Exhibit 10.31
ACTUANT CORPORATION
CHANGE IN CONTROL AGREEMENT
FOR
XXXXXX X. XXXXXXXXX
This Agreement is made as of January 7, 2002 (the "Effective Date"),
between Actuant Corporation (the "Corporation"), a Wisconsin corporation and
Xxxxxx X. Xxxxxxxxx (the "Executive").
WHEREAS, the Executive is a valued employee of the Corporation; and
WHEREAS, the Corporation desires to enter into this Change in Control
Agreement with the Executive to provide the Executive with contractual
assurances to induce the Executive to remain as an employee of the Corporation
notwithstanding the possibility, threat or occurrence of a Change in Control (as
defined below) of the Corporation.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the Executive and the Corporation agree as follows:
1. Employment and Duties. The Corporation hereby employs Executive
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as Vice-President and Chief Financial Officer, with all powers and authority as
are customary to these positions, and Executive hereby accepts employment with
the Corporation in accordance with the terms and conditions set forth herein.
Executive shall have such executive responsibilities as is customary with these
positions and as the Corporation's Board of Directors or the President (as the
case may be) shall from time to time assign to him. Executive agrees to devote
his full time (excluding annual vacation time), skill, knowledge, and attention
to the business of the Corporation and the performance of his duties under this
Agreement.
2. Termination, Bonus, and Severance Pay.
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a. As used in this Agreement, a Change in Control means:
(i) a sale of over 50% of the stock of the Corporation
measured in terms of voting power, other than in a public
offering; or
(ii) the sale by the Corporation of over 50% of its
business or assets in one or more transactions over a consecutive
12-month period; or
(iii) a merger or consolidation of the Corporation with or
into any other corporation or corporations such that the
shareholders of the Corporation prior to the merger or
consolidation do not own at least 50% of the surviving entity
measured in terms of voting power; or
(iv) the acquisition by any means of more than 25% of the
voting power or common stock of the Corporation by any person or
group of persons
(with group defined by the definitions under Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended); or
(v) the election of directors constituting a majority of the
Corporation's board of directors pursuant to a proxy solicitation not
recommended by the Corporation's board of directors.
b. As used in this Agreement, a Triggering Event means:
(i) (a) reducing the base salary paid to the Executive or (b) a
material reduction in Executive's bonus opportunity or (c) reducing
the total aggregate value of the fringe benefits received by the
Executive from the levels received by the Executive at the time of a
Change in Control or during the 180 day period immediately preceding
the Change in Control; or
(ii) a material change in the Executive's position or duties or
the Executive's reporting responsibilities from the levels existing
at the time of a Change in Control or during the 180 day period
immediately preceding the Change in Control; or
(iii) a change in the location or headquarters where the Executive
is normally expected to provide services to a location of 40 or more
miles from the previous location existing at the time of the Change in
Control or during the 180 day period immediately preceding the Change
in Control.
c. If the Corporation terminates Executive's employment within the
period beginning six months prior to a Change in Control and ending 24
months following a Change in Control or Executive voluntarily terminates
his services following a Triggering Event that occurs within 24 months
following the date of a Change in Control, the Corporation shall pay to the
Executive a lump sum equal to the sum of (a) twice the amount of the
highest per annum base rate of salary in effect with respect to the
Executive during the two-year period immediately prior to the termination
of employment plus (b) twice the amount of the highest annual bonus or
incentive compensation earned by the Executive under any cash bonus or
incentive compensation plan of the Corporation during the three complete
fiscal years of the Corporation immediately preceding the termination of
employment. Such lump sum shall be paid by the Corporation to the Executive
within twenty days after the Executive's termination of employment. In
addition, the Corporation, at the Corporation's cost, shall continue to
provide Executive with the welfare benefits and other perquisites Executive
was receiving at the time of the Change in Control for a period of two
years following Executive's termination of employment or such earlier date
as Executive becomes employed by another employer and becomes eligible for
welfare benefits. For purposes hereof, perquisites will include the
Executive's right to lease a car or a car allowance, as the case may be.
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d. Notwithstanding any provision herein, no amounts will be due under
this Agreement in the event the Executive's employment is terminated by the
Corporation for cause. The term "for cause" shall mean solely the following
events:
(i) Executive has been convicted of a felony which has adversely
affected the Corporation's reputation;
(ii) Executive has materially misappropriated the Corporation's
funds, property or opportunities; or
(iii) Executive has materially breached any of the provisions of
this Agreement after having been provided by written notice a
reasonable opportunity (not less than 15 business days) to cure such
breach.
