1
EXHIBIT 10.14
SEVERANCE AGREEMENT
THIS AGREEMENT, dated __________, is made by and between
Xxxxxx Group, Inc., a Delaware corporation (the "Company"), and ____________
(the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its shareholders to xxxxxx the continued employment of key
management personnel; and
WHEREAS, the Board recognizes that, as is the case with many
publicly held corporations, the possibility of a Change in Control exists and
that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used
in this Agreement are provided in the last Section hereof.
2. Term of Agreement. The Term of this Agreement shall
commence on the date hereof and shall continue in effect through December 31,
1999; provided, however, that commencing on January 1, 1999 and each January 1
thereafter, the Term shall automatically be extended for one additional year
unless, not later than September 30 of the preceding year, the Company or the
Executive shall have given notice not to extend the Term; and further provided,
however, that if a Change in Control shall have occurred during the Term, the
Term shall expire no earlier than twenty-four (24) months beyond the month in
which such Change in Control occurred.
2
3. Company's Covenants Summarized. In order to induce the
Executive to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the Company agrees, under
the conditions described herein, to pay the Executive the Severance Payments and
the other payments and benefits described herein. Except as provided in Section
9.1 hereof, no Severance Payments shall be payable under this Agreement unless
there shall have been a termination of the Executive's employment with the
Company following a Change in Control and during the Term. This Agreement shall
not be construed as creating an express or implied contract of employment and,
except as otherwise agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that,
subject to the terms and conditions of this Agreement, in the event of a
Potential Change in Control during the Term, the Executive will remain in the
employ of the Company until the earliest of (i) a date which is six (6) months
from the date of such Potential Change of Control, (ii) the date of a Change in
Control, (iii) the date of termination by the Executive of the Executive's
employment for Good Reason or by reason of death, Disability or Retirement, or
(iv) the termination by the Company of the Executive's employment for any
reason.
5. Compensation Other Than Severance Payments.
5.1 Following a Change in Control and during the Term,
during any period that the Executive fails to perform the Executive's full-time
duties with the Company as a result of incapacity due to physical or mental
illness, the Company shall pay the Executive's full salary to the Executive at
the rate in effect at the commencement of any such period, together with all
compensation and benefits payable to the Executive under the terms of any
compensation or benefit plan, program or arrangement maintained by the Company
during such period, until the Executive's employment is terminated by the
Company for Disability; provided, however, that the amounts received under this
Section 5.1 shall be reduced by any amounts received by the Executive with
respect to the same period of time under any long term disability plan of the
Company.
2
3
5.2 If the Executive's employment shall be terminated for
any reason following a Change in Control and during the Term, the Company shall
pay the Executive's full salary to the Executive through the Date of Termination
at the rate in effect immediately prior to the Date of Termination or, if
higher, the rate in effect immediately prior to the first occurrence of an event
or circumstance constituting Good Reason, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of the Company's compensation and benefit plans, programs or arrangements
as in effect immediately prior to the Date of Termination or, if more favorable
to the Executive, as in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason.
5.3 If the Executive's employment shall be terminated for
any reason following a Change in Control and during the Term, the Company shall
pay to the Executive the Executive's normal post-termination compensation and
benefits as such payments become due. Such post-termination compensation and
benefits shall be determined under, and paid in accordance with, the Company's
retirement, insurance and other compensation or benefit plans, programs and
arrangements as in effect immediately prior to the Date of Termination or, if
more favorable to the Executive, as in effect immediately prior to the
occurrence of the first event or circumstance constituting Good Reason.
