FORM OF SEVERANCE AGREEMENT
Exhibit
10.3
FORM OF
THIS
SEVERANCE AGREEMENT (the “Agreement”), dated as
of _________, 2009, is made and entered by and between Xxxxxx International
Industries, Incorporated (“Xxxxxx” or, including
any successor thereto, the “Company”), a Delaware
corporation, and _____________ (the “Executive”).
WHEREAS,
the Executive is a senior executive of Harman and is expected to make major
contributions to the Company’s short and long-term profitability, growth and
financial strength;
WHEREAS,
Harman recognizes that: (a) top-quality executives may seek more secure career
opportunities if a Change in Control, as defined below, occurs in the future;
and (b) the Company may encounter difficulties in recruiting qualified senior
executives unless it offers an employment security arrangement, applicable in
Change in Control situations;
WHEREAS,
Harman desires to assure itself of both present and future continuity of
management and desires to establish certain minimum severance benefits for
certain of its senior executives, including the Executive, applicable in the
event of a Change in Control;
WHEREAS,
Harman wishes to ensure that its senior executives are not practically disabled
from discharging their duties in respect of a proposed or actual transaction
involving a Change in Control; and
WHEREAS,
Harman desires to provide additional inducement for the Executive to continue to
remain in the Company’s employ.
NOW,
THEREFORE, Harman and the Executive agree as follows:
1.
Certain Defined
Terms. In addition to terms defined elsewhere in this
Agreement, the following terms have the following meanings:
(a)
“Base Pay” means the
Executive’s annual base salary rate as in effect from time to time;
(b)
“Board” means Xxxxxx’x
Board of Directors;
(c)
“Cause” means that,
prior to any termination pursuant to Section 3(b), the Executive shall
have:
(i)
been convicted of a criminal violation
involving fraud, embezzlement or theft in connection with his duties or in the
course of his employment with the Company or any Subsidiary;
(ii)
committed intentional wrongful damage to property of
Harman or any Harman subsidiary;
(iii) committed
intentional wrongful disclosure of secret processes or confidential information
of Harman or any Subsidiary; or
(iv) committed
intentional wrongful engagement in any Competitive Activity;
and any
such act shall have been demonstrably and materially harmful to
Harman. For purposes of this Agreement, no act or failure to act on
the part of the Executive shall be deemed “intentional” if it was due primarily
to an error in judgment or negligence, but shall be deemed “intentional” only if
done or omitted to be done by the Executive not in good faith and without
reasonable belief that the Executive’s action or omission was in the best
interest of Harman. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for “Cause” hereunder unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of a majority of the Committee then in
office at a meeting of the Committee called and held for such purpose, after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive’s counsel (if the Executive chooses to have counsel
present at such meeting), to be heard before the Committee, finding that, in the
good faith opinion of the Committee, the Executive had committed an act
constituting “Cause” as defined in this Agreement and specifying the particulars
thereof in detail. Nothing in this Agreement will limit the right of
the Executive or his beneficiaries to contest the validity or propriety of any
such determination;
(d)
“Change in Control”
means the occurrence during the Term of any of the following
events:
(i)
The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
“Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the combined voting power of the then
outstanding Voting Stock of the Company; provided, however, that for purposes of
this Section 1(d)(i), the following acquisitions shall not constitute a Change
in Control: (A) any issuance of Voting Stock of the Company directly
from the Company that is approved by the Incumbent Board (as defined in Section
1(d)(ii), below), (B) any acquisition by the Company or a Subsidiary of Voting
Stock of the Company, (C) any acquisition of Voting Stock of the Company by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Subsidiary, or (D) any acquisition of Voting Stock of the Company by any
Person pursuant to a Business Combination (as defined in Section 1(d)(iii)
below) that complies with clauses (A), (B) and (C) of Section 1(d)(iii), below;
or
(ii)
individuals who, as of the date hereof, constitute the
Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any
individual becoming a Director after the date hereof whose election, or
nomination for election by the Company’s shareholders, was approved by a vote of
at least two-thirds of the Directors then comprising the Incumbent Board (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to such
nomination) shall be deemed to have been a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest (within
the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or
removal of Directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
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(iii) consummation
of a reorganization, merger or consolidation, a sale or other disposition of all
or substantially all of the assets of the Company, or other transaction (each, a
“Business
Combination”), unless, in each case, immediately following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners of Voting Stock of the Company immediately prior to
such Business Combination beneficially own, directly or indirectly, more than
50% of the combined voting power of the then outstanding shares of Voting Stock
of the entity resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either directly or through one
or more subsidiaries), (B) no Person (other than the Company, such entity
resulting from such Business Combination, or any employee benefit plan (or
related trust) sponsored or maintained by the Company, any Subsidiary or such
entity resulting from such Business Combination) beneficially owns, directly or
indirectly, 25% or more of the combined voting power of the then outstanding
shares of Voting Stock of the entity resulting from such Business Combination,
and (C) at least a majority of the members of the Board of Directors of the
entity resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement or of the action of
the Board providing for such Business Combination; or
(iv) approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company, except pursuant to a Business Combination that complies with
clauses (A), (B) and (C) of Section 1(d)(iii).
(e)
“Committee” means the
Compensation and Option Committee of the Board or such similar committee of the
Board comprised of non-officer directors and responsible for executive
compensation matters of the Company generally;
(f)
“Competitive Activity”
means the Executive’s participation, without the Company’s written consent, in
the management of any business enterprise if such enterprise engages in
substantial and direct competition with the Company or a Subsidiary and the
enterprise’s sales of any product or service under the Executive’s supervision
competitive with any product or service of the Company or a Subsidiary amounted
to 10% of the enterprise’s net sales for its most recently completed fiscal year
and if the Company’s and its Subsidiary’s net sales of said product or service
amounted to 10% of the Company’s net sales for its most recently completed
fiscal year. “Competitive Activity” will not include (i) the mere
ownership of securities in any such enterprise and the exercise of rights
appurtenant thereto or (ii) participation in the management of any such
enterprise other than in connection with the competitive operations of such
enterprise;
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(g)
“Employee Benefits”
means the perquisites, benefits and service credit for benefits as provided
under any and all employee retirement income and welfare benefit policies,
plans, programs or arrangements in which Executive is entitled to participate,
including without limitation any stock option, performance share, performance
unit, stock purchase, stock appreciation, savings, pension, supplemental
executive retirement, or other retirement income or welfare benefit, deferred
compensation, incentive compensation, group or other life, health,
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company or a Subsidiary), disability, salary continuation,
expense reimbursement and other employee benefit policies, plans, programs or
arrangements that may now exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted by the Company or a Subsidiary,
providing perquisites, benefits and service credit for benefits at least as
great in the aggregate as are payable thereunder prior to a Change in
Control;
(h)
“Exchange Act” means
the Securities Exchange Act of 1934, as amended from time to time;
(i)
“Incentive Pay” means
an annual bonus, incentive or other payment of compensation, in addition to Base
Pay, made or to be made in regard to services rendered in any year or other
period pursuant to any bonus, incentive, profit-sharing, performance,
