EXHIBIT 10(h)(ii)
EXECUTIVE AGREEMENT
THIS EXECUTIVE AGREEMENT (this "Agreement") entered into as
of January 5, 1998, by and between QMS, INC. (the "Company"), a
corporation organized under the laws of the State of Delaware,
and XXXXXX X. XXXXXXX (the "Executive").
W I T N E S S E T H
WHEREAS, to assure that the Company will continue to have
the Executive's services available to the Company, the Company
desires to provide the Executive with benefits upon certain
contingencies;
NOW, THEREFORE, in consideration of the foregoing, the
continued employment of the Executive and for other good and
valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto agree as follows:
1. DEFINITIONS
(a) "Affiliate" shall mean a person that directly or
indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, a specified
person.
(b) "Associate" shall mean: (i) any corporation,
partnership or other organization of which a specified person is
an officer or partner, or is, directly or indirectly, the
beneficial owner of ten percent (10%) or more of any class of
equity securities thereof, (ii) any trust or other estate in
which the specified person has a substantial beneficial interest
or as to which the specified person serves as trustee or in a
similar fiduciary capacity, (iii) any relative or spouse of such
specified person, or any relative of such spouse, who has the
same home as such specified person and (iv) any person who is a
trustee, officer or partner of such specified person or of any
corporation, partnership or other entity which is an Affiliate of
such specified person.
(c) "Beneficial Owner" shall be defined by reference to
Rule 13d-3 under Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as such Rule is in effect on the date hereof;
provided, however, that any individual, corporation, partnership,
Group (as hereinafter defined), association or other person or
entity which, directly or indirectly, owns or has the right to
acquire any of the Company's outstanding securities entitled to
vote generally in the election of directors at any time in the
future, whether such right is contingent, absolute, direct or
indirect, pursuant to any agreement, arrangement or understanding
or upon exercise of conversion rights, warrants or options, or
otherwise, shall be deemed the Beneficial Owner of such
securities.
(d) "Benefits" shall mean the immediate vesting of all
options granted to Executive to purchase the common stock of the
"Company" as authorized by the Compensation Committee of the
Board.
(e) "Board" shall mean the Board of Directors of the Company.
(f) "Cause" shall mean conduct of the Executive amounting
to fraud, dishonesty, conviction of felony, gross negligence or
willful misconduct.
(g) "Change of Control" of the Company shall be deemed to
have occurred if and when, (1) any individual, corporation,
partnership, Group, association or other person or entity,
together with his, its or their Affiliates or Associates (other
than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company) is or becomes the
Beneficial Owner of securities of the Company representing twenty
percent (20%) or more of the combined voting power of the
Company's then outstanding securities entitled to vote generally
in the election of directors or (2) the Continuing Directors (as
hereinafter defined) shall at any time fail to constitute a
majority of the members of the Board.
(h) "Continuing Directors" shall mean the directors who
either are members of the Board on the date hereof, or who become
members of the Board subsequent to such date and whose election,
or nomination for election by the Company's stockholders, was
Duly Approved by the Continuing Directors at the time of such
nomination or election, either by a specific vote or by approval
of the proxy statement issued by the Company on behalf of the
Board in which such person is named as nominee for director,
without due objection to such nomination.
(i) "Duly Approved by the Continuing Directors" shall mean
an action approved by the vote of at least a majority of the
Continuing Directors then on the Board, except, if the votes of
such Continuing Directors in favor of such action would be
insufficient to constitute an act of the Board if a vote by all
of its members were to have been taken, then such term shall mean
an action approved by the unanimous vote of the Continuing
Directors then on the Board so long as there are at least three
Continuing Directors on the Board at the time of such unanimous
vote.
(j) "Group" shall mean persons who act in concert as
described in Section 13(d)(3) of the Exchange Act as in effect on
the date hereof.
(k) "Trust" shall mean the Trust specifically established
for purposes of receipt and payment of the payment provided for
in Section 2(c) hereof.