5.4 Upon a Change in Control which occurs during the Term,
(A) the Company shall, within five (5) days after such Change in Control, pay to
the Executive a lump sum cash amount equal to the product of (i) the target
award to which the Executive would have been entitled under each of the
Company's incentive compensation plans, other than an award of the type
described in Section 5.4(B) or 5.4(C) hereof (such target award to be determined
pursuant to the provisions of each such plan or, if no such provisions exist in
the case of any such plan, as determined by the Compensation Committee of the
Board, as constituted immediately prior to the Change in Control, in its sole
discretion), in respect of the year in which such Change in Control occurs and
(ii) a fraction, the numerator of which shall be the number of months (including
fractions thereof) from the first day of the year in which the Change in Control
occurs to the
3
4
date on which the Change in Control occurs, and the denominator of which shall
be twelve (12); (B) all options held by the Executive to acquire Company stock
shall immediately become vested and exercisable in full, and all restrictions on
restricted Company stock and other Company stock-based awards held by the
Executive shall immediately lapse; and (C) the Company shall, within five (5)
days after such Change in Control, pay to the Executive a lump sum cash amount
equal to the product of (i) the target award to which the Executive would have
been entitled for the then uncompleted cycle under the Company's Long Term
Incentive Plan, regardless of whether the Executive is vested in such award, and
(ii) a fraction, the numerator of which shall be the number of months (including
fractions thereof) from the first day of the cycle in which the Change in
Control occurs to the date on which the Change in Control occurs, and the
denominator of which shall be the total of months in the cycle.
6. Severance Payments.
6.1 Subject to Section 6.2 hereof, if the Executive's
employment is terminated following a Change in Control and during the Term,
other than (A) by the Company for Cause, (B) by reason of death or Disability,
or (C) by the Executive without Good Reason, then the Company shall pay the
Executive the amounts, and provide the Executive the benefits, described in this
Section 6.1 ("Severance Payments"), in addition to any payments and benefits to
which the Executive is entitled under Section 5 hereof. Notwithstanding the
foregoing, the Executive shall not be eligible to receive any payment or benefit
provided for in this Section 6.1 unless the Executive shall have executed a
release (substantially in the form of Exhibit A hereto) in favor of the Company
and others set forth on said Exhibit A, relating to all claims or liabilities of
any kind relating to the Executive's employment and termination of employment
with the Company.
(A) In lieu of any further salary
payments to the Executive for periods subsequent to the Date of
Termination and in lieu of any severance benefit otherwise payable to
the Executive, the Company shall pay to the Executive within five (5)
days of such termination of employment an amount, in
4
5
cash, equal to [3][2] times the sum of (i) the Executive's base salary
as in effect immediately prior to the Date of Termination or, if
higher, in effect immediately prior to the first occurrence of an event
or circumstance constituting Good Reason, and (ii) the highest of (a)
the average annual bonus earned by the Executive in respect of the
three fiscal years ending immediately prior to the fiscal year in which
occurs the Date of Termination, (b) the average annual bonus earned by
the Executive in respect of the three fiscal years ending immediately
prior to the fiscal year in which occurs the Change in Control or (c)
the target bonus in respect of the fiscal year in which occurs the Date
of Termination.
(B) For the [thirty-six (36)][twenty-four
(24)] month period immediately following the Date of Termination, the
Company shall cause the Executive to continue to participate in all
employee pension and welfare benefit plans (including, but not limited
to, the Company's executive life insurance plan) in which the Executive
was participating immediately prior to the Date of Termination (or, if
more favorable to the Executive, immediately prior to the Change in
Control) and to continue to receive such other benefits and perquisites
as the Executive was receiving immediately prior to the Date of
Termination (or, if more favorable to the Executive, immediately prior
to the Change in Control); provided, however, that neither the Company
nor any affiliate shall be required by virtue of this Section 6.1(B) to
grant stock options or other stock-based awards to the Executive during
such period. To the extent such participation in any such plan is
barred or otherwise not feasible, the Company shall arrange to provide
substantially similar benefits to the Executive (and, if applicable,
the Executive's dependents) outside such plan. Benefits otherwise
receivable by the Executive pursuant to this Section 6.1 (B) shall be
reduced to the extent benefits of the same type are received by or made
available to the Executive during the [thirty-six (36)][twenty-four
(24)] month period following the Executive's termination of employment
(and any such benefits received by or made available to the Executive
shall be reported to the Company by the Executive). If the Severance
Payments shall be
5
6
decreased pursuant to Section 6.2 hereof, and the Section 6.1(B)
benefits are thereafter reduced pursuant to the immediately preceding
sentence, the Company shall, no later than five (5) business days
following such reduction, pay to the Executive in cash the maximum
amount which can be paid to the Executive without being, or causing any
other payment to be, nondeductible by reason of section 280G of the
Code.