discretionary pay or similar agreement, policy, plan, program or arrangement
(whether or not funded) of the Company or a Subsidiary, or any successor
thereto;
(j)
“Retirement Plans”
means the retirement income, supplemental executive retirement, excess benefits
and retiree medical, life and similar benefit plans providing retirement
perquisites, benefits and service credit for benefits at least as great in the
aggregate as are payable thereunder prior to a Change in Control;
(k)
“Severance Period”
means the period of time commencing six months prior to the date of the first
occurrence of a Change in Control and continuing until the earlier of (i) the
second anniversary of the occurrence of the Change in Control, or (ii) the
Executive’s death; provided, however, that
commencing on each anniversary of the Change in Control, the Severance Period
will automatically be extended for an additional year unless, not later than 90
calendar days before the anniversary date, either the Company or the Executive
shall have given written notice to the other that the Severance Period is not to
be so extended;
(l)
“Subsidiary” means an
entity in which the Company, directly or indirectly, beneficially owns 50% or
more of the outstanding Voting Stock;
(m) “Term” means the
period commencing as of the date hereof and expiring as of the later of (i) the
close of business on December 31, 2012, or (ii) the expiration of the Severance
Period. However, commencing on January 1, 2012 and each January 1
thereafter, the term of this Agreement will automatically be extended for an
additional year unless, not later than September 30 of the immediately preceding
year, the Company or the Executive shall have given notice that it or the
Executive, as the case may be, does not wish to have the Term
extended. Furthermore, if prior to the date which is six months prior
to a Change in Control, the Executive ceases for any reason to be an officer of
the Company or any Subsidiary, thereupon without further action the Term shall
be deemed to have expired and this Agreement will immediately terminate and be
of no further effect. For purposes of this Section, the Executive
shall not be deemed to have ceased to be an officer of the Company and any
Subsidiary by reason of the transfer of Executive’s employment between the
Company and any Subsidiary, or among any Subsidiaries;
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(n)
“Termination Date”
means the date on which the Executive’s employment is terminated (the effective
date of which shall be the date of termination, or such other date that may be
specified by the Executive if the termination is pursuant to Section 3(b));
provided, however, that if the
Termination Date precedes the Change in Control, then any additional payments
and benefits that are due upon a Change in Control and that are deferred
compensation within the meaning of Section 409A shall be subject to the Section
409A Delay, as defined below, and payable upon the Change in Control;
and
(o)
“Voting
Stock” means securities entitled to vote generally in the election of
directors.
2.
Operation
of Agreement. This Agreement will be effective and binding
immediately upon its execution, but anything in this Agreement to the contrary
notwithstanding, this Agreement will not be operative unless and until the date
which is six months prior to a Change in Control. If a Change in
Control occurs at any time during the Term, this Agreement shall become
operative immediately and retroactively, including without limitation,
notwithstanding that the Term may have since expired.
3.
Termination Following a
Change in Control. (a) In the event of the occurrence of a
Change in Control, the Executive’s employment may be terminated by the Company
or a Subsidiary during the Severance Period and the Executive shall be entitled
to the benefits provided by Section 4 as a result thereof or of any termination
within six months prior to a Change in Control unless such termination is the
result of the occurrence of one or more of the following events:
(i)
The Executive’s death;
(ii)
The Executive becoming permanently disabled within
the meaning of, and begins actually receiving disability benefits pursuant to,
the long-term disability plan in effect for, or applicable to, Executive
immediately prior to the Change in Control; or
(iii) Cause.
If,
during the Severance Period, the Executive’s employment is terminated by the
Company or any Subsidiary other than pursuant to Section 3(a)(i), 3(a)(ii) or
3(a)(iii), the Executive will be entitled to the benefits provided by Section 4
hereof.