3. Certain Additional Payments by the Corporation.
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a. In the event it shall be determined that the severance benefits
payable to Executive under this Agreement or any other payments or benefits
received or to be received by the Executive (whether payable pursuant to
the terms of this Agreement, any other plan, agreement or arrangement) (the
"Payments") would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") or any interest
or penalties are incurred by the Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment"). The Gross-Up Payment shall be in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and excise tax imposed on the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
b. Subject to the provisions of paragraph c. of this Section 3, all
determinations required to be made under this Section 3, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a certified public accounting firm
designated by the Executive (the "Accounting Firm"), which shall provide
detailed supporting calculations both to the Corporation and the Executive
within twenty business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Corporation. All fees and expenses of the Accounting Firm shall be borne
solely by the Corporation. Any Gross-Up Payment, as determined pursuant to
this Section 3, shall be paid by the Corporation to the Executive within
five days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Corporation
and the Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Corporation should have been
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made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Corporation exhausts its
remedies pursuant to paragraph c. of this Section 3 and the Executive
thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by the
Corporation to or for the benefit of Executive.
c. The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than
ten business days after the Executive is informed in writing of such
claim and shall describe the nature of such claim and the date on
which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the thirty-day period following
the date on which he gives such notice to the Corporation (or such
shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Corporation notifies the
Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:
(i) give the Corporation any information reasonably
requested by the Corporation relating to such claim,
(ii) take such action in connection with contesting such
claim as the Corporation shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Corporation,
(iii) cooperate with the Corporation in good faith in order
effectively to contest such claim, and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly
all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
paragraph c. of Section 3, the Corporation shall control all
proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts,
as the Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and xxx for a
refund, the
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Corporation shall advance the amount of such payment to the Executive,
on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that any extension of
the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
d. If, after the receipt by the Executive of an amount advanced
by the Corporation pursuant to paragraph c. of this Section 3, the
Executive becomes entitled to receive any refund with respect to such
claim, the Executive shall (subject to the Corporation's complying
with the requirements of paragraph c. of this Section 3) promptly pay
to the Corporation the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If
after the receipt by the Executive of an amount advanced by the
Corporation pursuant to paragraph c. of this Section 3, a
determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Corporation does not notify
the Executive in writing of its intent to contest such denial of
refund prior to the expiration of thirty days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be
paid.
4. Confidential Information. As a supplement to any other
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confidentiality provisions applicable to the Executive, Executive acknowledges
that all Confidential Information is and shall continue to be the exclusive
proprietary property of the Corporation, whether or not disclosed to or
entrusted to the custody of Executive. Executive will not, either during the
term hereof or at any time thereafter, disclose any Confidential Information, in
whole or in part, to any person or entity other than to employees or affiliates
of the Corporation, for any reason or purpose, unless the Corporation gives its
prior written consent to such disclosure. Executive also will not, either during
the term hereof or at any time thereafter, use in any manner any Confidential
Information for his own purposes or for the benefit of any person or entity
except the Corporation and its affiliates whether such use consists of
duplication, removal, oral communication, disclosure, transfer or other
unauthorized use thereof, unless the Corporation gives its prior written consent
to such use. As used herein, the term "Confidential Information" refers to all
information and materials not in the public domain belonging to, used by or in
the business of the Corporation (the "Business") relating to its business
strategies, products, pricing, customers, technology, programs, costs, employee
compensation, marketing plans, developmental plans, computer programs, computer
systems, inventions, developments, formulae, processes, designs, drawings, trade
secrets of every kind and character and competitive information. "Confidential
Information" also includes confidential information belonging to other companies
and disclosed to the Executive by the Corporation.
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5. Non-competition and Inventions.
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a. During the period of employment of Executive and for a period
of one year after Executive's termination of employment for any reason,
Executive shall not directly or indirectly as a principal, agent, owner,
employee, consultant, advisor, trustee, beneficiary, distributor, partner,
co-venturer, officer, director, stockholder or in any other capacity, nor
will any entity owned by Executive:
(i) divert or attempt to divert any business from the
Corporation or engage in any act likely to cause any customer or
supplier of the Corporation to discontinue or curtail its
business with the Corporation or to do business with another
entity, firm, business, activity or enterprise directly or
indirectly competitive with the Corporation; or
(ii) contact, sell or solicit to sell or attempt to
contact, sell or solicit to sell products competitive to those
sold by the Corporation to any customer of the Corporation with
which Executive had contact while performing services for the
Corporation; or
(iii) solicit or attempt to solicit any employee of the
Corporation for employment or retention.