(C) Within five (5) days of such
termination of employment, the Company shall pay to the Executive a
lump sum cash amount (the "Pro-Rata Bonus") equal to the product of (i)
the target award to which the Executive would have been entitled under
each of the Company's incentive compensation plans, other than an award
of the type described in Section 5.4(B) or 5.4(C) hereof (such target
award to be determined pursuant to the provisions of each such plan or,
if no such provisions exist in the case of any such plan, as determined
by the Board in its sole discretion), in respect of the year in which
such termination occurs and (ii) a fraction, the numerator of which
shall be the number of months (including fractions thereof) from the
first day of the year during which such termination occurs to the date
on which such termination occurs, and the denominator of which shall be
twelve (12); provided, however, that if such termination of employment
occurs during the same year in which the Change in Control occurs, the
Pro Rata Bonus shall be offset by any payments received by the
Executive pursuant to Section 5.4(A) hereof.
6.2 (A) Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be received
by the Executive in connection with a Change in Control or the termination of
the Executive's employment (whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement with the Company, any Person 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
Payments, being hereinafter called "Total Payments") would be subject (in whole
or part), to the Excise Tax, then, the cash Severance Payments shall first be
reduced, and the other payments
6
7
and benefits hereunder shall thereafter be reduced, to the extent necessary so
that no portion of the Total Payments is subject to the Excise Tax, but only if
(A) is greater than or equal to (B), where (A) equals the reduced amount of such
Total Payments minus the aggregate amount of federal, state and local income
taxes on such reduced Total Payments and (B) equals the unreduced amount of such
Total Payments minus the sum of (1) the aggregate amount of federal, state and
local income taxes on such Total Payments and (2) the amount of Excise Tax to
which the Executive would be subject in respect of such unreduced Total
Payments; provided, however, that the Executive may elect to have the other
payments and benefits hereunder reduced (or eliminated) prior to any reduction
of the cash Severance Payments.
(B) For purposes of determining whether and the extent to
which the Total Payments will be subject to the Excise Tax, (i) no portion of
the Total Payments the receipt or enjoyment of which the Executive shall have
waived at such time and in such manner as not to constitute a "payment" within
the meaning of section 280G(b) of the Code shall be taken into account, (ii) no
portion of the Total Payments shall be taken into account which, in the opinion
of tax counsel ("Tax Counsel") reasonably acceptable to the Executive and
selected by the accounting firm (the "Auditor") which was, immediately prior to
the Change in Control, the Company's independent auditor, 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, in the opinion of Tax Counsel, 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 allocable to such reasonable compensation,
and (iii) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be determined by the Auditor in accordance
with the principles of sections 280G(d)(3) and (4) of the Code.
(C) At the time that payments are made under this Agreement,
the Company shall provide the Executive with a written statement setting forth
the manner in which such payments were calculated and the
7
8
basis for such calculations including, without limitation, any opinions or other
advice the Company has received from Tax Counsel, the Auditor or other advisors
or consultants (and any such opinions or advice which are in writing shall be
attached to the statement). If the Executive objects to the Company's
calculations, the Company shall pay to the Executive such portion of the
Severance Payments (up to 100% thereof) as the Executive reasonably determines
is necessary to result in the proper application of subsection A of this Section
6.2.
6.3 The payments provided in subsections (A), (C) of Section
6.1 hereof shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments, and the
limitation on such payments set forth in Section 6.2 hereof, cannot be finally
determined on or before such day, the Company shall pay to the Executive on such
day an estimate, as determined in good faith by the Company of the minimum
amount of such payments to which the Executive is clearly entitled and shall pay
the remainder of such payments (together with interest on the unpaid remainder
(or on all such payments to the extent the Company fails to make such payments
when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the amount
of the estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to the Executive,
payable on the fifth (5th) business day after demand by the Company (together
with interest at 120% of the rate provided in section 1274(b)(2)(B) of the
Code).
