TRANSACTION BONUS AND SEVERANCE AGREEMENT BY AND BETWEEN SEQUA CORPORATION AND KENNETH J. BINDER
Exhibit 10.3
BY
AND BETWEEN
SEQUA
CORPORATION
AND
XXXXXXX
X. XXXXXX
THIS
TRANSACTION BONUS AND SEVERANCE AGREEMENT (the “Agreement”) is made this 23rd
day of October, 2007 by and between Sequa Corporation and its affiliates,
subsidiaries, divisions, successors and assigns (collectively, the “Company”)
and Xxxxxxx X. Xxxxxx (“Employee”).
W
I T N E
S S E T H:
WHEREAS,
Sequa Corporation is a party to that certain Agreement and Plan of Merger dated
as of July 8, 2007 by and among Blue Xxx Acquisition Corporation, Blue Xxx
Merger Corporation and Sequa Corporation (the “Merger Agreement”);
and
WHEREAS,
in connection with the “Merger” contemplated by the Merger Agreement, the
Company desires to provide additional consideration to the Employee for his
continued employment through the “Effective Time” of the “Merger” (as such terms
are defined in the Merger Agreement) and if the Employee is involuntarily
terminated other than for cause or terminates for good reason within two years
after the Effective Time; and
WHEREAS,
it is intended that the Company’s obligation to pay such consideration be
conditioned on the Employee’s compliance with the non-competition provisions
contained in the employment agreement dated March 2, 2000 between the Company
and the Employee, as amended by letter agreements dated May 1, 2007 (the
“Employment Agreement”) and the trade secret agreement between the Company and
the Employee dated May 1, 2007 (the “Trade Secret Agreement”),
subject to the terms hereof.
NOW,
THEREFORE, the Company and the Employee mutually agree to enter into this
Agreement, the terms and conditions of which are set forth below.
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1.
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Effective
Date
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The
effective date of this Agreement (the “Effective Date”) is the date of the
“Effective Time” of the “Merger” as those terms are defined in the Merger
Agreement. This Agreement shall be of no force and effect if such
merger is not consummated. In addition, this Agreement shall be of no
force and effect if the employment of the Employee terminates for any reason
prior to the Effective Date.
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2.
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Transaction
Bonus
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Subject
to Section 6, if the Employee remains in the employment of the Company until
the
Effective Date, the Company shall pay to the Employee in a single lump sum
within fifteen (15) days after the Effective Date, a bonus in the amount of
$1,500,000 (the “Transaction Bonus).” An amount equal to $150,000 of
the Transaction Bonus shall constitute additional consideration for the
Employee’s non-competition agreement contained in the Employment Agreement and
the Trade Secret Agreement which shall similarly apply to the Transaction
Bonus.
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3.
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Severance
Payment
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Subject
to Sections 4, 6 and 7 below, if (i) the Employee remains in the employment
of
the Company until the Effective Date, and (ii) his employment with the Company
terminates within the two (2)-year period beginning on the Effective Date either
by reason of an involuntary termination of employment by the Company without
Cause (as defined below) or by reason of a termination of employment by the
Employee for Good Reason (as defined below), the Company shall pay to the
Employee in a single lump sum within sixty (60) days after such termination
of
employment a severance benefit in an amount equal to three times the greater
of
the Employee’s rate of annual base salary as in effect on the date of this
Agreement or the Employee’s rate of annual base salary as in effect immediately
prior to such termination of employment (the “Severance Benefit”); provided,
however, that (A) the Employee’s entitlement to the Severance Benefit shall be
conditioned on the Employee’s execution, within fifty (50) days following such
termination of employment, of an agreement and general release in a customary
form to be provided by the Company in its sole good faith discretion and not
revoking such release; (B) if the termination of the Employee’s employment
occurs within the last fifty (50) days of a calendar year, the payment shall
be
made in the succeeding calendar year but no later than sixty (60) days after
such termination of employment, (C) in no event shall the Employee be entitled
to the Severance Benefit if the Employee’s employment terminates as a result of
death or Disability; and (D) the Employee’s entitlement to the Severance Benefit
shall be conditioned on his compliance with the non-competition provisions
in
the Employment Agreement and the Trade Secret Agreement,
which shall similarly apply to the Severance
Benefit. An amount equal to $1,250,000 of the Severance Benefit shall
constitute additional consideration for the Employee’s non-competition agreement
contained herein.