Notwithstanding the provisions above, Executive may acquire
securities of any entity the securities of which are publicly traded,
provided that the value of the securities of such entity held directly or
indirectly by Executive immediately following such acquisition is less than
5% of the total value of the then outstanding class or type of securities
acquired.
b. Executive acknowledges and agrees that the restrictions set
forth in this Section 5 are founded on valuable consideration and are
reasonable in duration and geographic area in view of the circumstances
under which this Agreement is executed and that such restrictions are
necessary to protect the legitimate interests of the Corporation. If, in
any judicial proceeding, a court shall refuse to enforce any separate
covenant set forth herein, then such unenforceable covenant shall be deemed
eliminated from this Section 4 for the purpose of that proceeding to the
extent necessary to permit the remaining separate covenants to be enforced.
c. The Executive hereby sells, transfers and assigns to the
Corporation the entire right, title and interest of the Executive in and to
all inventions, ideas, disclosures and improvements, whether patented or
unpatented, and copyrightable materials, made or conceived by the
Executive, solely or jointly, or in whole or in part, during the period
Executive is bound by this Agreement which (i) relate to methods,
apparatus, designs, products, processes or devices sold, leased, used or
under construction or development by the Corporation or any subsidiary or
(ii) otherwise relate to or pertain to the business, functions or
operations of the Corporation or any subsidiary, or (iii) arise (wholly or
partly) from the efforts of the Executive during the Term hereof in
connection with his
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performance of his duties hereunder. The Executive shall communicate
promptly and disclose to the Corporation, in such form as the Corporation
requests, all information, details and data pertaining to the
aforementioned inventions, ideas, disclosures and improvements; and,
whether during the term hereof or thereafter, the Executive shall execute
and deliver to the Corporation such formal transfers and assignments and
such other papers and documents as may be required of the Executive to
permit the Corporation to file and prosecute the patent applications and,
as to copyrightable material, to obtain copyright thereon. This provision
does not relate to any invention for which (i) no equipment, supplies,
facilities or trade secret information of the Corporation was used and
which was developed entirely on the Executive's own time and which does not
relate (A) directly to the business of the Corporation, or (B) to the
Corporation's actual or demonstrably anticipated research or development;
or (ii) does not result in any work performed by the Executive for the
Corporation.
d. The provisions in this paragraph are a supplement to any other
confidentiality and non-compete provisions applicable to the Executive in
any other agreements.
6. Miscellaneous.
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a. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Wisconsin, without reference to
principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
b. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive, to his address appearing on the records of the
Corporation.
If to the Corporation: Actuant Corporation
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Chairman of the Audit Committee
With a copy to: Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx III, Esq.
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
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c. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
d. The Corporation may withhold from any amounts payable under this
Agreement such federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
e. The Executive's or the Corporation's failure to insist upon strict
compliance with any provisions hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the
Corporation may have hereunder, including, without limitation, the right of
the Executive to terminate employment for cause pursuant to this Agreement,
shall not be deemed to be a waiver of such provision or right of any other
provision or right of this Agreement.
f. The Executive and the Corporation acknowledge that, except as may
otherwise be provided herein or under any other written agreement between
the Executive and the Corporation, the employment of the Executive by the
Corporation is "at will" and the Executive's employment may be terminated
by the Corporation at any time.
g. The Corporation agrees that if it breaches any payment obligation
hereunder, the Corporation will pay all reasonable attorney fees and costs
incurred by Executive in enforcing Executive's rights hereunder.
h. 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 shall
constitute one and the same instrument.
i. If the Corporation sells, leases, exchanges or otherwise disposes
of, in a single transaction or series of related transactions, all or
substantially all of its property and assets, or if the Corporation ceases
to exist as a separate entity as a result of a merger, spin-off,
reorganization or otherwise, then the Corporation will, as a condition
precedent to any such transaction, cause effective provision to be made so
that the person or entity acquiring such property and assets or succeeding
to the business of the Corporation as the surviving entity of a merger,
spin-off, reorganization or otherwise, as applicable, becomes bound by, and
replaces the Corporation under, this Agreement.
7. Injunctive Relief. Executive acknowledges and agrees that irreparable
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injury will result to the Corporation in the event Executive breaches any
covenant contained in this Agreement and that the remedy at law for such breach
will be inadequate. Therefore, if Executive engages in any act in violation of
the provisions of this Agreement, the Corporation shall be entitled, in addition
to such other remedies and damages as may be available to it by law or under
this Agreement, to injunctive or other equitable relief to enforce the
provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
Actuant Corporation
By: /s/
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/s/
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Xxxxxx X. Xxxxxxxxx
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