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and
during the Term, any purported termination of the Executive's employment (other
than by reason of death) shall be communicated by written Notice of Termination
from one party hereto to the other party hereto in accordance with Section 10
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in
8
9
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
Further, a Notice of Termination for Cause is required to include a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (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 clause (i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination," with respect
to any purported termination of the Executive's employment after a Change in
Control and during the Term, shall mean (i) if the Executive's employment is
terminated for Disability, thirty (30) days after Notice of Termination is given
(provided that the Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty (30) day period), and
(ii) if the Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination (which, in the case of a termination by
the Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive, shall
not be less than fifteen (15) days nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the earlier of (i) the date on which the Term ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of an arbitrator; provided,
however, that the Date of Termination shall be extended by a notice of dispute
given by the Executive only if
9
10
such notice is given in good faith and the Executive pursues the resolution of
such dispute with reasonable diligence.
7.4 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the Term and the Date of
Termination is extended in accordance with Section 7.3 hereof, the Company shall
continue to pay the Executive the full compensation in effect when the notice
giving rise to the dispute was given (including, but not limited to, salary) and
continue the Executive as a participant in all compensation, benefit and
insurance plans in which the Executive was participating when the notice giving
rise to the dispute was given, until the Date of Termination, as determined in
accordance with Section 7.3 hereof. Amounts paid under this Section 7.4 are in
addition to all other amounts due under this Agreement (other than those due
under Section 5.2 hereof) and shall not be offset against or reduce any other
amounts due under this Agreement.
8. No Mitigation. The Company agrees that, if the
Executive's employment with the Company terminates during the Term, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section 6
hereof or Section 7.4 hereof. Further, the amount of any payment or benefit
provided for in this Agreement (other than Section 6.1(B) hereof) shall not be
reduced by any compensation earned by the Executive as the result of employment
by another employer, by retirement benefits, by offset against any amount
claimed to be owed by the Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
9.1 In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
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
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
10
11
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
9.2 This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose 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, addressed, if
to the Executive, to the address inserted below the Executive's signature on the
final page hereof and, if to the Company, to the address set forth below, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:
To the Company:
Xxxxxx Group, Inc.
000 Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000-0000
Attention:
----------------------
----------------------
11
12
11. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or of any lack of 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. This Agreement supersedes any
other agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof which have been made by either party;
provided, however, that this Agreement shall supersede any agreement setting
forth the terms and conditions of the Executive's employment with the Company
only in the event that the Executive's employment with the Company is terminated
on or following a Change in Control, by the Company other than for Cause or by
the Executive for Good Reason. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Connecticut. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law and any additional withholding to which the
Executive has agreed. The obligations of the Company and the Executive under
this Agreement which by their nature may require either partial or total
performance after the expiration of the Term (including, without limitation,
those under Sections 6 and 7 hereof) shall survive such expiration.
12. Validity. The invalidity or unenforceability of any
provision 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.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12
13
14. Settlement of Disputes; Arbitration.
14.1 All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be in
writing. Any denial by the Board of a claim for benefits under this Agreement
shall be delivered to the Executive in writing and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Board shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim and shall further allow the Executive to
appeal to the Board a decision of the Board within sixty (60) days after
notification by the Board that the Executive's claim has been denied.
14.2 Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Hartford, Connecticut in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the evidentiary standards
set forth in this Agreement shall apply. The arbitrator shall have the authority
to require that the Company reimburse the Executive for the payment of all or
any portion of the legal fees and expenses incurred by the Executive in
connection with such dispute or controversy. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding any
provision of this Agreement to the contrary, the Executive shall be entitled to
seek specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated below:
(A) "Affiliate" shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act.
(B) "Auditor" shall have the meaning set forth in Section
6.2 hereof.
