EXHIBIT 10.12
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of March 1, 2002 (the "Effective Date"),
by and between XXXXX XXXX (the "Employee") and THE ST. XXX COMPANY, a Florida
corporation (the "Company").
1. TERM OF AGREEMENT
This Agreement shall become effective on the Effective Date and, except to
the extent provided in Section 9.6, shall terminate five (5) years after
the Effective Date; provided, however, that if a Qualifying Termination of
Employment occurs prior to the expiration of such five (5) year period,
this Agreement shall remain in effect until the Company has met all of its
obligations hereunder.
2. DEFINITIONS
2.1. Cause means negligence, misconduct, a material breach of this
Agreement, conviction following final disposition of any available
appeal of a felony, or pleading guilty or no contest to a felony.
2.2 Change in Control means the occurrence of any of the following
events after the date of this Agreement:
a) The consummation of a merger or consolidation of the
Company with or into another entity or any other corporate
reorganization if 50% or more of the combined voting power,
directly or indirectly, of the continuing or surviving
entity's securities outstanding immediately after such
merger, consolidation or other reorganization is owned by
persons who were not stockholders of the Company
immediately prior to such merger, consolidation or other
reorganization;
b) The sale, transfer, exchange or other disposition of all or
substantially all of the Company's assets;
c) The liquidation or dissolution of the Company; or
d) Any transaction as a result of which any person is the
"beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Company representing 25%
or more of the total voting power represented by the
Company's then outstanding voting securities. For purposes
of this Paragraph, the term "person" shall have the same
meaning as when used in sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but shall exclude (1) a
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trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a parent or
subsidiary of the Company, (2) a corporation owned directly
or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of
the common stock of the Company, (3) the Xxxxxx X. xxXxxx
Testamentary Trust, and (4) the Nemours Foundation.
A transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company's incorporation or to
create a holding company that will be owned in substantially the
same proportions by the persons who held the Company's securities
immediately before such transaction. Furthermore, the Company's
purchase of Company stock from the Xxxxxx X. xxXxxx Testamentary
Trust shall in no event be deemed to result in a Change in Control.
2.3 Continuation Period means the period commencing on the date of the
Employee's Qualifying Termination of Employment and ending on the
earlier of:
a) The date thirty-six (36) months after the Qualifying
Termination of Employment; or
b) The date of the Employee's death.
2.4 Disability means the Employee's disability which constitutes a
long-term disability under the Company's long-term disability plan
then in effect.
2.5 Good Reason means
a) The Employee has experienced a demotion in title with the
Company from that in effect immediately prior to the Change in
Control which demotion results in a substantial and material
reduction in duties or responsibilities with the Company,
except that placement in any meaningful transition role for a
period of up to one (1) year following a Change in Control
shall not constitute Good Reason;
b) The Employee has incurred a 10% or more reduction in his total
compensation as an employee of the Company (consisting of
annual base salary and target bonus percentage);
c) The Employee has been notified that his principal place of
work as an employee of the Company will be relocated, without
his permission, to any office or location more than 50 miles
from Jacksonville other than to a location which is within 50
miles of Tallahassee, Panama City or any Company project in
northwest Florida; or
d) A successor to the Company fails to comply with Section
10.1.
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A termination of employment by the Employee for one of the reasons
set forth above shall not be deemed a termination for Good Reason
unless, within the six (6) month period immediately following the
occurrence of such Good Reason event, the Employee has given written
notice to the Company specifying the event or events relied upon for
such termination and the Company has not remedied such event or
events within sixty (60) days of the receipt of such notice.
The Company and the Employee, upon mutual written agreement, may
waive any of the foregoing provisions with respect to an event that
otherwise would constitute Good Reason.
2.6. Qualifying Termination of Employment means a termination of the
Employee's employment under any of the following circumstances:
a) The Employee resigns for Good Reason (as that term is
defined in Section 2.5); or
b) The Company terminates the Employee's employment for any
reason other than Cause (as that term is defined in Section
2.1), death or Disability (as that term is defined in Section
2.4).