2. EXECUTIVE'S RIGHTS UPON CHANGE OF CONTROL
(a) This Agreement shall be effective immediately upon
execution of this Agreement by the parties hereto and shall
remain in effect so long as the Executive remains employed by the
Company and thereafter until all Benefits to which the Executive
is entitled under this Agreement have been provided.
(b) If a Change of Control occurs while the Executive is
employed by the Company and if, within eighteen (18) months after
the date of a Change of Control, the Executive's employment is
terminated involuntarily, or voluntarily by the Executive based
on material changes in the nature or scope of the Executive's
duties or employment or a reduction of compensation of the
Executive made without the Executive's consent, the Executive
may, in his sole discretion, give written notice within thirty
(30) days after the date of termination of employment to the
Secretary of the Company that he intends to exercise his rights
hereunder and to receive the Benefits and payments provided for
hereunder (the "Notice of Exercise").
(c) If the Executive gives a Notice of Exercise to receive
the Benefits and the payments provided for hereunder:
(i) The Compensation Committee's authorization of the immediate
vesting of all options granted to Executive shall be effective;
and
(ii) The Company shall pay to the Trust for the benefit of
the Executive, a single cash payment (the "Executive Payment") in
the amount equal to 200% of the base salary plus cash incentive
compensation paid or scheduled to be paid by the Company to the
Executive for the year in which the Change of Control occurred
the amount which, if paid to the Executive in thirty-six (36)
consecutive equal monthly installments commencing on the date set
forth in Section 2(i) hereof, will have a present value equal to
the amount by which 299% of the Executive's "base amount" (as
defined by Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code")) exceeds the aggregate present value of all
other parachute payments (as defined by Section 280G of the Code)
received by the Executive. "Present value" shall be determined
in accordance with Section 280G(d)(4) of the Code.
(d) Within thirty (30) days after the date of giving of the
Notice of Exercise by the Executive, the Company shall provide
written notice to the Executive setting forth the Company's
computation of the amount that would be payable pursuant to the
Executive's election hereunder, accompanied by the written
opinion of the Company's independent certified public accountants
confirming the Company's computation. If the Executive takes
exception to the Company's computation of such amount, the
Executive shall have forty-five (45) days from the date of the
giving of the Notice of Exercise to give a further written notice
to the Company (the "Notice of Exception") setting forth in
reasonable detail the Executive's exceptions to the Company's
computation, accompanied by the written opinion of the
Executive's tax advisor confirming the basis for such exceptions.
(e) Forty-five (45) days after the date of giving the
Notice of Exercise by the Executive, the Company shall make the
payment provided for in Section 2(c) hereof unless the Executive
has given a Notice of Exception to the Secretary of the Company,
in which event, the Company and the Executive shall submit their
respective computations and tax opinions to a third tax advisor,
mutually agreeable to each, whose determination of the matter
shall be final and binding on the Company and the Executive.
After such final determination, the Company shall have five (5)
business days to make the payment provided for in Section 2(c).
(f) The Company shall, within the time periods described in
Section 2(e), deliver to the Trust for the benefit of the
Executive, its certified or cashier's check in the amount payable
pursuant to Section 2(c) and payment of such Executive Payment
shall not terminate the Executive's rights to receive any and all
other payments, rights or benefits arising pursuant to this
Agreement or from any other agreement, plan or policy which by
its terms or by operation of law provides for the continuation of
such payments, rights or benefits after the termination of the
Executive's relationship with the Company.
(g) The Executive Payment shall be in addition to and shall
not be offset or reduced by (1) any other amounts that have
accrued or have otherwise become payable to the Executive or his
beneficiaries, but have not been paid by the Company at the time
the Executive gives the Notice of Exercise including, but not
limited to, salary, severance pay, consulting fees, disability
benefits, termination benefits, retirement benefits, life and
health insurance benefits or any other compensation or benefit
payment that is part of any valid previous, current or future
contract, plan or agreement, written or oral, and (2) any
indemnification payments that may have accrued but not paid or
that may thereafter become payable to the Executive pursuant to
the provisions of the Company's Certificate of Incorporation, By-
laws or similar policy, plan or agreement relating to the
indemnification of directors and officers of the Company under
certain circumstances.
