prevents or
limits the Executive’s continuing or future participation in any Other
Arrangement for which the Executive may qualify, and nothing in this Agreement
limits or otherwise affects the rights the Executive may have under any Other
Arrangement. Amounts that are vested benefits or which the Executive is
otherwise entitled to receive under any Other Arrangement at or subsequent to
the Date of Termination will be payable in accordance with such Other
Arrangement.
(j) No
Employment or Service Contract. Nothing
in this Agreement is intended to provide the Executive with any right to
continue in the employ of the Company for any period of specific duration or
interfere with or otherwise restrict in any way the Executive’s rights or the
rights of the Company.
(k) Payment;
Assignment.
Benefits payable under this Agreement will be paid only from the general assets
of the Company. No person has any right to or interest in any specific assets of
the Company by reason of this Agreement. To the extent benefits under this
Agreement are not paid when due to any individual, he or she is a general
unsecured creditor of the Company with respect to any amounts due. Benefits
payable pursuant to this Agreement and the right to receive future benefits may
not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered
or subject to any charge.
9
(l) Late
Payments.
Benefits not paid under this Agreement when due will accrue interest at the rate
of 18% per year or the maximum rate permitted under applicable law.
(m) Survival. The
respective obligations of, and benefits afforded to, the Company and the
Executive which by their express terms or clear intent survive termination of
the Executive’s employment with the Company or termination of this Agreement, as
the case may be, will survive termination of the Executive’s employment with the
Company or termination of this Agreement, as the case may be, and will remain in
full force and effect according to their terms.
(n) Amendments;
Waivers. No
provision of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in a writing signed by the
Executive and a duly authorized officer of the Parent Corporation. No waiver by
any party to this Agreement at any time of any breach by another party to this
Agreement of, or of compliance with any condition or provision of this Agreement
to be performed by such party will be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent
time.
(o) Governing
Law. This
Agreement and the legal relations among the parties as to all matters,
including, without limitation, matters of validity, interpretation,
construction, performance and remedies, will be governed by and construed
exclusively in accordance with the internal laws of the State of Minnesota
(without regard to the conflict of laws principles of any
jurisdiction).
(p) Further
Assurances. The
parties to this Agreement agree to perform, or cause to be performed, such
further acts and deeds and to execute and deliver or cause to be executed and
delivered, such additional or supplemental documents or instruments as may be
reasonably required by the other party to carry into effect the intent and
purpose of this Agreement.
(q) Interpretation. The
invalidity or unenforceability of all or any part of any provision of this
Agreement will not affect the validity or enforceability of the remainder of
such provision or of any other provision of this Agreement, which will remain in
full force and effect.
(r) Counterparts. This
agreement may be executed in several counterparts, each of which will be deemed
to be an original, but all of which together will constitute one and the same
instrument.
[Remainder
of page intentionally left blank]
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The
Company and the Executive have executed this Agreement as of the date first
above written.
|
ANALYSTS
INTERNATIONAL CORPORATION | |
|
By: |
Xxxx X. Xxxxxxxxx |
|
Agreed
to as of this 12th day of January, 2001 | |
| /s/ Xxxx X. Xxxxxxxxx | |
| Xxxx X. Xxxxxxxxx | |
11
Exhibit
A
DEFINITIONS
For
purposes of the Agreement, the following terms will have the meaning set forth
below in this Exhibit A unless the context clearly requires otherwise. Terms
defined elsewhere in the Agreement will have the same meaning throughout the
Agreement.
1. “Affiliate” means
(i) any corporation at least a majority of whose outstanding securities
ordinarily having the right to vote at elections of directors is owned directly
or indirectly by the Parent Corporation or (ii) any other form of business
entity in which the Parent Corporation, by virtue of a direct or indirect
ownership interest, has the right to elect a majority of the members of such
entity’s governing body.
2. “Base
Pay” means
the Executive’s annual base salary from the Company at the rate in effect
immediately prior to a Change in Control or at the time Notice of Termination is
given, whichever is greater. Base Pay includes only regular cash salary (plus
the amount of any automobile allowance paid to the Executive or any automobile
lease payments made by the Company on behalf of the Executive) and is determined
before any reduction for deferrals pursuant to any nonqualified deferred
compensation plan or arrangement, qualified cash or deferred arrangement or
cafeteria plan.
3. “Benefit
Plan” means
any
(a) employee
benefit plan as defined in Section 3(3) of ERISA;
(b) cafeteria
plan described in Code Section 125;
(c) plan,
policy or practice providing for paid vacation, other paid time off or short-or
long-term profit sharing, bonus or incentive payments or perquisites;
or
(d) stock
option, stock purchase, restricted stock, phantom stock, stock appreciation
right or other equity-based compensation plan with respect to the securities of
any Affiliate
that is
sponsored, maintained or contributed to by the Company for the benefit of
employees (and/or their families and dependents) generally or the Executive in
particular (and/or the Executive’s family and dependents).