The determination of whether the Employee's employment has
terminated shall be made without regard to whether the Employee
continues to provide services to the Company as a member of its
Board of Directors or otherwise in the capacity of an independent
contractor. A transfer of the Employee's employment from the Company
to a successor of the Company shall not be considered a termination
of employment if such successor complies with the requirements of
Section 10.1.
3. AMOUNT OF SEVERANCE PAY
Within thirty (30) business days after a Qualifying Termination of
Employment, the Company shall pay the Employee as follows:
3.1 If the Qualifying Termination of Employment occurs within the first
twenty-four (24) months after the occurrence of a Change in Control,
a lump sum equal to the product of two (2) times the sum of:
a) The Employee's base salary at the greater of (1) the annual
rate in effect on the date when the Qualifying Termination of
Employment is effective, or (2) the annual rate in effect on
the date of the Change in Control; plus
b) The Employee's annual target bonus amount for the most recent
year completed prior to the date when the Qualifying
Termination of Employment is effective.
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3.2 If the Qualifying Termination of Employment does not meet the
requirements of Section 3.1 above, a lump sum equal to the product
of one (1) times the sum of:
a) The Employee's base salary at the annual rate in effect on the
date when the Qualifying Termination of Employment is
effective; plus
b) The Employee's annual target bonus amount for the most recent
year completed prior to the date when the Qualifying
Termination of Employment is effective.
For purposes of determining the Employee's annual base salary and
annual target bonus under Sections 3.1 and 3.2 above, any reduction
in annual base salary or annual target bonus that would constitute
Good Reason under this Agreement shall be deemed not to have
occurred.
4. GROUP INSURANCE AND OUTPLACEMENT SERVICES
4.1 Group Insurance. In the event of a Qualifying Termination of
Employment, during the Continuation Period the Employee (and, where
applicable, the Employee's dependents) shall be entitled to medical
and dental benefits under the Company's welfare benefit plans (as
that term is defined in Subsection 3(1) of the Employee Retirement
Income Security Act of 1974, as amended) other than the Company's
retiree medical plan, as if the Employee were still employed during
such period. Such medical and dental benefits shall be provided at
the same level and at the same after-tax cost to the Employee as is
generally available to similar Company executives. The Employee's
salary, for purposes of such plans, shall be determined using the
method set forth in Section 3.1 or 3.2, whichever is applicable. To
the extent the Company is unable or does not wish to cover the
Employee under its plans during the Continuation Period, the Company
shall provide the Employee with substantially equivalent benefits on
an individual basis at no additional after-tax cost to the Employee.
The foregoing notwithstanding, in the event the Employee becomes
eligible for comparable insurance coverage in connection with new
employment, the coverage provided by the Company under this Section
shall terminate immediately. Any medical or dental coverage provided
pursuant to this Section shall be applied, to the extent permitted
by law, to reduce the Company's group health continuation coverage
responsibilities under the Consolidated Omnibus Budget
Reconciliation Act of 1985.
4.2 Outplacement Services. In the event of a Qualifying Termination of
Employment, the Employee shall be entitled to senior executive level
outplacement services at the Company's expense. Such services shall
be provided by a firm selected by the Employee from a list compiled
by the Company.
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5. EXCISE TAXES
5.1 No Gross-Up Payment. In the event it shall be determined by an
Accounting Firm (within the meaning of Section 5.2 below) that any
payment or distribution by the Company to or for the benefit of the
Employee, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (or any successor thereto)
or comparable state or local tax or any interest or penalties with
respect to such excise tax or comparable state or local tax (such
excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the
amount of the Payment due to the Employee shall be reduced (but not
below zero) to the extent necessary that no portion thereof shall be
subject to the Excise Tax and no gross-up payment shall be made. If
the Accounting Firm determines that the total Payments are to be
reduced under the preceding sentence, then the Company shall
promptly give the Employee notice to that effect and a copy of the
detailed calculation thereof. The Employee may then elect, in the
Employee's sole discretion, which and how much of the total Payments
are to be eliminated or reduced (as long as after such election no
Excise Tax will be payable) and shall advise the Company in writing
of the Employee's election within ten (10) days of receipt of
notice. If no such election is made by the Employee within such ten
(10) day period, then the Company may elect which and how much of
the total Payments are to be eliminated or reduced (as long as after
such election, no Excise Tax will be payable) and shall notify the
Employee promptly of such election. No additional payments by the
Company or return of payments by the Employee shall be required or
made if a late determination based on case law, an IRS holding, or
otherwise, would result in a recalculation of the Excise Tax
implications.