(b)
In the event of the occurrence of a Change in Control,
the Executive may terminate employment with the Company and any Subsidiary
during the Severance Period with the right to severance compensation as provided
in Section 4 upon the occurrence of one or more of the following events
(regardless of whether any other reason, other than Cause, for such termination
exists or has occurred, including without limitation other employment) and shall
also have such severance compensation in the event he had terminated employment
upon the occurrence of one or more of the following events within six months
prior to the Change in Control:
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(i) Failure
to elect or reelect or otherwise to maintain the Executive in the office or the
position, or a substantially equivalent office or position, of or with the
Company and/or a Subsidiary (or any successor thereto by operation of law or
otherwise), as the case may be, which the Executive held immediately prior to a
Change in Control, or the removal of the Executive as a Director of the Company
and/or a Subsidiary (or any successor thereto) if the Executive shall have been
a Director of the Company and/or a Subsidiary immediately prior to the Change in
Control;
(ii)
(A) A significant adverse change in the
nature or scope of the authorities, powers, functions, responsibilities or
duties attached to the position with the Company and any Subsidiary which the
Executive held immediately prior to the Change in Control, (B) a reduction in
the aggregate of the Executive’s Base Pay and Incentive Pay received from the
Company and any Subsidiary, or (C) the termination or denial of the Executive’s
rights to Employee Benefits or a reduction in the scope or value thereof, any of
which is not remedied by the Company within 10 calendar days after receipt by
the Company of written notice from the Executive of such change, reduction or
termination, as the case may be;
(iii) A
determination by the Executive (which determination will be conclusive and
binding upon the parties to this Agreement, provided that the determination has
been made in good faith and in all events will be presumed to have been made in
good faith unless otherwise shown by the Company by clear and convincing
evidence) that a change in circumstances has occurred following a Change in
Control, including, without limitation, a change in the scope of the business or
other activities for which the Executive was responsible immediately prior to
the Change in Control, which has rendered the Executive substantially unable to
carry out, has substantially hindered Executive’s performance of, or has caused
Executive to suffer a substantial reduction in, any of the authorities, powers,
functions, responsibilities or duties attached to the position held by the
Executive immediately prior to the Change in Control, which situation is not
remedied within 10 calendar days after the Company receives written notice from
the Executive of such determination;
(iv) The
liquidation, dissolution, merger, consolidation or reorganization of the Company
or transfer of all or substantially all of its business and/or assets, unless
the successor or successors (by liquidation, merger, consolidation,
reorganization, transfer or otherwise) to which all or substantially all of its
business and/or assets have been transferred (by operation of law or otherwise)
assumed all duties and obligations of the Company under this Agreement pursuant
to Section 11(a);
(v)
The Company relocates its principal executive offices
(if such offices are the principal location of Executive’s work), or requires
the Executive to have his principal location of work changed, to any location
that, in either case, is in excess of 50 miles from the principal executive
office’s location immediately prior to the Change in Control, or requires the
Executive to travel away from his office in the course of discharging his
responsibilities or duties at least 20% more (in terms of aggregate days in any
calendar year or in any calendar quarter when annualized for purposes of
comparison to any prior year) than was required of Executive in any of the three
full years immediately prior to the Change in Control without, in either case,
his prior written consent; or
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(vi) Without
limiting the generality or effect of the foregoing, any material breach of this
Agreement by the Company or any successor thereto which is not remedied by the
Company within 10 calendar days after receipt by the Company of written notice
from the Executive of such breach.
(c)
A termination by the Company pursuant to Section 3(a) or
by the Executive pursuant to Section 3(b) will not affect any rights that the
Executive may have pursuant to any agreement, policy, plan, program or
arrangement of the Company or any Subsidiary providing Employee Benefits, which
rights shall be governed by the terms thereof; provided that the Executive shall
not be entitled to a severance payment or benefit under any other agreement with
the Company, including, without limitation, any employment agreement, if the
Executive is entitled to a comparable payment or benefit hereunder.
4.
Severance
Compensation. a) If the Company or Subsidiary terminates the
Executive’s employment during the Severance Period other than pursuant to
Section 3(a)(i), 3(a)(ii) or 3(a)(iii), or if the Executive terminates his
employment pursuant to Section 3(b), the Company will pay to the Executive,
subject to Section 18 hereof as to the Section 409A Delay, the amount described
in Paragraph (a) of Annex A within five business days after the Termination Date
and will continue to provide to the Executive the benefits described in
Paragraphs (b) and (c) of Annex A for the periods described therein; provided, however, that no
payment that would otherwise be made and no benefit that would otherwise be
provided upon a termination of employment that is deferred compensation for
purposes of Section 409A shall be made or provided, as the case may be, unless
and until such termination of employment also constitutes a separation from
service (within the meaning of Section 409A).