4. “Board” means
the board of directors of the Parent Corporation duly qualified and acting at
the time in question. On and after the date of a Change in Control, any duty of
the Board in connection with this Agreement is nondelegable and any attempt by
the Board to delegate any such duty is ineffective.
5. “Cause” means:
(a) the
Executive’s gross misconduct that is materially and demonstrably injurious to
the Company;
(b) the
Executive’s willful and continued failure to perform substantially the
Executive’s duties with the Company (other than any such failure (1) resulting
from the Executive’s incapacity due to bodily injury or physical or mental
illness or (2) relating to changes in the Executive’s duties after a Change in
Control that constitute Good Reason) after a demand for substantial performance
is delivered to the Executive by the chair of the Board which specifically
identifies the manner in which the Executive have not substantially performed
the Executive’s duties and provides for a reasonable period of time within which
the Executive may take corrective actions; or
(c) the
Executive’s conviction (including a plea of nolo contendere) of willfully
engaging in illegal conduct constituting a felony or gross misdemeanor under
federal or state law which is materially and demonstrably injurious to the
Company or which impairs the Executive’s ability to perform substantially the
Executive’s duties for the Company.
An act or
failure to act will be considered “gross or willful” for this purpose only if
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that it was in, or not opposed to, 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 a committee thereof) or based upon the
advice of counsel for the Company will 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. It is also expressly understood that the Executive’s attention to
matters not directly related to the business of the Company will not provide a
basis for termination for Cause so long as the Board did not expressly
disapprove in writing of the Executive’s engagement in such activities either
before or within a reasonable period of time after the Board knew or could
reasonably have known that the Executive engaged in those activities.
Notwithstanding the foregoing, the Executive may not be terminated for Cause
unless and until there has been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board at a meeting of the Board called and held for
the purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive’s counsel, to be heard before the Board),
finding that in the good faith opinion of the Board the Executive were guilty of
the conduct set forth above in clauses (a), (b) or (c) of this definition and
specifying the particulars thereof in detail.
6. “Change
in Control” means
the occurrence of any of the following on or after December 18, 2000:
(a) the sale,
lease, exchange or other transfer, directly or indirectly, of all or
substantially all of the assets of the Parent Corporation, in one transaction or
in a series of related transactions, to any Person;
(b) the
approval by the shareholders of the Parent Corporation of any plan or proposal
for the liquidation or dissolution of the Parent Corporation;
(c) any
Person, other than a “bona fide underwriter,” becomes, after the date of this
Agreement, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of (i) 20 percent or more, but not more than 50
percent, of the
2
combined
voting power of the Parent Corporation’s outstanding securities ordinarily
having the right to vote at elections of directors, unless the transaction
resulting in such ownership has been approved in advance by the “continuity
directors” or (ii) more than 50 percent of the combined voting power of the
Parent Corporation’s outstanding securities ordinarily having the right to vote
at elections of directors (regardless of any approval by the continuity
directors);
(d) a merger
or consolidation to which the Parent Corporation is a party if the shareholders
of the Parent Corporation immediately prior to the effective date of such merger
or consolidation have, solely on account of ownership of securities of the
Parent Corporation at such time, “beneficial ownership” (as defined in Rule
13d-3 under the Exchange Act) immediately following the effective date of such
merger or consolidation of securities of the surviving corporation representing
(i) 50 percent or more, but not more than 80 percent, of the combined voting
power of the surviving corporation’s then outstanding securities ordinarily
having the right to vote at elections of directors, unless such merger or
consolidation has been approved in advance by the continuity directors, or (ii)
less than 50 percent of the combined voting power of the surviving corporation’s
then outstanding securities ordinarily having the right to vote at elections of
directors (regardless of any approval by the continuity directors);
or
(e) the
continuity directors cease for any reason to constitute at least a majority of
the Board.
For
purposes of the definition of a Change in Control, a “continuity director” means
any individual who is a member of the Board on the date of the Agreement, while
he or she is a member of the Board, and any individual who subsequently becomes
a member of the Board whose election or nomination for election by the Parent
Corporation’s shareholders was approved by a vote of at least a majority of the
directors who are continuity directors (either by a specific vote or by approval
of the proxy statement of the Parent Corporation in which such individual is
named as a nominee for director without objection to such nomination). For
example, if a majority of the seven individuals constituting the Board on
December 18, 2000, approved a proxy statement in which two different individuals
were nominated to replace two of the individuals who were members of the Board
on December 18, 2000, the two newly elected directors would join the five
remaining directors who were members of the Board on December 18, 2000 as
continuity directors. Similarly, if a majority of those seven directors approved
a proxy statement in which three different individuals were nominated to replace
three other directors who were members of the Board on December 18, 2000, the
three newly elected directors would also become, along with the other four
directors, continuity directors. Individuals subsequently joining the Board
could become continuity directors under the principles reflected in this
example. For purposes of the definition of a Change in Control, a “bona fide
underwriter” means a Person engaged in business as an underwriter of securities
that acquires securities of the Parent Corporation through such Person’s
participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.
