EXHIBIT 5(B)
CHANGE IN CONTROL AGREEMENT
OF XXXXXXX X. XXXXXXXX
This Change in Control Agreement (the "Agreement") between Barefoot, Inc., a
Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx (the "Executive")
is made this 16th day of September, 1991.
Whereas, the Company recognizes that the possibility of a Change in Control
(as hereinafter defined) exists and that the threat of the occurrence of a
Change in Control can result in significant distractions of its key management
personnel because of the uncertainties inherent in such a situation; and
Whereas, it is the best interests of the Company and its stockholders to
retain the services of the Executive in the event of a threat or occurrence of
a Change in Control and to ensure his continued dedication and efforts in such
event without undue concern for his personal financial and employment security;
and
Whereas, in order to induce the Executive to remain in the employ of the
Company, particularly in the event of a threat or the occurrence of a Change in
Control, the Company desires to enter into this Agreement with the Executive to
provide the Executive with certain benefits in the event his employment is
terminated as a result of, or in connection with, a Change in Control;
Now, Therefore, in consideration of the foregoing premises and the covenants
contained herein, the parties hereby agree as follows:
1. Term of Agreement. This Agreement shall commence as of the date first
above written and shall continue in effect until December 31, 1992; provided,
however, that commencing on January 1, 1993 and on each January 1 thereafter,
the term of this Agreement shall automatically be extended for one year unless
either the Company or the Executive shall have given written notice to the
other at least 90 days prior thereto that the term of this Agreement shall not
be so extended; and provided further that any notice by the Company not to
extend that is given after the occurrence of a Change in Control shall not be
effective to terminate this Agreement prior to the expiration of 12 months
after the occurrence of the Change in Control.
2. Definitions.
2.1. Accrued Compensation. For purposes of this Agreement, "Accrued
Compensation" shall mean an amount which shall include all amounts earned or
accrued through the "Termination Date" but not paid as of the Termination Date,
including (i) base salary, (ii) reimbursement for reasonable and necessary
expenses incurred by the Executive on behalf of the Company during the period
ending on the Termination Date, (iii) vacation pay, and (iv) bonuses and
incentive compensation.
2.2. Base Amount. For purposes of this Agreement, "Base Amount" shall mean
the greater of the Executive's annual base salary (a) at the rate in effect on
the Termination Date or (b) at the highest rate in effect at any time during
the 90-day period prior to the Change in Control, and shall include all amounts
of his base salary that are deferred under any qualified or nonqualified
employee benefit plans of the Company or under any other agreement or
arrangement.
2.3. Bonus Amount. For purposes of this Agreement, "Bonus Amount" shall mean
the most recent annual bonus paid or payable to the Executive, or, if greater,
the annual bonus paid or payable for the full fiscal year ended prior to the
fiscal year during which a Change in Control occurred.
2.4. Cause. For purposes of this Agreement, a termination of employment is
for "Cause" if the Executive has been convicted of a felony or the termination
is evidenced by a resolution adopted in good faith by two-thirds of the Board
that the Executive (a) intentionally and continually failed substantially to
perform his reasonably assigned duties with the Company (other than a failure
resulting from the Executive's incapacity due to physical
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or mental illness or from the Executive's assignment of duties that would
constitute "Good Reason" as hereinafter defined), which failure continued for a
period of at least 30 days after a written notice of demand for substantial
performance was delivered to the Executive specifying the manner in which the
Executive has failed substantially to perform; or (b) intentionally engaged in
conduct that was demonstrably and materially injurious to the Company;
provided, however, that no termination of the Executive's employment shall be
for Cause as set forth in clause (b) above until (x) there shall have been
delivered to the Executive a copy of a written notice setting forth that the
Executive was guilty of the conduct set forth in clause (b) and specifying the
particulars thereof in detail, and (y) the Executive shall have been provided
an opportunity to be heard in person by the Board (with the assistance of the
Executive's counsel if the Executive so desires). No act, nor failure to act,
on the Executive's part shall be considered "intentional" unless the Executive
has acted, or failed to act, with a lack of good faith and with a lack of
reasonable belief that the Executive's action or failure to act was in the best
interests of the Company.