(b)
Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment or provide any benefit required
to be made or provided under this Agreement on a timely basis, the Company will
pay interest on the amount or value thereof at an annualized rate of interest
equal to the so-called composite “prime rate” as quoted from time to time during
the relevant period in The Wall Street
Journal , plus 2%. Such interest will be payable as it accrues
on demand. Any change in such prime rate will be effective on and as
of the date of such change.
(c)
Notwithstanding any provision of this Agreement to the
contrary, the parties’ respective rights and obligations under this Section 4
and under Sections 5, 7 and 8 will survive any termination or expiration of this
Agreement or the termination of the Executive’s employment following a Change in
Control for any reason whatsoever.
5.
Limitation
on Payments and Benefits. Notwithstanding any provision of
this Agreement to the contrary, if any amount or benefit to be paid or provided
under this Agreement would be an “excess parachute payment,” within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended (“Code”), or any
successor provision thereto, but for the application of this sentence, then the
payments and benefits identified in the last sentence of this Section 5 to be
paid or provided under this Agreement will be reduced to the minimum extent
necessary (but in no event to less than zero) so that no portion of any such
payment or benefit, as so reduced, constitutes an excess parachute payment;
provided, however, that no such
reduction shall be made if it is not thereby possible to eliminate all excess
parachute payments under this Agreement; and provided, further, that the
foregoing reduction will be made only if and to the extent that such reduction
would result in an increase in the aggregate payment and benefits to be
provided, determined on an after-tax basis (taking into account the excise tax
imposed pursuant to Section 4999 of the Code, or any successor provision
thereto, any tax imposed by any comparable provision of state law, and any
applicable federal, state and local income and employment
taxes). Whether requested by the Executive or the Company, the
determination of whether any reduction in such payments or benefits to be
provided under this Agreement or otherwise is required pursuant to the preceding
sentence will be made at the expense of the Company by the Company’s independent
accountants. The fact that the Executive’s right to payments or
benefits may be reduced by reason of the limitations contained in this Section 5
will not of itself limit or otherwise affect any other rights of the Executive
other than pursuant to this Agreement. In the event that any payment
or benefit intended to be provided under this Agreement or otherwise is required
to be reduced pursuant to this Section 5, the Company will reduce the
Executive’s payment and/or benefits, to the extent required, in the following
order: (i) the lump sum payment described in Paragraph (1) of Annex
A; (ii) the lump sum payment described in Paragraph (3) of Annex A; and (iii)
the benefits described in Paragraph (2) of Annex A.
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6.
No
Mitigation Obligation. The Company hereby acknowledges that it
will be difficult and may be impossible for the Executive to find reasonably
comparable employment following the Termination Date and that the
non-competition covenant contained in Section 8 will further limit the
employment opportunities for the Executive. In addition, the Company
acknowledges that its severance pay plans applicable in general to its salaried
employees do not provide for mitigation, offset or reduction of any severance
payment received thereunder. Accordingly, the payment of the
severance compensation by the Company to the Executive in accordance with the
terms of this Agreement is hereby acknowledged by the Company to be reasonable,
and the Executive will not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
will any profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the part of
the Executive under this Agreement or otherwise.
7.
Legal Fees and
Expenses. b) The Executive shall not be required to incur
legal fees and the related expenses associated with the interpretation,
enforcement or defense of Executive’s rights under this Agreement by litigation
or otherwise because such costs substantially would detract from the Executive’s
benefits under this Agreement. Accordingly, if it should appear to
the Executive that the Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any other person takes
or threatens to take any action to declare this Agreement void or unenforceable,
or institutes any litigation or other action or proceeding designed to deny, or
to recover from, the Executive the benefits provided or intended to be provided
to the Executive hereunder, the Company irrevocably authorizes the Executive
from time to time to retain counsel of Executive’s choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director, officer, stockholder
or other person affiliated with the Company, in any
jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Executive’s entering into an attorney-client relationship with
such counsel, and in that connection the Company and the Executive agree that a
confidential relationship shall exist between the Executive and such
counsel. Without respect to whether the Executive prevails, in whole
or in part, in connection with any of the foregoing, the Company will pay and be
solely financially responsible for any and all attorneys’ and related fees and
expenses incurred by the Executive in connection with any of the
foregoing. However, if the Executive brings an action in bad faith,
or with no colorable claim of success, the Company shall not pay for any of
Executive’s attorneys’ fees or related expenses.