5.2 Determination by Accountant. All determinations and calculations
required to be made under this Section shall be made by an
independent accounting firm selected by the Company from among the
largest six accounting firms in the United States (the "Accounting
Firm"), which shall provide its determination (the "Determination"),
together with detailed supporting calculations both to the Company
and the Employee within fourteen (14) days of the Qualifying
Termination of Employment. Any Determination by the Accounting Firm
shall be binding upon the Company and the Employee, absent manifest
error.
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6. TERMINATION UPON DEATH
In the event of the Employee's death prior to termination of employment,
this Agreement shall terminate and the Company shall only be obligated to
(a) pay to the Employee's estate or legal representative the annual base
salary to the extent earned by the Employee prior to the Employee's death,
and (b) pay any other benefits to the extent required by the Company's
retirement and benefits plans. The Company may, however, pay the estate or
legal representative a bonus that the Employee has earned prior to his
death. After making such payment(s) and providing such benefits, the
Company shall have no further obligations under this Agreement. If the
Employee dies after termination of employment but before receiving all
payments to which he has become entitled hereunder, payment shall be made
to the estate of Employee.
7. DISABILITY
In the event of the Employee's Disability (as defined in Section 2.4), the
Company shall have the right, at its option, to terminate the Employee's
employment. Unless and until so terminated, during any period of
Disability during which the Employee is unable to perform the services
required of him, the Employee's salary shall be payable to the extent of,
and subject to, the Company's policies and practices then in effect with
regard to sick leave and disability benefits. In the event of the
Employee's termination due to the Employee's Disability, the Company shall
only be obligated to (a) pay to the Employee or his personal
representative the Employee's annual base salary to the extent earned by
the Employee prior to the termination of employment, (b) pay any
disability benefits as provided under the Company's long-term disability
plan then in effect, and (c) pay any other benefits to the extent required
by the Company's retirement and benefits plans. After making such
payment(s) and providing such benefits, the Company shall have no further
obligations under this Agreement; provided, however, that nothing
contained in this Section shall restrict the Employee's eligibility to
receive disability and other related benefits offered pursuant to the
Company's plans, policies, or programs.
8. TERMINATION FOR CAUSE OR WITHOUT GOOD REASON.
In the event that the Company terminates the Employee's employment for
Cause (as defined in Section 2.1) or the Employee terminates his
employment without Good Reason (as defined in Section 2.5), the Company
shall only be obligated to pay to the Employee the Employee's annual base
salary to the extent earned by the Employee prior to the termination of
employment. After making such payment, the Company shall have no further
obligations under this Agreement.
9 RESTRICTIVE COVENANTS
9.1 Confidential Information. During the period of his employment, the
Employee shall hold in a fiduciary capacity for the benefit of the
Company and its affiliates all trade secrets, proprietary or
confidential information, knowledge or data
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relating to the Company, its affiliates, and/or their respective
businesses, which shall have been obtained by the Employee. Trade
secret information includes, but is not limited to, customer lists,
pricing information, sales reports, financial and marketing data,
reserves estimation processes or procedures, techniques, or
processes that: (a) derive independent economic value, actual or
potential, from not being generally known to the public or to
persons who can obtain economic value from their disclosure or use,
and (b) are the subject of reasonable efforts under the
circumstances to maintain their secrecy. After termination of the
Employee's employment with the Company, Employee shall not, without
the prior written consent of the Company, use, communicate or
divulge any such information, knowledge or data to anyone at any
time.