13
14
(C) "Base Amount" shall have the meaning set forth in
section 280G(b)(3) of the Code.
(D) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.
(E) "Board" shall mean the Board of Directors of the
Company.
(F) "Cause" for termination by the Company of the
Executive's employment shall mean (i) the willful and continued failure by the
Executive to substantially perform the Executive's duties with the Company
(other than any such failure resulting from the Executive'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 Executive pursuant to
Section 7.1 hereof) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically identifies
the manner in which the Board believes that the Executive has not substantially
performed the Executive's duties, (ii) the engaging by the Executive in conduct
which is demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise or (iii) the Executive's conviction for
the commission of (a) a felony or (b) any other crime involving moral turpitude.
For purposes of clauses (i) and (ii) of this definition, no act, or failure to
act, on the Executive's part shall be deemed "willful" unless done, or omitted
to be done, by the Executive not in good faith and without reasonable belief
that the Executive's act, or failure to act, was in the best interest of the
Company.
(G) A "Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:
(I) any Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company
or its affiliates) representing 25% or more of the combined
voting power of the Company's then outstanding securities,
excluding any Person who becomes such a Beneficial Owner
14
15
in connection with a transaction described in clause (i) of
paragraph (III) below; or
(II) the following individuals cease for
any reason to constitute a majority of the number of directors
then serving: individuals who, on the date hereof, constitute
the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or
nomination for election by the Company's shareholders was
approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were
directors on the date hereof or whose appointment, election or
nomination for election was previously so approved or
recommended; or
(III) there is consummated a merger or
consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, other
than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, at least
60% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in
the securities Beneficially Owned by such Person any
securities acquired directly
15
16
from the Company or its Affiliates) representing 25% or more
of the combined voting power of the Company's then outstanding
securities; or
(IV) the shareholders of the Company
approve a plan of complete liquidation or dissolution of the
Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the
Company of all or substantially all of the Company's assets to
an entity, at least 60% of the combined voting power of the
voting securities of which are owned by shareholders of the
Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
(H) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(I) "Company" shall mean Xxxxxx Group, Inc. and, except in
determining under Section 15(E) hereof whether or not any Change in Control of
the Company has occurred, shall include any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of law,
or otherwise.
(J) "Date of Termination" shall have the meaning set forth in
Section 7.2 hereof.
(K) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the Executive shall
have been absent from the full-time performance of the Executive's duties with
the Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within thirty
(30) days after such Notice of Termination is given, the Executive shall not
have returned to the full-time performance of the Executive's duties.
(L) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
16
17
(M) "Excise Tax" shall mean any excise tax imposed under
section 4999 of the Code.
(N) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(O) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) after any Change in Control, of any one of the
following acts by the Company, or failures by the Company to act, unless, in the
case of any act or failure to act described in paragraph (I) or (IV) below, such
act or failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(I) the assignment to the Executive of any
duties inconsistent with the Executive's status as an
executive officer of the Company or a substantial adverse
alteration in the nature or status of the Executive's
responsibilities from those in effect immediately prior to the
Change in Control;
(II) a reduction by the Company in the
Executive's annual base salary as in effect on the date hereof
or as the same may be increased from time to time;
(III) the relocation of the Executive's
principal place of employment to a location more than 50 miles
from the Executive's principal place of employment immediately
prior to the Change in Control or the Company's requiring the
Executive to be based anywhere other than such principal place
of employment (or permitted relocation thereof) except for
required travel on the Company's business to an extent
substantially consistent with the Executive's present business
travel obligations;
(IV) any purported termination of the
Executive's employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of Section
7.1 hereof; for
17
18
purposes of this Agreement, no such purported termination
shall be effective.
The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or failure
to act constituting Good Reason hereunder.
(P) "Notice of Termination" shall have the meaning set forth
in Section 7.1 hereof.