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(b)
Without limiting the obligations of the Company under
Section 7(a) of this Agreement, in the event a Change in Control occurs, the
performance of the Company’s obligations under this Section 7 shall be secured
by amounts deposited or to be deposited in trust pursuant to certain trust
agreements to which the Company shall be a party, which amounts deposited shall
in the aggregate be not less than $1,000,000, providing that the fees
and expenses of counsel selected from time to time by the Executive pursuant to
Section 7(a) shall be paid, or reimbursed to the Executive if paid by the
Executive, either in accordance with the terms of such trust agreements, or, if
not so provided, on a regular, periodic basis upon presentation by the Executive
to the trustee of a statement or statements prepared by such counsel in
accordance with its customary practices. Any failure by the Company
to satisfy any of its obligations under this Section 7(b) shall not limit the
rights of the Executive hereunder. Subject to the foregoing, the
Executive shall have the status of a general unsecured creditor of the Company
and shall have no right to, or security interest in, any assets of the Company
or any Subsidiary.
(c)
The reimbursement obligations of the Company under
Section 7(a) and Section 7(b) shall be paid no later than December 31 of the
calendar year following the calendar year in which the related expense is
incurred; provided that in no event shall the reimbursement provided by the
Company in one taxable year affect the amount of reimbursement provided in any
other taxable year nor shall Executive’s right to reimbursement be subject to
liquidation or exchange for another benefit.
8.
Competitive Activity;
Confidentiality; Nonsolicitation. c) For a period ending one
year following the Termination Date, if the Executive shall have received or
shall be receiving benefits under Section 4, the Executive shall not, without
the prior written consent of the Company, which consent shall not be
unreasonably withheld, engage in any Competitive Activity; provided that the
foregoing shall not apply if the Termination Date was prior to the Change in
Control and Executive had already commenced such activity.
(b)
During the Term, the Company agrees that it will
disclose to Executive its confidential or proprietary information (as defined in
this Section 8(b)) to the extent necessary for Executive to carry out his
obligations to the Company. The Executive hereby covenants and agrees
that he will not, without the prior written consent of the Company, during the
Term or thereafter disclose to any person not employed by the Company, or use in
connection with engaging in competition with the Company, any confidential or
proprietary information of the Company. For purposes of this
Agreement, the term “confidential or proprietary information” will include all
information of any nature and in any form that is owned by the Company and that
is not publicly available (other than by Executive’s breach of this Section
8(b)) or generally known to persons engaged in businesses similar or related to
those of the Company. Confidential or proprietary information will
include, without limitation, the Company’s financial matters, customers,
employees, industry contracts, strategic business plans, product development (or
other proprietary product data), marketing plans, and all other secrets and all
other information of a confidential or proprietary nature. For
purposes of the preceding two sentences, the term “Company” will also include
any Subsidiary (collectively, the “Restricted
Group”). The foregoing obligations imposed by this Section
8(b) will not apply (i) during the Term, in the course of the business of and
for the benefit of the Company, (ii) if such confidential or proprietary
information will have become, through no fault of the Executive, generally known
to the public or (iii) if the Executive is required by law to make disclosure
(after giving the Company notice and, to the extent feasible, an opportunity to
contest such requirement).
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(c)
The Executive hereby covenants and agrees that during
the Term and for one year thereafter Executive will not, without the prior
written consent of the Company, which consent shall not unreasonably be
withheld, on behalf
of Executive or on behalf of any person, firm or company, directly or
indirectly, attempt to influence, persuade or induce, or assist any other person
in so persuading or inducing, any management employee of the Restricted Group to
give up employment with the Restricted Group, provided the foregoing shall not
be violated by advertising or searches not specifically targeted at the
management employees of the Restricted Group, or serving as a
reference.