9.2 Solicitation of Customers by the Employee. Unless waived in writing
by the Company, the Employee agrees that he will not, directly or
indirectly, during the course of employment and for two (2) years
after termination of his employment, solicit the trade or patronage
of any of the customers of the Company or its affiliates, regardless
of the location of such customers with respect to any services,
products, or other matters in which the Company or its affiliates
are active.
9.3 Solicitation of Company Employees. Unless waived in writing by the
Company, the Employee further agrees that he will not, directly or
indirectly, during the course of employment and for two (2) years
after termination of his employment, solicit or attempt to entice
away from the Company or its affiliates any director, agent or
employee of the Company or its affiliates.
9.4 Return of Property. Upon termination of the employment period, the
Employee will surrender to the Company all property belonging to the
Company or its affiliates.
9.5 Compliance with Business Ethics and Conflict of Interest Policy.
During the Employee's employment with the Company, the Employee
shall comply in all respects with the Company's Business Ethics and
Conflict of Interest Policy attached hereto as exhibit "A," and as
may be amended from time to time.
9.6 Survival; Injunctive Relief. The Employee agrees that Sections 9.1
through 9.5 shall survive the termination of this Agreement and the
period of his employment hereunder. The Employee acknowledges that
the Company and its affiliates have no adequate remedy at law and
would be irreparably harmed if Employee breaches or threatens to
breach any of the provisions of this Section and, therefore, agrees
that the Company and its affiliates shall be entitled to injunctive
relief to prevent any such breach or threatened breach thereof and
to specific performance of the terms of this Section (in addition to
any other legal or equitable remedy the Company or the affiliate may
have). The Employee further agrees that the Employee shall not, in
any equity proceeding relating to the enforcement of this Section,
raise the defense that the Company or the affiliate has an adequate
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remedy at law. Nothing in this Agreement shall be construed as
prohibiting the Company or any affiliate from pursuing any other
remedies at law or in equity that it may have under and in respect
of this Agreement or any other agreement.
10. SUCCESSORS
10.1 Company's Successors. The Company shall require any successor
(whether direct or indirect by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all
of the Company's business or assets, by an agreement in substance
and form satisfactory to the Employee, to assume this Agreement and
to agree expressly to perform this Agreement in the same manner and
to the same extent as the Company would be required to perform it in
the absence of a succession. For all purposes under this Agreement,
the term "Company" shall include any successor to the business or
assets of the Company which executes and delivers the assumption
agreement described in this Section 10.1 or which becomes bound by
this Agreement by operation of law.
10.2 Employee's Successors. This Agreement and all rights of the Employee
hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees.
11. LIQUIDATED DAMAGES
The payments and benefits provided in this Agreement are intended to be
liquidated damages for a termination of the Employee's employment by the
Company or for the actions of the Company and its affiliates leading to a
termination of the Employee's employment by the Employee for Good Reason,
and shall be the sole and exclusive remedy therefor.
12. RELEASE
Notwithstanding any provision herein to the contrary, the Company may
require that, prior to payment of any amount or provision of any benefit
under this Agreement, the Employee shall have executed a complete release
of the Company and its successors, affiliates and related parties in such
form as is reasonably acceptable to both parties and any waiting periods
contained in such release shall have expired.
13. MISCELLANEOUS PROVISIONS
13.1 Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid. In the
case of the Employee, mailed notices shall be addressed to the
Employee at the home address that the Employee most
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recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate
headquarters, and all notices shall be directed to the attention of
its Secretary.
13.2 Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Employee and by an authorized officer
of the Company (other than the Employee). No waiver by either party
of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or
provision at another time.