2.5. Change in Control. For purposes of this Agreement, a "Change in Control"
shall mean any of the following events:
(a) An acquisition (other than directly from the Company) of any voting
securities of the Company (the "Voting Securities") by any "Person" (as the
term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), but not
including the underwriters in the Company's initial public offering),
immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of
the combined voting power of the Company's then outstanding Voting
Securities; provided, however, that in determining whether a Change in
Control has occurred, the acquisition of Voting Securities in a "Non-
Control Acquisition" (as hereinafter defined) shall not cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by
either the Company or a Subsidiary, (ii) the Company or any Subsidiary, or
(iii) any Person in connection with a Non-Control Transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person acquired Beneficial Ownership of more than
the permitted amount of the outstanding Voting Securities as a result of
the acquisition of Voting Securities by the Company which, by reducing the
number of Voting Securities outstanding, increases the proportional number
of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after
such share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities Beneficially Owned by
the Subject Person, then a Change in Control shall occur.
(b) During any period of two consecutive years, individuals who at the
beginning of such period constitute the entire Board of Directors (the
"Incumbent Board") cease for any reason to constitute a majority thereof;
provided, however, that if the election, or nomination for election by the
Company's stockholders, of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new director shall, for
purposes of this Agreement, be considered as a member of the Incumbent
Board.
(c) Approval by stockholders of the Company if required, or if not
required the approval by the Board, of:
(i) a merger, consolidation, or reorganization involving the Company,
unless such merger, consolidation, or reorganization is a Non-Control
Transaction;
(ii) a complete liquidation or dissolution of the Company; or
(iii) an Agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other
than a transfer to a Subsidiary).
(d) Notwithstanding anything contained in this Agreement to the contrary,
if the Executive's employment is terminated prior to a Change in Control
and the Executive reasonably demonstrates that such termination (i) was at
the request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who effectuates a
Change in Control (a "Third Party") or (ii) other-wise occurred in
connection with, or in anticipation of, a Change in Control which actually
occurs,
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then for all purposes of this Agreement, the date of a Change in Control
with respect to the Executive shall mean the date immediately prior to the
date of such termination of the Executive's employment.
2.6. Company. For purposes of this Agreement, "Company" shall mean Barefoot
Inc. and shall include Successors and Assigns. Any reference to the Company as
employer of the Executive shall also refer to any Subsidiary, if applicable.
2.7. Disability. For purposes of this Agreement, "Disability" shall mean a
physical or mental infirmity that impairs the Executive's ability to
substantially perform his duties with the Company for a period of 180
consecutive days and the Executive has not returned to his full-time
employment prior to the Termination Date as stated in the Notice of
Termination.
2.8. Good Reason. (a) For purposes of this Agreement, "Good Reason" shall
mean the occurrence after a Change in control of any of the events or
conditions described in paragraphs (i) through (viii) below, unless the
Executive expressly consents in writing to such events or conditions:
(i) a change in the Executive's status, title, position, or
responsibilities (including reporting responsibilities) that, in the
Executive's reasonable judgment, represents an adverse change from his
status, title, position, or responsibilities as in effect at any time
within 90 days preceding the date of a Change in Control or at any time
thereafter; the assignment to the Executive of any duties or
responsibilities that, in the Executive's reasonable judgment, are
inconsistent with his status, title, position, or responsibilities as in
effect at any time within 90 days preceding the date of a Change in Control
or at any time thereafter; or any removal of the Executive from or failure
to reappoint or reelect him to any of such offices or positions, except in
connection with the termination of his employment for Disability, Cause, as
a result of his death, or by the Executive other than for Good Reason;
(ii) a reduction in the Executive's base salary or any failure to pay the
Executive any compensation or benefits to which he is entitled within five
days of the date due;
(iii) the Company's requiring the Executive to be based at any place
outside a 00-xxxx xxxxxx xxxx Xxxxxxxxxxx, Xxxx, except for reasonably