(h) The Executive Payment, when paid into the Trust is
intended to be tax-deferred until actual receipt of such monies
by the Executive. All cost of establishing the Trust, including
but not limited to legal fees and trustee fees, shall be the
responsibility of and paid by the Company.
(i) The trustees of the Trust shall hold such monies
constituting the Executive Payment and pay installments thereof
to the Executive as required hereunder pursuant to the terms of
the trust agreement governing the Trust. Beginning on the first
day of the first full month after the payment of the Executive
Payment to the Trust and for each month thereafter that the
Executive remains unemployed, the trustee of the Trust will pay,
in cash, to the Executive, at the address set forth for the
Executive at the end of this Agreement, a portion of the
Executive Payment equal to one-thirty-sixth (1/36) of the total
Executive Payment, so that the Executive shall receive equal
monthly installments of the Executive Payment on the first day of
each month of the period he remains so unemployed.
(j) In the event that the Executive shall accept employment
with a person, firm or corporation other than the Company
(including becoming self-employed), following the exercise by the
Executive of his right to receive the Executive Payment, the
Executive shall, within five(5) business days of this acceptance
of such new employment, notify the Company and the trustee of the
Trust of such re-employment and the amount of compensation to be
paid in connection therewith. From and after the date that
compensation begins to accrue to the Executive in connection with
such new employment, if the Executive's new monthly compensation
is less than the amount of the installment of the Executive
Payment that would otherwise be due and payable, the Executive
shall be entitled to a partial payment of such installment of
Executive Payment in an amount equal to the difference between
said installment of Executive Payment and the new monthly
compensation (the "Compensation Differential"). In the event the
Executive's new monthly compensation shall exceed the amount of
the installment of Executive Payment due and payable, the
difference shall be carried over by the trustee and deducted from
any Compensation Differential to be paid in any subsequent month.
The Executive shall deliver to the trustee within fifteen (15)
days after the first of each month during the term of this
Agreement certification, in the form attached hereto, as to the
amount of new monthly compensation received or to which the
Executive is entitled for the preceding month. In the event such
certification shows a Compensation Differential, within five (5)
business days of receipt of such certification, the trustee of
the Trust will make the partial payment of the installment of
Executive Payment (adjusted as herein provided) to the Executive.
The trustee shall return and pay to the Company any portion of an
Executive Payment installment for each month not paid to the
Executive as provided herein.
In the event that during the term of this Agreement the
Executive dies, the Executive's legal representative shall be
entitled to receive the entire Executive Payment provided for
hereunder in the manner and as if the Executive had not died.
3. EXECUTIVE'S EXPENSES
All costs and expenses (including reasonable legal,
accounting and other advisory fees) incurred by the Executive to
(a) defend the validity of this Agreement, (b) contest any
determinations by the Company concerning the amounts payable by
the Company to the Executive under this Agreement, (c) determine
in any tax year of the Executive the tax consequences to the
Executive of any amounts payable (or reimbursable) hereunder or
(d) prepare responses to an Internal Revenue Service audit of,
and otherwise defend, his personal income tax return for any year
which is the subject of any such audit or an adverse
determination, administrative proceeding or civil litigation
arising therefrom that is occasioned by or related to an audit by
the Internal Revenue Service of the Company's income tax returns
to the extent such audit, adverse determination, administrative
proceeding or civil litigation relate to the Benefits and
Executive Payments provided for herein, upon written demand by
the Executive, to be promptly advanced or reimbursed to the
Executive or paid directly, on a current basis, by the Company or
its successors.
