Exhibit 10.3
KEY COMPONENTS, INC.
SALE BONUS AGREEMENT
THIS SALE BONUS AGREEMENT dated as of July 1, 2004 (this "Agreement"),
between Key Components, Inc., a New York corporation with offices at 000 Xxxxx
Xxxxxx Xxxx, Xxxxxxxxx, XX (the "Company") and Xxxxxx Xxxxxxxx ("Employee").
WHEREAS, the Employee is a key management employee, and the Company has
determined that, subject to the terms herein set forth, it is in its best
interest to provide the Employee a bonus in the event of the Change of Control
(as defined below). Capitalized terms used herein and not otherwise defined
shall have the meanings given to such terms in the Company's Stock Incentive
Plan, as in effect and as amended from time to time.
NOW, THEREFORE, in consideration of the premises and subject to the
terms and conditions set forth herein, the parties hereto agree as follows:
1. Change of Control Bonus Payment: Except as otherwise provided
herein, subject to the Employee's continuous employment with the Company or a
subsidiary as of a Change of Control, in the event of a Change of Control AND if
the price per share of Common Stock paid (or the fair market value of property
received) in conjunction with any transaction resulting in a Change in Control
(x) is equal to $120 (ONE HUNDRED TWENTY DOLLARS) per share, the Employee shall
receive at the closing of such Change of Control a cash payment in the amount of
$400,000 (the "Initial Sale Bonus"), or (y) is equal to or exceeds $150 (ONE
HUNDRED FIFTY DOLLARS) per share, the Employee shall receive at the closing of
such Change of Control a cash payment in the amount of $825,000 (the "Maximum
Sale Bonus"), or (z) is greater than $120 but less than $150 per share, the
Employee shall receive a cash payment at the closing of such Change of Control
that shall be pro-rated between the Initial Sale Bonus and the Maximum Sale
Bonus (as an example, if the price is $135 per share, the Employee shall receive
at the closing of such Change of Control a cash payment in the amount of
$612,500), subject in all events to applicable withholding and deductions (the
"Sale Bonus"). For purposes of this Agreement, Change in Control shall mean a
transaction or series of transactions (other than a Public Offering) which must
be consummated no later than 12 months from the dated date of this Agreement:
(i) involving the sale, transfer or other disposition for cash
and/or Marketable Securities by the Xxxxx Entities to one or
more persons or entities that are not, immediately prior to
such sale, affiliates of the Company or any Xxxxx Entity, of
all or substantially all of the Common Stock of the Company
beneficially owned by the Xxxxx Entities as of the date of
such transaction; or
(ii) involving the sale, transfer or other disposition for cash
and/or Marketable Securities of all or substantially all of
the assets of the Company and the Subsidiaries, taken as a
whole, to one or more persons or entities that are not,
immediately prior to such sale, transfer or other disposition,
affiliates of the Company or any Xxxxx Entity.
2. Non-Disclosure: During or after employment with the Company, the
Employee shall not at any time, disclose this Agreement or the Sale Bonus unless
specifically authorized by his Executive Supervisor.
3. Termination for Good Reason or without Cause. If Employee's
employment is terminated (a) by the Company without Cause (as such term is
defined in the Employment Agreement between the Company and Employee, dated July
1, 2004 (the "Employment Agreement")) or (b) by the Employee for Good Reason (as
defined in the Employment Agreement), in either case, at any time prior to a
Change of Control, Employee shall be paid the Sale Bonus contemplated in Section
1 of this Agreement if a Sale Bonus would have been paid if Employee had
remained employed on the consummation of a Change of Control. Any such Sale
Bonus shall be paid at the time contemplated in Section 1 of this Agreement.
4. No Right To Employment: Nothing in this Agreement shall interfere
with or limit in any way the right of the Company or any subsidiary to terminate
the Employee's employment at any time, or confer upon the Employee any right to
continue in the employ of the Company or any Subsidiary. This Agreement shall
not impair any of the rights Employee may have under his Employment Agreement,
including, without limitation, his right to receive severance as contemplated
under Section 5(b) of the Employment Agreement. It is expressly agreed and
acknowledged that the Sale Bonus contemplated hereunder is in addition to any
rights that the Employee may have to severance under the Employment Agreement
and the Sale Bonus shall not reduce (or in any way off-set) the amount of
severance payable to employee under the Employment Agreement.
5. Governing Law: This Agreement shall be construed in accordance with
the laws of the State of New York by the courts of the State of New York to
which the Employee hereby agrees to submit in any dispute arising out of this
Agreement, which Agreement shall survive the termination of the relationship
between the Employee and the Company. The losing party in any such dispute shall
reimburse the other for all costs, including legal fees and expenses, incurred
by the prevailing party in connection with any dispute under this Agreement.
1
6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
7. Parachute Payments. Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined by the Employee, in his
sole and absolute discretion, that any payments, awards, benefits or
distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any affiliate thereof) or any entity which
effectuates a change in ownership or control (within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code") to or for the
benefit of Employee ("Payments") would be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then the amounts payable to
Employee under this Agreement shall be reduced (not below zero) to the maximum
amount that could be payable to Employee without giving rise to the Excise Tax
(the "Safe Harbor Cap"), if, and only if, the result of subtracting the Excise
Tax from the Payments is less than the Safe Harbor Cap.
KEY COMPONENTS, INC.
By:
-------------------------------------------------
Title:
----------------------------------------------
EMPLOYEE:
-----------------------------------------------------
Name: Xxxxxx Xxxxxxxx
2