It
is
expressly understood that said agreement and general release shall not require
the Employee to waive (i) any right to indemnification the Employee may have
under applicable bylaws or insurance policies maintained by the Company or
its
subsidiaries or (ii) any right to vested employee benefits.
For
purposes of this Agreement, the term “Cause” shall mean a reasonable and good
faith determination by the Company that the Employee (i) has failed, including
either willfully or grossly negligently, to perform the Employee’s duties; (ii)
has engaged in misconduct which is injurious to the Company (including but
not
limited to violations of policies related to workplace practices and
harassment); (iii) has been convicted of a crime (including conviction or a
nolo
contendere plea) involving, in the good faith judgment of the Company, fraud,
dishonesty or moral turpitude; (iv) has breached any of the non-competition,
non-disclosure, non-solicitation or other restrictive covenants contained in
the
Employment Agreement or any other employment or other agreement between the
Company and the Employee; (v) has intentionally refused (except by reason of
incapacity due to physical or mental illness or disability by the Employee)
to
devote his entire business time to the performance of his duties as an employee
of the Company; (vi) has breached the provisions of the Company’s Trade Secrets
Agreement to which he is a party; (vii) has engaged in theft or misappropriation
of assets of the Company; or (viii) has engaged in any willful, intentional
or
grossly negligent act having the effect of injuring the reputation or business
of the Company; or (ix) materially breached the Company’s Code of
Conduct.
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For
purposes of this Agreement, the term “Good Reason” shall mean the existence of
one or more of the following conditions arising without the consent of the
Employee: (i) a material diminution in the Employee’s base
compensation; (ii) a material diminution in the Employee’s authority, duties or
responsibilities; or (iii) a material change in the geographic location at
which
the Employee must perform the Employee’s services to the Company. A
material diminution in the Employee’s authority, duties or responsibilities
within the meaning of clause (ii) of the preceding sentence shall not be deemed
to have occurred merely because the Company ceases to be a public company or
there is a change in the person or entity to whom the Employee reports or
because the Employee’s title is changed, provided the Employee’s authority,
duties and responsibilities otherwise remain substantially the
same. Notwithstanding the foregoing, the Employee’s termination of
employment shall not be considered as for Good Reason unless the Employee
provides written notice to the Company of the existence of the condition or
conditions providing the basis for a Good Reason termination within ninety
(90)
days of the initial existence of the condition and the Company fails to remedy
the condition within thirty (30) days after receiving such notice.
For
purposes of this Agreement, the term “Disability” shall have the meaning set
forth in the Employee’s employment or similar agreement with the Company, or if
there is no such agreement containing a definition of “Disability”, the term
“Disability” shall mean that the Employee is physically or mentally
incapacitated so as to render the Employee incapable of performing the essential
functions of the job and such incapacity cannot be reasonably accommodated
by
the Company without undue hardship.
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4.
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Reduction
of Severance Benefit
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Anything
in this Agreement to the contrary notwithstanding, if the Employee becomes
entitled to the Severance Benefit as described in Section 3 above and is also
entitled to severance payments described in the Employment Agreement or under
any other plan, program, agreement or arrangement with the Company or other
severance payments imposed by applicable law, the Severance Benefit as described
in Section 3 above shall be reduced by the principal amount of any such other
severance payments (even if such other severance payments are payable at a
different time or in a different form than the Severance Benefit). In
such event, the terms of such other severance plan, program, agreement or
arrangement or applicable law shall continue to govern the time and form of
payment of the amounts payable thereunder. The Severance Benefit
shall be reduced only by cash severance payments made by reason of the
termination of the Employee’s employment and shall not be reduced by any other
types of benefits that may be provided by reason of such termination of
employment (including, but not limited to, continued medical or other welfare
benefits or payments in kind, if any).
Additionally,
if it is determined by a court of competent jurisdiction that the Employee
breached the non-competition provisions contained in the Employment Agreement
or
the Trade Secret Agreement, (a) the Company’s obligation to provide the
Severance Benefit shall cease and the Employee shall not be entitled to any
further payments under this Agreement, (b) the Employee shall repay to the
Company all of the Severance Benefits the Employee has already received and
the
portion of the Transaction Bonus that is consideration for the non-competition
agreement contained in Section 3(D) herein, and (c) the Company shall have
all
other remedies available under applicable law.
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5.
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Withholding
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The
Company shall withhold from any payment under this Agreement, or any payroll
or
other payment to the Employee, amounts of withholding and other taxes due in
connection with any payment under this Agreement.
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6.