If at any time during the term of this Agreement or
afterwards there should arise any dispute as to the validity,
interpretation or application of any term or condition of this
Agreement, the Company agrees, upon written demand by the
Executive (and the Executive shall be entitled, upon application
to any court of competent jurisdiction, to the entry of a
mandatory injunction, without the necessity of posting any bond
with respect thereto), compelling the Company promptly to provide
sums sufficient to pay on a current basis (either directly or by
reimbursing the Executive) the Executive's costs and reasonable
attorneys' fees (including expenses of investigation and
disbursements for the fees and expenses of experts, etc.)
incurred by the Executive in connection with any such dispute or
any litigation, regardless of whether the Executive is the
prevailing party in such dispute or litigation; provided, that,
the court in which such litigation is first initiated determined,
with respect to this obligation, upon application of either party
hereto, that the Executive did not initiate such litigation
frivolously. Under no circumstances shall the Executive be
obligated to pay or reimburse the Company for any attorneys'
fees, costs or expenses incurred by the Company. The provisions
of this subsection shall survive the expiration or termination of
this Agreement.
4. TAX INDEMNITY
Should any of the payments or reimbursements under this
Agreement or any other plan, agreement or arrangement between the
Executive and the Company, be determined or alleged to be subject
to an excise or similar purpose tax pursuant to Code Section 4999
or any successor other comparable federal, state or local tax
laws, the Company shall pay to the Executive such additional
compensation as is necessary (after taking into account all
federal, state and local income taxes payable by the Executive as
a result of the receipt of such additional compensation) to place
the Executive in the same after-tax position (including federal,
state and local taxes) he would have been in had no such excise
or similar purpose tax (or any interest or penalties thereon)
been paid or incurred by the Executive.
If the Executive intends to make any payments with respect
to any such excise or similar purpose tax as a result of an
adjustment to the Executive's tax liability by any federal, state
or local tax authority, the Company will pay such additional
compensation by delivering its certified or cashier's check
payable in such amount of the Executive within fifteen (15)
business days after the Executive notifies the Company of his
intention to make such payment. Without limiting the obligation
of the Company hereunder, the Executive agrees, in the event the
Executive makes any payment pursuant to the preceding sentence,
to negotiate with the Company in good faith with respect to
procedures reasonably requested by the Company which would afford
the Company the ability to contest the imposition of such excise
tax; provided however, that the Executive will not be required to
afford the Company any right to contest the applicability of any
such excise tax to the extent that the Executive reasonably
determines (based upon the opinion of his tax counsel) that such
contest is inconsistent with the overall tax interests of the
Executive.
In the event that the Executive intends to file a tax return
which takes the position that such excise or similar purpose tax
is due and payable, in reliance upon a written opinion of the
Executive's tax counsel that it is more likely than not that such
excise tax is due and payable, the Executive shall, at least
forty-five (45) days in advance of the due date (including
extensions) of filing of his tax return, notify and submit to the
Company his computations and tax counsel's opinion to such
effect. The Company shall have thirty (30) days from its receipt
of such notice to examine, along with its tax advisors, the
computations and advise the Executive of its recommendation
(evidenced by the written opinion of its tax advisors) as to the
merits of such a position. The Executive hereby agrees to then
file his tax return on the basis of such recommendation. No
payment shall be made by the Company pursuant to the
indemnification provided for herein unless and until, in the case
of the non-audited return circumstance discussed in the
immediately preceding two sentences, the notice and computations
provided for therein have been timely delivered to the Company.
5. GENERAL PROVISIONS
(a) Severability. In case any one or more of the
provisions of this Agreement shall, for any reason, be held or
found by final judgment of a court of competent jurisdiction to
be invalid, illegal or unenforceable in any respect (1) such
invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, (2) this Agreement shall be
construed as if such invalid, illegal or unenforceable provision
had never been contained herein, and (3) if the effect of a
holding or finding that any such provision is either invalid,
illegal or unenforceable is to modify to the Executive's
detriment, reduce or eliminate any compensation, reimbursement,
payment, allowance or other benefit to the Executive intended by
the Company and Executive in entering into this Agreement, the
Company shall promptly negotiate and enter into an agreement with
the Executive containing alternative provisions (reasonably
acceptable to the Executive), that will restore to the Executive
(to the extent legally permissible) substantially the same
economic, substantive and income tax benefits the Executive would
have enjoyed had any such provision of this Agreement been upheld
as legal, valid and enforceable. Failure to insist upon strict
compliance with any provision of this Agreement shall not be
deemed a waiver of such provision or of any other provision of
this Agreement.
