CHANGE IN CONTROL
AGREEMENT
This Agreement ("Agreement"), dated as of November 8, 1996, is made by and
between TPC Corporation, a Delaware corporation (the "Company"), and Xxxxxxx X.
Xxxxxxx (the "Executive").
RECITALS
The Board of Directors of the Company (the "Board") has determined that it
is in the best interest of the Company and its shareholders to ensure that the
Company will have the continued dedication of the Executive, notwithstanding
the possibility, threat, or occurrence of a Change in Control (as defined
below) of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal uncertainties
and risks created by any pending or threatened Change in Control and to
encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change in Control, and
to provide the Executive with compensation arrangements upon a Change in
Control that ensure that the compensation expectations of the Executive will be
satisfied and that are competitive with those of other corporations.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, and for other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. DEFINITIONS
1.1 BASE AMOUNT means the Executive's base amount on the date of the
Change in Control, as determined in accordance with Code Section 280G.
1.2 BOARD means the Board of Directors of the Company.
1.3 CHANGE IN CONTROL shall mean any of the following events that occur
during the Term of this Agreement:
(a) The acquisition by any individual, entity, or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of (i) a
percentage of the then outstanding shares of common stock (assuming, for
purposes of this definition, that all shares of Class B Common Stock have been
converted into the same number of shares of Class A Common Stock) of the
Company (the "Outstanding Company Common Stock") that, when added to the
beneficial ownership previously held by that Person, and to the largest holding
of beneficial ownership in Outstanding Company Common Stock by any other
Person, equals or exceeds 50%, or (ii) a percentage of the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities") that, when added to the beneficial ownership previously held by
that Person, and to the largest holding of beneficial ownership in Outstanding
Company Voting Securities by any other Person, equals or exceeds 50%; provided,
however, that for purposes of this subparagraph (a), the following acquisitions
shall not in and of themselves constitute a Change in Control hereunder: (x)
any acquisition of securities of the Company made directly from the Company and
approved by a majority of the directors then comprising the Incumbent Board (as
defined below), (y) any acquisition of beneficial ownership of a higher
percentage of the Outstanding Company Common Stock or the Outstanding Company
Voting Securities that results solely from the acquisition, purchase, or
redemption of securities of the Company by the Company so long as such action
by the Company was approved by a majority of the directors then comprising the
Incumbent Board, or (z) any acquisition by any Company pursuant to a
transaction that complies with clauses (i), (ii), and (iii) of subparagraph (c)
hereof; or
(b) Individuals who, as of November 8, 1996, constituted 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
subsequent to November 8, 1996 whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though
such individual were 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 (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(c) Consummation of a reorganization, merger, or consolidation or
sale or other disposition of all or substantially all the assets of the
Company (a
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"Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities
that were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially owned, directly or indirectly, more
than 75% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
company resulting from such Business Combination (including, without
limitation, a company which as a result of such transaction owns the Company
or all or substantially all the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case
may be, (ii) no Person (excluding any company resulting from such Business
Combination) beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of the company
resulting from such Business Combination (including, without limitation, a
company which as a result of such transaction owns the Company or all or
substantially all the Company's assets either directly or through one or more
subsidiaries) or the combined voting power of the then outstanding voting
securities of such company except to the extent that such ownership existed
prior to the Business Combination, and (iii) at least a majority of the
members of the board of directors of the company 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
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
1.4 CODE means the Internal Revenue Code of 1986, as amended.
1.5 COMPANY means TPC Corporation and any successor thereto.
1.6 DIRECTOR means a member of the Board.
1.7 DISABILITY has the same meaning as the definition of disability under
the Company's long-term disability plan.