(d)
Executive and the Company agree that the covenants
contained in this Section 8 are reasonable under the circumstances, and further
agree that if in the opinion of any court of competent jurisdiction any such
covenant is not reasonable in any respect, such court will have the right, power
and authority to excise or modify any provision or provisions of such covenants
as to the court will appear not reasonable and to enforce the remainder of the
covenants as so amended. Executive acknowledges and agrees that the
remedy at law available to the Company for breach of any of his obligations
under this Section 8 would be inadequate and that damages flowing from such a
breach may not readily be susceptible to being measured in monetary
terms. Accordingly, Executive acknowledges, consents and agrees that,
in addition to any other rights or remedies that the Company may have at law, in
equity or under this Agreement, upon adequate proof of his violation of any such
provision of this Agreement, the Company will be entitled to immediate
injunctive relief and may obtain a temporary order restraining any threatened or
further breach, without the necessity of proof of actual damage.
9.
Employment
Rights. Nothing expressed or implied in this Agreement will
create any right or duty on the part of the Company or the Executive to have the
Executive remain in the employment of the Company or any Subsidiary prior to or
following any Change in Control.
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10.
Withholding of
Taxes. The Company may withhold from any amounts payable under
this Agreement all federal, state, city or other taxes as the Company is
required to withhold pursuant to any applicable law, regulation or
ruling.
11.
Successors and Binding
Agreement.
(a)
The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business or assets of the Company, by agreement
in form and substance reasonably satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken
place. This Agreement will be binding upon and inure to the benefit
of the Company and any successor to the Company, including without limitation
any persons acquiring directly or indirectly all or substantially all of the
business or assets of the Company whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be deemed the
“Company” for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.
(b)
This Agreement will inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c)
This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 11(a) and 11(b). Without limiting the
generality or effect of the foregoing, the Executive’s right to receive payments
hereunder will not be assignable, transferable or delegable, whether by pledge,
creation of a security interest, or otherwise, other than by a transfer by
Executive’s will or by the laws of descent and distribution and, in the event of
any attempted assignment or transfer contrary to this Section 11(c), the Company
shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
12.
Notices. For
all purposes of this Agreement, all communications, including without limitation
notices, consents, requests or approvals, required or permitted to be given
hereunder will be in writing and will be deemed to have been duly given when
hand delivered or dispatched by electronic facsimile transmission (with receipt
thereof orally confirmed), or five business days after having been mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, or three business days after having been sent by a nationally
recognized overnight courier service such as FedEx, UPS, or Purolator, addressed
to the Company (to the attention of the Secretary of the Company) at its
principal executive office and to the Executive at his address on the books of
the Company, or to such other address as any party may have furnished to the
other in writing and in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
13.
Governing
Law. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Delaware, excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of this Agreement to the substantive law of another
jurisdiction.
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14.
Consent to
Jurisdiction. Any disputes, litigation, proceedings or other
legal actions by any party to this Agreement in connection with or relating to
this Agreement or any matters described or contemplated in this Agreement may be
instituted in the courts of the State of Delaware or of the United States
sitting in the State of Delaware. Each party to this Agreement
irrevocably submits to the jurisdiction of the courts of the State of Delaware
and of the United States sitting in the State of Delaware in connection with any
such dispute, litigation, proceeding or other legal action arising out of or
relating to this Agreement.
15.
Validity. If
any provision of this Agreement or the application of any provision hereof to
any person or circumstance is held invalid, unenforceable or otherwise illegal,
the remainder of this Agreement and the application of such provision
to any other person or circumstance will not be affected, and the provision so
held to be invalid, unenforceable or otherwise illegal will be reformed to the
extent (and only to the extent) necessary to make it enforceable, valid or
legal.
16.