(b) Entire Agreement. The Executive acknowledges receipt
of a copy of this Agreement, which has been executed in duplicate
and agrees that, with respect to the subject matter hereof, this
is the entire agreement with the Company relating to the
Executive Payment with the Company. Any other oral or any
written representations, understandings or agreements with the
Company or any of its officers or representatives covering the
same subject matter which are in conflict with this Agreement
hereby are merged into and superseded by the provisions of this
Agreement.
(c) No Set-off. The Company shall have no right of set-off
or counterclaim in respect of any debt or other obligation of the
Executive to the Company against any payment or other obligation
of the Company to the Executive provided for in this Agreement.
(d) Modification and Waiver. No provision of this
Agreement may be amended, modified or waived unless such
amendment, modification or waiver shall be agreed to in writing
and signed by the Executive and by a person duly authorized by
the Board.
(e) No Assignment of Compensation. No right or interest in
any compensation or reimbursement payable hereunder shall be
assignable or divisible by the Executive; provided, however, that
this provision shall not preclude the Executive from designating
one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude his executor or
administrator from assigning any right hereunder to the person or
persons entitled thereto.
(f) No Attachment. Except as required by law, no right to
receive payments under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment,
encumbrances, charge, pledge or hypothecation, or to execution,
attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to affect any
such action shall be null, void and of no effect.
(g) Headings. The headings of Sections and subsections
hereof are included solely for convenience of reference and shall
not control the meaning or interpretation of any of the
provisions of this Agreement.
(h) Governing Law. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the
State of Alabama.
(i) No Assignment of Agreement. This Agreement may not be
assigned, partitioned, subdivided pledged, or hypothecated in
whole or in part without the express prior written consent of the
Executive and the Company. This Agreement shall not be
terminated either by the voluntary or involuntary dissolution or
the winding up of the affairs of the Company, or by any merger or
consolidation wherein the Company is not the surviving entity, or
by any transfer of all or substantially all of the Company's
assets on a consolidated basis. In the event of any such merger,
consolidation or transfer of assets, the provisions of this
Agreement shall be binding upon the surviving entity or to the
entity to which such assets shall be transferred.
(j) Interest on Amounts Payable. If any amounts which are
required or determined to be paid or payable or reimbursed or
reimbursable to the Executive under this Agreement (or after a
Change of Control, under any other plan, agreement, policy or
arrangement with the Company) are not so paid promptly at the
times provided herein or therein, such amounts shall accrue
interest at an annual percentage rate of ten percent (10%) from
the date such amounts were required or determined to have been
paid or payable or reimbursed or reimbursable to the Executive
until such amounts and any interest accrued thereon are finally
and fully paid; provided, however, that in no event shall the
amount of interest contracted for, charged or received hereunder
exceed the maximum non-usurious amount of interest allowed by
applicable law.
(k) Notices. Any notice required or permitted to be given
under this Agreement shall be in writing and shall be deemed to
have been given when delivered in person, by telecopy or when
deposited in the U.S. mail, postage prepaid, to the respective
addresses set forth on the signature pages of this Agreement,
unless a party changes his or its address for receiving notices
by giving notice in accordance with this subsection, in which
case, to the address specified in such notice.
(l) Federal Income Tax Withholding. The Company may
withhold from any benefits payable under this Agreement all
federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
IN WITNESS WHEREOF, the parties have executed and delivered
this Executive Agreement as of the day and year indicated above.
QMS, INC. XXXXXX X. XXXXXXX
One Magnum Pass
Xxxxxx, Xxxxxxx 00000 /s/ Xxxxxx X. Xxxxxxx
(Signature)
By: /s/ Xxxxxxx X. Xxxxx c/o QMS, Inc.
Name: Xxxxxxx X. Xxxxx One Magnum Pass
Title: Executive VP & COO Xxxxxx, Xxxxxxx 00000