1.8 GOOD REASON shall mean any of the following:
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(a) the assignment to the Executive of any duties inconsistent with
the Executive's duties at the time of a Change in Control or a change in the
Executive's reporting responsibilities as in effect immediately prior to the
Change in Control, without the Executive's express written consent; or any
removal of the Executive from or any failure to reelect the Executive to
positions held by the Executive immediately prior to the Change in Control,
except in connection with promotions to higher office;
(b) a reduction in the Executive's total compensation as in effect
immediately prior to the Change in Control;
(c) the failure of the Company substantially to maintain and
continue the Executive's relative level of participation in the same or
substantially comparable bonus, stock incentive programs, and retirement and
welfare benefit plans as provided immediately prior to the Change in Control;
(d) the failure of the Company substantially to provide and continue
for the Executive the same or substantially comparable fringe benefits; or
(e) the Company's requiring the Executive to be based anywhere other
than in or within 20 miles of the Executive's principal place of employment at
the time of the Change in Control, except for required travel on the Company's
business to an extent substantially consistent with the Executive's prior
business travel obligations or, in the event the Executive consents to
relocation, the failure of the Company to pay (or reimburse the Executive for)
all reasonable moving expenses incurred by the Executive relating to a change
in the Executive's principal residence in connection with such relocation.
1.9 HOLDOVER PERIOD means the period following a Change in Control that
(a) begins on the date that the Company provides the Executive with written
notice that the Company requires the services of the Executive and (b) ends on
the date specified in the notice but no later than six months after the date of
the Change in Control.
1.10 PROTECTED PERIOD shall be the period of time beginning upon the later
of (a) the date of a Change in Control or (b) the last day of the Executive's
Holdover Period, and ending two years after such date.
1.11 RETENTION BONUS means the Executive's benefit, as described in
Subsection 2.1 of this Agreement.
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1.12 SEVERANCE COMPENSATION means the Executive's severance benefit, as
described in Subsection 2.2 of this Agreement.
1.13 TERM has the meaning set forth in Section 8 of this Agreement.
1.14 TERMINATION OF EMPLOYMENT shall be deemed to have occurred for
purposes of this Agreement and the Executive shall be entitled to the Severance
Compensation hereunder if following a Change in Control that occurs during the
Term of this Agreement, the Executive (a) is terminated by the Company during
the Holdover Period or the Protected Period for any reason other than willful
dishonesty or the commission of a felony for which he is convicted and which,
in either case, may cause material harm to the Company, (b) terminates
employment during the Protected Period where such termination in any way
follows or results from a Good Reason, or (c) terminates employment during the
Holdover Period where such termination in any way follows or results from a
Good Reason described in Subsection 1.8(b)-(e) of this Agreement. The Executive
is not entitled to benefits under this Agreement if he terminates service
during the Holdover Period for a Good Reason described in Subsection 1.8(a) of
this Agreement; provided, however, that immediately following the end of the
Holdover Period, the Executive may have a Termination of Employment for a Good
Reason described in Subsection 1.8(a) based on events that occurred during the
Holdover Period.
2. BENEFITS
2.1 RETENTION BONUS. Upon a Change in Control, the Executive shall be
entitled to a cash payment equal to two-thirds times the Base Amount as a
Retention Bonus. The Retention Bonus shall be paid within three business days
after the Change in Control.
2.2 SEVERANCE COMPENSATION. Upon Termination of Employment, the
Executive shall be entitled to receive a cash payment equal to four-thirds
times the Base Amount. The Severance Compensation shall be paid within three
business days after the Termination of Employment.
2.3 HEALTH COVERAGE. Upon Termination of Employment, the Executive shall
be entitled to receive continuing group medical and dental insurance coverage
for a period of 24 months after Termination of Employment, at no cost to the
Executive.
2.4 EXCEPTION TO BENEFIT ELIGIBILITY. The Executive shall not be
entitled to receive any of the benefits under this Agreement if the Executive
is one of the "Persons" (or a member of a group within the meaning of Section
13(d)(3) of the Exchange Act that constitutes the "Person") whose beneficial
ownership results in a "Change in Control" under Subsection 1.3(a) or clause
(ii) of Subsection 1.3(c) or if the Executive is (i) a general partner,
executive officer, or director of any such
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Person, (ii) a person controlling any such Person, (iii) a general partner ,
executive officer, or director of any person controlling any such person, or
(iv) a beneficial owner of (x) any equity interest in any such Person or
controlling person, if such Person or controlling person was formed for the
purpose of engaging in the transaction resulting in the Change in Control or
(y) more than 5% of the outstanding equity interest therein, if not so formed.