7. “Code” means
the Internal Revenue Code of 1986, as amended. Any reference to a specific
provision of the Code includes a reference to such provision as it may be
amended from time to time and to any successor provision.
3
8. “Company” means
the Parent Corporation, any Successor and any Affiliate.
9. “Date
of Termination”
following a Change in Control (or prior to a Change in Control if the
Executive’s termination was either a condition of the Change in Control or was
at the request or insistence of any Person related to the Change in Control)
means:
(a) if the
Executive’s employment is to be terminated by the Executive, the date specified
in the Notice of Termination which in no event may be a date more than 15 days
after the date on which Notice of Termination is given unless the Company agrees
in writing to a later date;
(b) if the
Executive’s employment is to be terminated by the Company for Cause, the date
specified in the Notice of Termination;
(c) if the
Executive’s employment is terminated by reason of the Executive’s death, the
date of the Executive’s death; or
(d) if the
Executive’s employment is to be terminated by the Company for any reason other
than Cause or the Executive’s death, the date specified in the Notice of
Termination, which in no event may be a date earlier than 15 days after the date
on which a Notice of Termination is given, unless the Executive expressly agrees
in writing to an earlier date.
In the
case of termination by the Company of the Executive’s employment for Cause, if
the Executive has not previously expressly agreed in writing to the termination,
then within the 30-day period after the Executive’s receipt of the Notice of
Termination, the Executive may notify the Company that a dispute exists
concerning the termination, in which event the Date of Termination will be the
date set either by mutual written agreement of the parties or by the judge or
arbitrators in a proceeding as provided in Section 5(g) of the Agreement. During
the pendency of any such dispute, the Executive will continue to make the
Executive available to provide services to the Company and the Company will
continue to pay the Executive the Executive’s full compensation and benefits in
effect immediately prior to the date on which the Notice of Termination is given
(without regard to any changes to such compensation or benefits that constitute
Good Reason) and until the dispute is resolved in accordance with Section 5(g)
of the Agreement. The Executive will be entitled to retain the full amount of
any such compensation and benefits without regard to the resolution of the
dispute unless the judge or arbitrators decide(s) that the Executive’s claim of
a dispute was frivolous or advanced by the Executive in bad faith.
10. “Eligible
Earnings” means
the sum of (i) the average of the Executive’s Base Pay for the last five years
of the Company ending on or before the Date of Termination, or if the Executive
was employed by the Company for fewer than five years, for the number of years
for which the Executive was employed plus (ii) the average of any incentive
compensation paid by the Company to the Executive for the last five years of the
Company ending on or before the Date of Termination, or if the Executive was
eligible to receive such incentive compensation for fewer than five years, for
the number of years for which the Executive was eligible. If the Executive’s
Base Pay or incentive compensation for a year relates to a period of less than
12
4
months,
the amount of the Base Pay or incentive compensation will be annualized in
determining the Executive’s Eligible Earnings.
11. “ERISA” means
the Employee Retirement Income Security Act of 1974, as amended. Any reference
to a specific provision of ERISA includes a reference to such provision as it
may be amended from time to time and to any successor provision.
12. “Exchange
Act” means
the Securities Exchange Act of 1934, as amended. Any reference to a specific
provision of the Exchange Act or to any rule or regulation thereunder includes a
reference to such provision as it may be amended from time to time and to any
successor provision.