required travel on the Company's business which is not materially greater
than such travel requirements prior to the Change in Control;
(iv) the failure by the Company to (x) continue in effect (without
reduction in benefit level and/or reward opportunities) any material
compensation or employee benefit plan or arrangement (including the
Company's profit sharing plan, group life insurance plan, and medical,
dental, accident and disability plans) in which the Executive was
participating at any time within 90 days preceding the date of a Change in
Control or at any time thereafter, unless such plan is replaced with a plan
that provides substantially equivalent compensation or benefits to the
Executive or (y) provide the Executive with compensation and benefits, in
the aggregate, at least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each other employee benefit
plan, program, and practice in which the Executive was participating at any
time within 90 days preceding the date of a Change in Control or at any
time thereafter;
(v) the insolvency or the filing (by any party, including the Company) of
a petition for bankruptcy of the Company, which petition is not dismissed
within 60 days;
(vi) any material breach by the Company of any provision of this
Agreement;
(vii) any purported termination of the Executive's employment for Cause
by the Company which does not comply with the terms of Section 2.4; or
(viii) the failure of the Company to obtain an agreement, satisfactory to
the Executive, from any Successors and Assigns to assume and agree to
perform this Agreement, as contemplated in Section 8 hereof.
(b) Any event or condition described in Section 2.8(a)(i) through (viii)
that occurs prior to a Change in Control but which the Executive reasonably
demonstrates either was at the request of a Third Party or otherwise arose in
connection with, or in anticipation of, a Change in Control that actually
occurs, shall constitute Good Reason for purposes of this Agreement
notwithstanding that it occurred prior to the Change in Control.
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(c) The Executive's right to terminate his employment pursuant to this
Section 2.8 shall not be effected by his incapacity due to physical or mental
illness.
2.9. Non-Control Transaction. For purposes of this Agreement, a "Non-Control
Transaction" is a merger, consolidation, or reorganization involving the
Company in which:
(a) the stockholders of the Company immediately before such merger,
consolidation, or reorganization own directly or indirectly, immediately
following such merger, consolidation, or reorganization, at least 60% of
the combined voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or reorganization
(the "Surviving Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such merger,
consolidation, or reorganization;
(b) the individuals who were members of the Board of Directors
immediately prior to the execution of the agreement providing for such
merger, consolidation, or reorganization constitute at least two-thirds of
the members of the Board of Directors of the Surviving Corporation; and
(c) no Person (other than the Company, any Subsidiary, any employee
benefit plan (or any trust forming a part thereof) maintained by the
Company, the Surviving Corporation, or any Subsidiary, or any Person who,
immediately prior to such merger, consolidation, or reorganization had
Beneficial Ownership of 15% or more of the then outstanding Voting
Securities) has Beneficial Ownership of 15% or more of the combined voting
power of the Surviving Corporation's then outstanding voting securities.
2.10. Notice of Termination. For purposes of this Agreement, following a
Change in Control, "Notice of Termination" shall mean a written notice of
termination from the Company of the Executive's employment that indicates the
specific termination provision in this Agreement relied upon and that 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.
2.11. Subsidiary. For purposes of this Agreement, "Subsidiary" shall mean a
corporation or other Person, a majority of whose voting power or equity
securities or equity interest is owned directly or indirectly by the Company.
2.12. Successors and Assigns. For purposes of this Agreement, "Successors and
Assigns" shall mean a corporation or other entity acquiring all or
substantially all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
2.13. Termination Date. For purposes of this Agreement, "Termination Date"
shall mean in the case of the Executive's death, his date of death, in the case
of Good Reason, the last day of his employment, and in all other cases, the
date specified in the Notice of Termination; provided, however, that if the
Executive's employment is terminated by the Company for Cause or due to
Disability, the date specified in the Notice of Termination shall be at least
30 days from the date the Notice of Termination is given to the Executive,
provided that in the case of Disability the Executive shall not have returned
to the full-time performance of his duties during such period of at least 30
days.