3. DEATH BENEFITS
If the Executive's employment with the Company is terminated after a
Change in Control and during the Protected Period due to death, the Executive
shall receive no Severance Compensation under Subsection 2.2 of this Agreement;
provided however, that if the Executive dies either (a) during the Holdover
Period or (b) after a Termination of Employment, but prior to payment of all
benefits under Section 2 of this Agreement, then the Executive's surviving
spouse (or if no spouse survives the Executive, the Executive's estate) shall
be entitled to the Severance Compensation. For purposes of this Section 3, the
Executive will be deemed to be in a Holdover Period for the six-month period
immediately following a Change in Control unless the Executive has received
written notice from the Company stating that a Holdover Period is not
applicable to the Executive or unless the time period prescribed by the Company
for the Holdover Period has expired. The benefits prescribed herein are in
addition to those available under applicable law and under the terms of the
Company's benefit plans and programs.
4. DISABILITY BENEFITS
If the Executive's employment with the Company is terminated after a
Change in Control and during the Protected Period due to Disability, the
Executive shall receive no Severance Compensation under Subsection 2.2 of this
Agreement; provided, however, that if the Executive terminates employment due
to Disability during the Holdover Period, the Executive shall receive Severance
Compensation as if the date of termination due to Disability were the date of a
Termination of Employment. For purposes of this Section 4, the Executive will
be deemed to be in a Holdover Period for the six-month period immediately
following a Change in Control unless the Executive has received written notice
from the Company stating that a Holdover Period is not applicable to the
Executive or unless the time period prescribed by the Company for the Holdover
Period has expired. The Executive shall also be eligible for disability
benefits available under applicable law and under the terms of the Company's
benefit plans and programs.
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5. CERTAIN REDUCTION IN PAYMENTS
Notwithstanding anything to the contrary in this Agreement, the
provisions of this Section 5 shall apply in the event that any payment or
distribution (whether paid or payable, or distributed or distributable,
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any reductions in payments required under this Section 5 (a
"Payment")) to the Executive would constitute a "parachute payment" within the
meaning of Code Section 280G; this Section 5 shall not be applicable if no such
Payment to the Executive constitutes a parachute payment under Code
Section 280G.
In the event that a nationally recognized accounting firm chosen by
the Company (the "Accounting Firm") shall determine that receipt of all
Payments would subject the Executive to the excise tax imposed by Code
Section 4999, then the aggregate present value of all Payments shall be reduced
(but not below zero) such that such aggregate present value of Payments equals
the Reduced Amount. If the Accounting Firm determines that some amount of
Payments would result in a Reduced Amount, the Company shall promptly notify
the Executive of the Accounting Firm's decision and further provide a copy of
the detailed computations, and the Executive shall be entitled solely to the
Reduced Amount. The Executive may then elect which of the Payments shall be
eliminated or reduced (as long as after such election the present value, as
determined in accordance with Code Section 280G(d)(4) ("Present Value"), of the
aggregate Payments equals the Reduced Amount). The Executive shall advise the
Company in writing of such election within 20 days of his receipt of notice.
If no such election is made by the Executive within the 20-day period, the
Company may elect which of such Payments shall be eliminated or reduced (as
long as after such election the Present Value of the aggregate Payments equals
the Reduced Amount) and shall promptly notify the Executive of such election.
All fees and expenses of the Accounting Firm shall be borne solely by the
Company.
The "Reduced Amount" shall be an amount expressed in present value
which maximizes the aggregate present value of Payments without causing any
Payment to be nondeductible by the Company because of Code Section 280G or
subject to an excise tax on the Executive under Code Section 4999. For
purposes of this Section 5, Present Value shall be determined in accordance
with Code Section 280G(d)(4).
