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EXHIBIT 10.8
SEVERANCE COMPENSATION AGREEMENT
SEVERANCE COMPENSATION AGREEMENT dated as of _________ __, 1999,
between @xxxx.xxx., a Tennessee corporation (the "Company"), and _______________
(the "Executive").
The Company's Board of Directors has determined that it is appropriate
to reinforce and encourage the continued attention and dedication of certain
members of the Company's senior management, including the Executive, to their
assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a change in control of the Company.
This Agreement sets forth the severance compensation which the Company
agrees it will pay to the Executive if the Executive's employment with the
Company terminates under one of the circumstances described herein following a
Change In Control of the Company (as defined herein).
1. TERM. This Agreement shall terminate, except to the extent that any
obligation of the Company hereunder remains unpaid as of such time, upon the
earliest of (i) five years from the date hereof if a Change in Control of the
Company has not occurred within such five-year period; (ii) the termination of
the Executive's employment with the Company based on death, Disability (as
defined in Section 3(b)), Retirement (as defined in Section 3(c)) or Cause (as
defined in Section 3(d)) or by the Executive other than for Good Reason (as
defined in Section 3(e)); and (iii) six months from the date of a Change in
Control of the Company if the Executive has not terminated his employment for
Good Reason as of such time.
2. CHANGE IN CONTROL. No compensation shall be payable under this
Agreement unless and until (a) there shall have been a Change in Control of the
Company while the Executive is still an employee of the Company, and (b) the
Executive's employment by the Company thereafter shall have been terminated in
accordance with Section 3. For purposes of this Agreement, a Change in Control
means the happening of any of the following:
(i) any person or entity, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, other than
the Company, a wholly-owned subsidiary thereof, any employee benefit
plan of the Company, any shareholder of the Company as of the date of
this Agreement or any of the Company's Subsidiaries becomes the
beneficial owner of the Company's securities having 30% or more of the
combined voting power of the then outstanding securities of the
Company that may be cast for the election of directors of the Company
(other than as a result of an issuance of securities initiated by the
Company in the ordinary course of business); or
(ii) as the result of, or in connection with, any cash tender
or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing
transactions less than a majority of the combined voting power of the
then outstanding securities of the Company or any successor
corporation or entity entitled to vote generally in the election of
the directors of the Company or such other corporation or entity after
such transaction are held in the aggregate by the holders of the
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Company's securities entitled to vote generally in the election of
directors of the Company immediately prior to such transaction; or
(iii) during any period of two consecutive years, individuals
who at the beginning of any such period constitute the Board cease for
any reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the Company's
shareholders, of each director of the Company first elected during
such period was approved by a vote of at least two-thirds of the
directors of the Company then still in office who were directors of
the Company at the beginning of any such period.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. (a) If a Change in Control
of the Company shall have occurred while the Executive is still an employee of
the Company, the Executive shall be entitled to the compensation provided in
Section 4 upon the subsequent termination of the Executive's employment with the
Company by the Executive or by the Company unless such termination is as a
result of (i) the Executive's death; (ii) the Executive's Disability (as defined
in Section (3)(b) below); (iii) the Executive's Retirement (as defined in
Section 3(c) below); (iv) the Executive's termination by the Company for Cause
(as defined in Section 3(d) below); or (v) the Executive's decision to terminate
employment other than for Good Reason (as defined in Section 3(e) below).
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
with the Company on a full-time basis for six months and within 30 days after
written notice of termination is thereafter given by the Company the Executive
shall not have returned to the full-time performance of the Executive's duties,
the Company may terminate this Agreement for "Disability."
(c) RETIREMENT. The term "Retirement" as used in this Agreement
shall mean termination by the Company or the Executive of the Executive's
employment based on the Executive's having reached age 65 or such other age as
shall have been fixed in any arrangement established with the Executive's
consent with respect to the Executive.
(d) CAUSE. The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement only, the Company shall have "Cause" to
terminate the Executive's employment hereunder only on the basis of fraud,
misappropriation or embezzlement on the part of the Executive. Notwithstanding
the foregoing, the Executive shall not be deemed to have been terminated 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 membership of the Company's Board of Directors (excluding
the Executive if the Executive is then a member of the Board of Directors) 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 was guilty of conduct set forth in the
second sentence of this Section 3(d) and specifying the particulars thereof in
detail.