(Q) "Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) any member of the Xxxxxx family (by
blood or marriage) or any entity for the benefit of, or controlled by, a member
of the Xxxxxx family (by blood or marriage), (ii) the Company or any of its
subsidiaries, (iii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iv) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (v) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
(R) "Potential Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following paragraphs shall
have occurred:
(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 becomes the Beneficial
Owner, directly or indirectly, of securities of the Company
representing 15% or more of
18
19
either the then outstanding shares of common stock of the
Company or the combined voting power of the Company's then
outstanding securities (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its affiliates); or
(iv) the Board adopts a resolution to the
effect that, for purposes of this Agreement, a Potential
Change in Control has occurred.
(S) "Retirement" shall be deemed the reason for the
termination by the Executive of the Executive's employment if such employment is
terminated in accordance with the Company's retirement policy, including early
retirement, generally applicable to its salaried employees.
(T) "Severance Payments" shall have the meaning set forth in
Section 6.1 hereof.
(U) "Tax Counsel" shall have the meaning set forth in
Section 6.2 hereof.
(V) "Term" shall mean the period of time described in
Section 2 hereof (including any extension, continuation or termination described
therein).
19
20
(W) "Total Payments" shall mean those payments so described in
Section 6.2 hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
XXXXXX GROUP, INC.
By:
-------------------------------
Name:
Title:
-------------------------------
EXECUTIVE
Address:
-------------------------------
-------------------------------
-------------------------------
(Please print carefully)
20
21
EXHIBIT A - COMPLETE AND PERMANENT RELEASE
TO: __________________ (the "Executive")
DATE: _________________
The Executive is hereby offered severance payments and benefits in accordance
with and subject to the terms of the Severance Agreement between the Executive
and the Company (the "Agreement") dated as of October 17, 1997, in consideration
of the Executive's execution and return of this Complete and Permanent Release
(the "Release").
The Executive's severance payments and benefits pursuant to the Agreement will
commence ten (10) business days after the execution and return to the Company of
this Release, but no sooner than the Termination Date, provided that the
Executive has not revoked this Release as hereinafter described. The Executive
has seven (7) calendar days from the date that the Executive signs this Release
to revoke this Release by giving written notice of the Executive's intent to do
so to the Company. This Release shall not become effective or enforceable until
this seven (7) day period has expired. If the Executive revokes this Release,
the Executive will not receive the severance payments and benefits described in
the Agreement.
By signing below, the Executive agrees that execution of this Release operates
to, and hereby does, release the Company, its subsidiaries and affiliates, its
(and its subsidiaries' and affiliates') present or former employees, officers,
directors, shareholders, representatives and agents (the "Released Parties")
from all claims or demands (the "Claims") the Executive has had, presently has
or may have, based on the Executive's employment with the Company or the
termination of that employment, including any rights or claims the Executive may
have based on any facts or events, whether known or unknown by the Executive,
including, without limitation, a release of any rights or claims the Executive
may have based on the Civil Rights Act of 1966, as amended; the Civil Rights Act
of 1991, as amended; the Age Discrimination in Employment Act of 1967, as
amended; Title VII of the Civil Rights Act of 1964, as amended; the Americans
with Disabilities Act of 1990; the Equal Pay Act of 1963; any and
21
22
all laws of any state concerning wages, employment and discharge; any state or
local municipality fair employment statutes or laws; or any other law, rule,
regulation or ordinance pertaining to employment, terms and conditions of
employment, or termination of employment; provided, however, that execution of
this Release shall not adversely affect (i) the Executive's rights to receive
benefits under the employee benefit plans and arrangements of the Company,
following termination of the Executive's employment; (ii) the Executive's rights
under the Agreement; or (3) the Executive's rights to indemnification under
applicable law, the Certificate of Incorporation or by-laws of the Company or
any agreement between the Executive and the Company. The Executive is advised to
consult with an attorney before signing the Release.
The Executive has twenty-one (21) calendar days from the date of the Release, as
set forth above, in which to sign and return this Release to the Company.
For the Company:
-----------------------
-----------------------
-----------------------
ACCEPTED THIS ____ DAY OF ___________, 19___
-----------------------
Executive
22