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6. NO CONTRACT OF EMPLOYMENT
This Agreement shall not be construed so as to create a contract,
promise, or guarantee of employment for any particular term or duration, in any
particular position or assignment, or at any particular level of compensation
or benefits.
7. NON-ALIENATION OF BENEFITS
No right or benefit at any time under the Agreement shall be subject
to alienation, sale, transfer, assignment, pledge, or any encumbrance of any
kind. If the Executive shall attempt to or shall alienate, sell, transfer,
assign, pledge, or otherwise encumber his or her rights, benefits, or amounts
payable under the Agreement, or any part thereof, or if by reason of his
bankruptcy or other events happening at any time, such benefits would otherwise
be received by anyone else, the Company in its sole discretion may terminate
his interest in any such right or benefit and hold or pay it to, or for the
benefit of, such person, his spouse, children, or other dependents, or any of
them as the Company may determine.
8. TERM OF THIS AGREEMENT
The Term of this Agreement shall commence on the date of this
Agreement and end on the first anniversary of that date; PROVIDED, HOWEVER,
that the Term shall automatically be extended without further action by the
parties for additional one-year periods, unless written notice of the Company's
intention not to extend has been given to the Executive at least six months
prior to the expiration of the then effective Term. This Agreement shall be
void and of no effect if (i) a Change in Control occurs after the expiration of
the Term, or (ii) the Executive's employment with the Company and its
subsidiaries is terminated for any reason prior to a Change in Control.
9. RESOLUTION OF DISPUTES
(a) Any disputes arising under or in connection with this Agreement
shall be resolved, in the Executive's discretion, either (i) by arbitration, to
be held in Houston, Texas in accordance with the rules and procedures of the
American Arbitration Association, or (ii) by litigation.
(b) All costs, fees, and expenses of any arbitration or litigation
in connection with this Agreement that results in any decision or settlement
requiring the Company to make a payment to the Executive, including, without
limitation, attorneys' fees of both the Executive and the Company, shall be
borne by, and be
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the obligation of, the Company. In no event shall the Executive be required
to reimburse the Company for any of the costs and expenses incurred by the
Company relating to arbitration or litigation.
10. MISCELLANEOUS
10.1 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to principles of
conflict of laws.
10.2 AMENDMENTS/WAIVER. This Agreement may not be amended, waived, or
modified otherwise than by a written agreement executed by the parties to this
Agreement or their respective successors and legal representatives. No waiver
by any party to this Agreement of any breach of any term, provision, or
condition of this Agreement by the other party shall be deemed a waiver of a
similar or dissimilar condition or provision at the same time, or any prior or
subsequent time.
10.3 NOTICES. All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other party, by facsimile
transmission, by overnight courier, or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive: Xxxxxxx X. Xxxxxxx
00000 Xxx Xxxxxx Xx.
Xxxx, Xxxxx 00000
If to the Company: TPC Corporation
000 Xxxx Xxxx Xxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000.
10.4 PAYMENT OBLIGATION ABSOLUTE. Subject to Section 5 and to Subsection
2.4, the obligations of the Company to pay the benefits described in Section 2
shall be absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense, or other right which the Company may have against the
Executive. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, nor shall the
amount of any payment hereunder be reduced by any compensation earned by the
Executive as a result of employment by another employer.
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10.5 TAX WITHHOLDING. The Company may withhold from any benefits payable
under this Agreement all federal, state, city, or other taxes that are required
by any law or governmental regulation or ruling.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and the Company has caused this Agreement to be executed in its name and
on its behalf, all as of the day and year first above written.
TPC CORPORATION
By: /s/ XXXX X. XXXXX
--------------------------
Xxxx X. Xxxxx, President
/s/ XXXXXXX X. XXXXXXX
--------------------------
Xxxxxxx X. Xxxxxxx
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