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(e) GOOD REASON. The Executive may terminate the Executive's
employment for Good Reason at any time during the term of this Agreement. For
purposes of this Agreement "Good Reason" shall mean any of the following
(without the Executive's express written consent):
(i) the assignment to the Executive by the Company of
duties inconsistent with the Executive's position, duties,
responsibilities and status with the Company immediately prior to a
Change in Control of the Company, or a change in the Executive's titles
or offices as in effect immediately prior to a Change in Control of the
Company, or any removal of the Executive from or any failure to reelect
the Executive to any of such positions, except in connection with the
termination of his employment for Disability, Retirement or Cause or as
a result of the Executive's death or by the Executive other than for
Good Reason;
(ii) a reduction by the Company in the Executive's base
salary as in effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement;
(iii) a relocation of the Company's principal executive
offices or the Executive's relocation to any place other than the
location at which the Executive performed the Executive's duties prior
to a Change in Control of the Company, except for required travel by
the Executive on the Company's business to an extent substantially
consistent with the Executive's business travel obligations at the time
of a Change in Control of the Company;
(iv) any material breach by the Company of any provision
of this Agreement;
(v) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company; or
(vi) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 3(f), and for purposes of this
Agreement, no such purported termination shall be effective.
(f) NOTICE OF TERMINATION. Any termination by the Company
pursuant to Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of
Termination. For purposes of this Agreement, a "Notice of Termination" shall
mean a written notice which shall indicate those specific termination provisions
in this Agreement relied upon and which sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. For purposes of this
Agreement, no such purported termination by the Company shall be effective
without such Notice of Termination.
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(g) DATE OF TERMINATION. "Date of Termination" shall mean (a) if
this Agreement is terminated by the Company for Disability, 30 days after Notice
of Termination is given to the Executive (provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period) or (b) if the Executive's employment is terminated by
the Company for any other reason, the date on which a Notice of Termination is
given.
4. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT. (a) If the
Company shall terminate the Executive's employment following a Change in Control
other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive shall
terminate his employment following a Change in Control for Good Reason, then the
Company shall pay to the Executive as severance pay in a lump sum, in cash, on
the fifth day following the Date of Termination, an amount equal to six months
of the Executive's base salary (with such base salary being determined as the
highest base salary Executive shall have received during the two years prior to
the Change in Control); provided, however, that if the lump sum severance
payment under this Section 4, either alone or together with other payments which
the Executive has the right to receive from the Company, would constitute a
"parachute payment" (as defined in Section 28OG of the Internal Revenue Code of
1986, as amended (the "Code")), such lump sum severance payment shall be reduced
to the largest amount as will result in no portion of the lump sum severance
payment under this Section 4 being subject to the excise tax imposed by Section
4999 of the Code.
(b) In addition to the lump sum payment provided in Section 4(a), if
the Company shall terminate the Executive's employment following a Change in
Control other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive
shall terminate his employment following a Change in Control for Good Reason,
then the Company shall provide to the Executive health insurance equivalent to
that provided to the Executive immediately prior to termination until the
earlier of: (i) six months following the Date of Termination or (ii) such time
as Executive is employed by another employer and is covered or permitted to be
covered by benefit plans of another employer providing substantially similar
coverage.
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL
RIGHTS. (a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the Date of Termination, or
otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any benefit plan, incentive plan or stock
option plan, employment agreement or other contract, plan or arrangement.
6. SUCCESSOR TO THE COMPANY. (a) The Company will require any successor
or assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially
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all of the business and/or assets of the Company, by agreement in form and
substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume 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 or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor or assign to its business and/or assets as aforesaid which executes
and delivers the agreement provided for in this Section 6 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law. If at any time during the term of this Agreement the Executive is employed
by any corporation a majority of the voting securities of which is then owned by
the Company, "Company" as used in Sections 3, 4, 11 and 12 hereof shall in
addition include such employer. In such event, the Company agrees that it shall
pay or shall cause such employer to pay any amounts owed to the Executive
pursuant to Section 4 hereof.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall 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. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
@xxxx.xxx.
Three Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Executive Officer
If to the Executive:
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Three Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
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8. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of Connecticut.
9. VALIDITY. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees and
expenses which the Executive may incur as a result of the Company's contesting
the validity, enforceability or the Executive's interpretation of, or
determinations under, this Agreement.
12. CONFIDENTIALITY. The Executive shall retain in confidence any and
all confidential information known to the Executive concerning the Company and
its business so long as such information is not otherwise publicly disclosed.
The provisions of this Section 12 are not intended to restrict the ability of
the Executive following termination of employment for any reason to engage in
any business which is, directly or indirectly, competitive with the business
conducted by the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
@xxxx.xxx.
By:
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Name:
Title:
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