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Golden
Parachute Reduction
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Notwithstanding
the other provisions of this Agreement, in the event that the amount of payments
payable to the Employee under this Agreement, together with any payments or
benefits payable under any other plan, program, arrangement or agreement
maintained by the Company, would constitute an “excess parachute payment”
(within the meaning of Section 280G of the Internal Revenue Code of 1986,
as amended), the payments under this Agreement shall be reduced (by the minimum
possible amounts) until no amount payable to the Employee under this Agreement
constitutes an “excess parachute payment” (within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended);
provided, however, that no such reduction shall be made if the net
after-tax payment (after taking into account Federal, state, local or other
income and excise taxes) to which the Employee would otherwise be entitled
without such reduction would be greater than the net after-tax payment (after
taking into account Federal, state, local or other income and excise taxes)
to
the Employee resulting from the receipt of such payments with such
reduction. If, as a result of subsequent events or conditions
(including a subsequent payment or absence of a subsequent payment under this
Agreement or other plans, programs, arrangements or agreements maintained by
the
Company), it is determined that payments under this Agreement have been reduced
by more than the minimum amount required to prevent any payments from
constituting an “excess parachute payment,” then an additional payment shall be
promptly made to the Employee in an amount equal to the additional amount that
can be paid without causing any payment to constitute an “excess parachute
payment.” All determinations required to be made under this
Section 6, including whether a payment would result in an “excess parachute
payment” and the assumptions to be utilized in arriving at such determination,
shall be made by a Big Four accounting firm selected by the Company which shall
provide detailed supporting calculations both to the Company and the Employee
as
requested by the Company or the Employee. All fees and expenses of
the accounting firm shall be borne solely by the Company and shall be paid
by
the Company. All determinations made by the accounting firm under
this Section 6 shall be final and binding upon the Company and the
Employee.
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7.
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Compliance
with Internal Revenue Code Section
409A
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If
it
should be determined that the Severance Benefit constitutes a “deferral of
compensation” subject to Section 409A of the Internal Revenue Code of 1986, as
amended, then, notwithstanding anything in this Agreement to the contrary,
(i)
if the Employee is a “specified employee” (within the meaning of said Section
409A and the regulations thereunder and as determined by the Company in
accordance with Section 409A) at the time of the Employee’s separation from
service (as defined below), the distribution of the Severance Benefit shall
be
delayed until the date which is 6 months after the date of the Employee’s
separation from service (or, if earlier than the end of such 6-month period,
the
date of the Employee’s death) and (ii) the Employee shall not be deemed to have
terminated from employment for purposes of Section 3 above unless the Employee
has experienced a “separation from service” within the meaning of said Section
409A and the regulations thereunder. To the extent the Severance
Benefit hereunder is subject to the 6-month delay, such Severance Benefit will
be paid immediately after the end of such 6-month period. If this
Section 7 becomes applicable, this Agreement shall be interpreted and operated
consistently with the requirements of Section 409A of the Internal Revenue
Code
of 1986, as amended, and the regulations thereunder.
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8.
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Governing
Law and Choice of
Forum
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This
Agreement shall be governed and construed in accordance with the laws of the
State of New York without regard to its conflict of laws
provisions.
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9.
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Modification
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No
modification of this Agreement shall be valid unless made in writing wherein
specific reference is made to this Agreement and signed by both parties
hereto.
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10.
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Binding
Effect
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This
Agreement shall be binding upon the Employee, the Employee’s heirs, executors
and administrators and shall inure to the benefit of the
Company. This Agreement shall be binding upon the Company (including
its successors and assigns). This Agreement may not be assigned by
Employee, but may be assigned by Sequa Corporation to a purchaser of its
business or assets.
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11.
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Confidentiality
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Employee
agrees that the terms of this Agreement are strictly confidential and he,
without the prior written consent of the Company, shall not disclose in any
way
to any third person the terms and conditions of this
Agreement. Nothing in this Section shall be construed to prohibit the
disclosure of such information by Employee to his immediate family members
or to
any legal or financial advisor, provided that persons to whom the disclosure
is
being made agree to be bound by the confidentiality provisions of this
Section. Nothing
in this Section shall be construed to prohibit the disclosure by Employee of
such information as may be required by law.
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IN
WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this
Agreement, as of the date first written above.
EMPLOYEE
/s/
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
SEQUA
CORPORATION
By: /s/
Xxxxxx
Xxxxxxxxx
Xxxxxx
Xxxxxxxxx
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