13. “Good
Reason”
means:
(a) a change
in the Executive’s title(s), status, position(s), authority, duties or
responsibilities as an executive of the Company as in effect immediately prior
to the Change in Control which, in the Executive’s reasonable judgment, is
material and adverse (other than, if applicable, any such change directly
attributable to the fact that the Parent Corporation is no longer publicly
owned); provided, however, that Good Reason does not include such a change that
is remedied by the Company promptly after receipt of notice of such change is
given by the Executive;
(b) a
reduction by the Company in the Executive’s Base Pay, or an adverse change in
the form or timing of the payment thereof, as in effect immediately prior to the
Change in Control or as thereafter increased;
(c) the
failure by the Company to cover the Executive under Benefit Plans that, in the
aggregate, provide substantially similar benefits to the Executive and/or the
Executive’s family and dependents at a substantially similar total cost to the
Executive (e.g., premiums, deductibles, co-pays, out of pocket maximums,
required contributions and the like) relative to the benefits and total costs
under the Benefit Plans in which the Executive (and/or the Executive’s family or
dependents) were participating at any time during the 90-day period immediately
preceding the Change in Control;
(d) the
Company’s requiring the Executive to be based more than 30 miles from where the
Executive’s office is located immediately prior to the Change in Control, except
for required travel on the Company’s business, and then only to the extent
substantially consistent with the business travel obligations which the
Executive undertook on behalf of the Company during the 90-day period
immediately preceding the Change in Control (without regard to travel related to
or in anticipation of the Change in Control);
(e) the
failure by the Company to obtain from any Successor the assent to this Agreement
contemplated by Section 5(a) of the Agreement;
(f) any
purported termination by the Company of the Executive’s employment that is not
properly effected pursuant to a Notice of Termination and
5
pursuant
to any other requirements of this Agreement, and, for purposes of this
Agreement, no such purported termination will be effective; or
(g) any
refusal by the Company to continue to allow the Executive to attend to matters
or engage in activities not directly related to the business of the Company
which, at any time prior to the Change in Control, the Executive were not
expressly prohibited in writing by the Board from attending to or engaging
in.
The
Executive’s continued employment does not constitute consent to, or waiver of
any rights arising in connection with, any circumstances constituting Good
Reason. The Executive’s termination of employment for Good Reason as defined
above will constitute Good Reason for all purposes of the Agreement
notwithstanding that the Executive may also thereby be deemed to have retired
under any applicable benefit plan, policy or practice of the Company.
14. “Notice
of Termination” means a
written notice given on or after the date of a Change in Control (unless the
Executive’s termination before the date of the Change in Control was either a
condition of the Change in Control or was at the request or insistence of any
Person related to the Change in Control in which case the written notice may be
given before the date of the Change in Control) which indicates the specific
termination provision in the Agreement pursuant to which the notice is given.
Any purported termination by the Company or by the Executive on or after the
date of a Change in Control (or before the date of a Change in Control if the
Executive’s termination was either a condition of the Change in Control or was
at the request or insistence of any Person related to the Change in Control)
must be communicated by written Notice of Termination to be effective; provided,
that the Executive’s failure to provide Notice of Termination will not limit any
of the Executive’s rights under the Agreement except to the extent the Company
demonstrates that it suffered material actual damages by reason of such
failure.
15. “Other
Arrangement” is any
Benefit Plan or other plan, policy or practice of the Company or any other
agreement between the Executive and the Company, other than this
Agreement.
16. “Parent
Corporation” means
Analysts International Corporation and any Successor.
17. “Person” means
any individual, corporation partnership, group, association or other person,” as
such term is used in Section 13(d) or Section 14(d) of the Exchange Act, other
than the Parent Corporation, any Affiliate or any benefit plan(s) sponsored by
the Parent Corporation or an Affiliate.
18.
“Successor” means
any Person that succeeds to, or has the practical ability to control (either
immediately or solely with the passage of time), the Parent Corporation’s
business directly, by merger, consolidation or other form of business
combination, or indirectly, by purchase of the Parent Corporation’s outstanding
securities ordinarily having the right to vote at the election of directors or
all or substantially all of its assets or otherwise.
6
AMENDMENT
This
Amendment (hereinafter “Amendment”),
effective as of March 15, 2005, to that certain agreement dated December
18, 2000, (hereinafter “Agreement”) is made between Analysts International
Corporation, a Minnesota corporation located at 0000 Xxxx 00xx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000 (the “Company”)
and Xxxx X. Xxxxxxxxx (the “Executive”).
| 1. |
Paragraph
10 of Exhibit A to the Agreement is hereby deleted and replaced as
follows: |
10. “Eligible
Earnings” means
the sum of (i) the Executive’s Base Pay plus (ii) the Executive’s Targeted
Incentive.
| 2. |
Paragraph
19 is hereby added to Exhibit A of the
Agreement: |
19. “Targeted
Incentive” means,
for purposes of this Agreement, the applicable percentage of the Executive’s
Base Pay targeted as incentive compensation, if any, for the fiscal year in
which a Change in Control Termination occurs.
The
Company and the Executive have executed this Amendment as of the date first
above written.
|
ANALYSTS
INTERNATIONAL CORPORATION | |
|
By: |
Xxxx
X. Xxxxxxxxx |
|
Its: |
Chief
Operating Officer |
|
Agreed
to as of this 17th day of March, 2005 | |
|
/s/
Xxxx X. Xxxxxxxxx | |