13.3 Other Agreements; Amendment. This Agreement does not supersede the
Employee's employment agreement (if any) or any stock option,
restricted stock or other equity-based incentive compensation
agreement between the Employee and the Company, except to the extent
that the benefits provided by this Agreement are greater than the
severance pay and similar benefits provided by such agreements. In
no event shall the Employee be entitled to severance pay both under
this Agreement and under any employment agreement following a
termination of employment. This Agreement may be amended only in
writing, by an instrument executed by both parties.
13.4 No Setoff; Withholding Taxes. There shall be no right of setoff or
counterclaim, with respect to any claim, debt or obligation, against
payments to the Employee under this Agreement. All payments made or
benefits provided under this Agreement shall be subject to reduction
to reflect taxes required to be withheld by law. The payments
received under this Agreement shall be in lieu of, and not in
addition to, any payments or benefits received in connection with
the Company's general severance policy then in effect. Should any
payment be made or benefits be provided under any such severance
policy, the payments and benefits provided hereunder shall be
correspondingly reduced by such payments and/or benefits.
13.5 Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of Florida, except its choice-of-law provisions.
13.6 Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in
full force and effect.
13.7 Arbitration of Disputes and Related Claims. Any good faith dispute
or controversy arising under or in connection with this Agreement
shall be settled by binding arbitration, which shall be the sole and
exclusive method of resolving any questions, claims or other matters
arising under this Agreement or, to the extent permitted by
applicable law, any claim that the Company has in any way violated
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the non-discrimination and/or other provisions of Title VII of the
Civil Rights Act of 1964, as amended; the Age Discrimination in
Employment Act of 1967, as amended; the Americans with Disabilities
Act; the Family and Medical Leave Act, as amended; the Employee
Retirement Income Security Act of 1974, as amended; and, in general,
any federal law or state laws. Such proceeding shall be conducted in
Jacksonville, Florida, by final and binding arbitration before a
panel of one or more arbitrators in accordance with the laws and
rules of the American Arbitration Association in effect at the time
the arbitration is commenced, and as subsequently amended while the
arbitration is pending, and under the administration of the American
Arbitration Association. The Federal and state courts located in the
United States of America are hereby given jurisdiction to render
judgment upon, and to enforce, each arbitration award, and the
parties hereby expressly consent and submit to the jurisdiction of
such courts. Notwithstanding the foregoing, in the event that a
violation of this Agreement would cause irreparable injury, the
Company and the Employee agree that in addition to the other rights
and remedies provided in this Agreement (and without waiving their
rights to have all other matters arbitrated as provided above) the
other party may immediately take judicial action to obtain
injunctive relief.
13.8 Legal Fees. In the event of any controversy or claim arising out of
or relating to this Agreement, or the breach thereof, the Company
shall pay (on an as-incurred basis) the reasonable fees and costs of
the Employee's attorneys attributable to such controversy or claim
(the "Legal Fees"); provided that, the Employee shall reimburse the
Company for all such Legal Fees if the Employee does not prevail on
at least one material issue arising in such controversy or claim.
13.9 Not Compensation for Other Plans. The amounts paid and benefits
provided hereunder are not to be considered compensation, earnings
or wages for purposes of any employee benefit plan of the Company or
its successors, affiliates, or related parties, including but not
limited to the SERP, DCAP, and qualified retirement plans.
13.10 No Assignment. Except to the extent provided in Section 10, the
rights of any person to payments or benefits under this Agreement
shall not be made subject to option or assignment, either by
voluntary or involuntary assignment or by operation of law,
including (without limitation) bankruptcy, garnishment, attachment
or other creditor's process, and any action in violation of this
Section shall be void.
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PLEASE READ CAREFULLY. BY SIGNING BELOW, EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE
HAS READ, AND HAS HAD THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY BEFORE
SIGNING, THIS AGREEMENT.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.
EMPLOYEE THE ST. XXX COMPANY
By /s/ Xxxxxxxxxxx X. Xxxx By /s/ Xxxxxxxx Xxxxxxxx
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Title Vice President Title Vice President, HR
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Date March 17, 2002 Date March 18, 2002
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