3. Compensation Upon Termination of Employment. If, during the term of this
Agreement, the Executive's employment with the Company is terminated within 12
months following a Change in Control other than (x) by the Company for Cause or
Disability, (y) by reason of the Executive's death, or (z) by the Executive
other than for Good Reason, the Executive shall be entitled to the following
compensation and benefits, with the amounts in paragraphs (a) through (c) below
payable in cash within five business days after the Executive's Termination
Date:
(a) the Company shall pay the Executive all Accrued Compensation:
(b) the Company shall pay the Executive, as severance pay and in lieu of
any further compensation for periods subsequent to the Termination Date, an
amount equal to the sum of the Base Amount and the Bonus Amount;
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(c) the Company shall pay an amount equal to the excess of (x) the amount
to which the Executive would have been entitled had he been 100% vested and
entitled to receive a distribution as of the Termination Date under all of
the Company's tax-qualified retirement plans in which he was a participant,
over (y) the Executive's vested accrued benefit under such plans; and
(d) the restrictions on any outstanding incentive awards granted to the
Executive under any of the Company's incentive plans or arrangements shall
lapse and such incentive awards shall become 100% vested, all stock options
and stock appreciation rights granted to the Executive shall become
immediately exercisable and shall become 100% vested, and all performance
units granted to the Executive shall become 100% vested;
provided, however, that if any payment or benefit to the Executive or for his
benefit paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise in connection with, or arising out of, his
employment with the Company or a change in ownership or effective control of
the Company or of a substantial portion of its assets would constitute an
excess parachute payment (within the meaning of Section 280G(b) of the Internal
Revenue Code of 1986, as amended (the "Code")) the amount of payments or
benefits hereunder shall be reduced to the largest amount as will result in no
portion of such payments' being subject to the excise tax imposed by Section
4999 of the Code, with the order in which the foregoing benefits lapse to be
determined by the Executive.
4. Mitigation. The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise, and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent
employment.
5. Relationship to Other Benefits. The severance pay and benefits provided
for in Section 3 hereof shall be in lieu of any other severance or termination
pay to which the Executive may be entitled under any Company severance or
termination plan, program, practice or arrangement, unless the Executive elects
to waive the benefits hereunder in favor of the benefits to which he is
entitled under such other plan, program, practice, or arrangement. Except as
provided in the preceding sentence regarding severance or termination benefits,
however, nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive, or other
plan or program provided by the Company for which the Executive may qualify, or
limit or reduce such rights as the Executive may have under any other
agreements with the Company. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or program of the
Company shall be payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
6. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense, or other right that
the Company may have against the Executive or others.
7. Notice of Termination. Following a Change in Control, any purported
termination of the Executive's employment by the Company shall be communicated
by a Notice of Termination to the Executive. For purposes of this Agreement, no
such purported termination shall be effective without such Notice of
Termination.
8. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its Successors and Assigns, and the
Company shall require any Successors and Assigns 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 or assignment had
taken place. Neither this Agreement nor any right or interest thereunder shall
be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal personal representative.
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9. Notices. For the purposes of this Agreement, notices and all other
communications provided for in this 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, to the recipient at
the address indicated below:
To the Company:
Barefoot Inc.
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxx 00000
Attn: Chairman of the Board of Directors
To the Executive:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxx Xxxx
Xxxxxx, Xxxx 00000
or such other address or to the attention of such other persons as the
recipient party shall have specified by prior written notice to the sending
party.
10. Waiver. 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 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.
11. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Ohio without giving effect
to the conflict of laws principles thereof. Any action brought by any party to
this Agreement shall be brought and maintained in a court of competent
jurisdiction in Franklin County in the State of Ohio.
12. Severability. The provisions of this Agreement shall be deemed severable,
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto and supersedes all prior agreements, if any, understandings,
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.
In Witness Whereof, the parties have executed this Agreement as of the day
and year first above written.
THE COMPANY:
Barefoot Inc.
/s/ Xxxxxxx X. Xxxxxx
By___________________________________
Xxxxxxx X. Xxxxxx, President
THE EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
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