Miscellaneous. No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by the
Executive and the Company. No waiver by either party to this
Agreement at any time of any breach by the other contracting party or compliance
with any condition or provision of this Agreement to be performed by such other
party will be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. References to Sections are to references
to Sections of this Agreement.
17.
Code
Section 409A. The intent of the parties hereto is that
payments and benefits under this Agreement comply with or be exempt from Code
Section 409A and the regulations and guidance promulgated thereunder
(collectively “Section
409A”) and, accordingly, to the maximum extent permitted, this Agreement
shall be interpreted and administered to be in compliance
therewith. To the extent that there is a material risk that any
payments under this Agreement may result in the imposition of an additional tax
to the Executive under Section 409A, the Company will reasonably cooperate with
the Executive to amend this Agreement such that payments hereunder comply with
Section 409A without materially changing the economic value of this Agreement to
either party. The Company shall use its best efforts to ensure
ongoing compliance with Section 409A. Notwithstanding any provision
in this Agreement to the contrary, no payment or benefit that is deferred
compensation for purposes of Section 409A and that is due upon the Executive’s
termination of employment will be paid or provided unless such termination is
also a separation from service (within the meaning of Section
409A). For purposes of Section 409A, the Executive’s right to receive
any installment payments pursuant to this Agreement shall be treated as a right
to receive a series of separate and distinct payments. Whenever a
payment under this Agreement specifies a payment period with reference to a
number of days (e.g., “payment shall
be made within 30 days following the date of termination”), the actual date of
payment within the specified period shall be within the sole discretion of the
Company.
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18.
Section 409A
Delay. If the Executive is at the time of the Executive’s
separation from service (as defined in Section 409A) with the Company (other
than as a result of the Executive’s death) a “Specified Employee,” as such term
is defined under Section 409A and using the identification methodology selected
by the Company from time to time, then with regard to any payment or the
provision of any benefit that is considered deferred compensation under Section
409A and that is payable on account of a separation from service shall be
delayed until the earlier of the Executive’s death or six months after the
Executive’s separation from service (the “Section 409A Delay”)
and shall then be promptly paid to the Executive in a lump sum, together with
interest for the period of delay, compounded annually, equal to the prime rate
(as published in The
Wall Street Journal) and in effect as of the date the payment should
otherwise have been provided, and any remaining payments and benefits due under
this Agreement shall be paid or provided in accordance with the normal payment
dates specified for them herein.
19.
Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same agreement.
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IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and
delivered as of the date first above written.
XXXXXX
INTERNATIONAL
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INDUSTRIES,
INCORPORATED
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By:
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14
Annex A
Severance
Compensation
(1)
A lump sum payment in an amount equal to 1.5 times the
Base Pay (at the highest rate in effect for any period prior to the Termination
Date).
(2)
For a period of 18 months following the Termination Date (the “Continuation
Period”), the Company will arrange to provide the Executive (and his
dependents) with coverage under the Company’s medical, dental or other health
plan, but only to the extent that the Executive makes a payment to the Company
in an amount equal to the monthly COBRA premium payments on a timely basis
required to maintain such coverage commencing with the first calendar month
following the Termination Date and the Company shall reimburse the Executive on
an after-tax basis for the amount of such premiums, if any, in excess of any
employee contributions necessary to maintain such coverage for the Continuation
Period (the “COBRA
Reimbursement”). The COBRA Reimbursement shall be subject to
Section 18 and shall be made within 30 days following the date on which
Executive incurs the expense but no later than December 31 of the year following
the year in which Executive incurs the related expense; provided, that in no
event shall the reimbursements or in-kind benefits to be provided by the Company
in one taxable year affect the amount of reimbursements or in-kind benefits to
be provided in any other taxable year, nor shall Executive’s right to
reimbursement or in-kind benefits be subject to liquidation or exchange for
another benefit.
(3)
Outplacement services for one year after the Termination Date
by a firm selected by the Executive, at the expense of the Company in an amount
up to $50,000.
A-1