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Exhibit 10.9
REVISED TERMINATION PROTECTION AGREEMENT
AGREEMENT as of August 23,1995 (the "Effective Date") by and between
Xxxxx & Co., Inc., a New York corporation (together with its subsidiaries and
affiliates and, after a Change of Control Event (as defined herein), any
successor or successors thereto, the "Corporation"), and _________________ (the
"Executive").
WHEREAS, Executive is a skilled and dedicated employee who has
important management responsibilities and talents which benefit the Corporation;
and
WHEREAS, the Corporation believes that its interests will be served if
Executive has fair and reasonable protection from the risks of a change in
ownership or control of the Corporation;
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINED TERMS.
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Unless otherwise indicated, capitalized terms used in this
Agreement which are defined in Schedule A shall have the meanings
set forth in Schedule A.
2. TERM.
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This Agreement shall be effective as of the Effective Date and
shall remain in effect thereafter. The Corporation may terminate
this Agreement by giving Executive at least two years advance
written notice of termination of the Agreement. Notwithstanding
the foregoing, this Agreement shall, if in effect on the date of a
Change of Control Event, remain in effect for at least two years
and six months following such Change of Control Event, and such
additional time as may be necessary to give effect to the terms of
the Agreement.
3. SEVERANCE AND OTHER BENEFITS.
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If Executive's employment with the Corporation is terminated by
the Corporation at any time within the two years and six months
following a Change of Control Event without Cause, or by Executive
for Good Reason (the effective date of either such termination
hereafter referred to as the "Termination Date"), Executive shall
be entitled to the benefits provided hereafter in this Section 3
and as set forth in this Agreement. If Executive's employment with
the Corporation is terminated prior to a Change of Control Event
at the request of any individual or entity acquiring ownership and
control of the Corporation, this Agreement shall become effective
upon the subsequent occurrence of a Change of Control Event
involving such acquirer, Executive's Termination Date shall be
deemed to have occurred immediately following the Change of
Control Event, and therefore Executive shall be entitled to the
benefits provided hereafter in this Section 3 and as set forth in
this Agreement.
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(a) SEVERANCE BENEFITS. Within ten (10) days after Termination
Date, the Corporation shall pay Executive a lump sum amount,
in cash, equal to the sum of:
(1) Two (2) times the sum of:
(A) Executive's Base Salary, and
(B) Executive's Target Bonus; and
(2) Executive's Target Bonus multiplied by a fraction, the
numerator of which shall equal the number of days
Executive was employed by the Corporation in the Calendar
Year in which the Termination Date occurs and the
denominator of which shall equal 365.
(b) PAYMENT OF ACCRUED BUT UNPAID AMOUNTS. Within ten (10) days
after Termination Date, the Corporation shall pay Executive
(1) any unpaid portion of Executive's bonus accrued with
respect to the Calendar Year ended prior to Termination Date;
and (2) all compensation previously deferred by Executive
but not yet paid.
(c) CONTINUED WELFARE BENEFITS. Until the date which is two years
after the Termination Date or, if earlier, the date of
which Executive commences full-time employment after the
Termination Date, the Corporation shall, at its expense,
provide Executive with medical and dental benefits, life
insurance, disability and accidental death and dismemberment
benefits at the highest level provided prior to the Change
of Control Event and ending on the Termination Date;
PROVIDED, HOWEVER, that if Executive becomes employed
by a new employer which maintains a medical plan (or its
equivalent) that either (i) does not cover Executive with
respect to a pre-existing condition which was covered under
the Corporations' medical plan, or (ii) does not cover
Executive for a designated waiting period, Executive's
coverage under the Corporation's medical plan shall
continue (but shall be limited in the event of non-coverage
due to a pre-existing condition, to the pre-existing
condition itself) until the earlier of the end of the
applicable period of non-coverage under the new employer's
plan or the date which is two years after the Termination
Date.
(d) OUTPLACEMENT COUNSELING. The Corporation shall reimburse
Executive for professional outplacement counseling services
by qualified consultants selected by Executive that are
incurred through the period ending two years after the
Termination Date; provided, however, that the maximum
aggregate amount for which an Executive shall be reimbursed
under this subsection 3(d) shall be 20% of the sum of (i) the
Executive's Base Salary and (ii) the Executive's Target
Bonus.
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(e) EFFECT ON EXISTING PLANS. All provisions relating to a
Change of Control Event applicable to Executive and contained
in any plan, program, agreement or arrangement maintained on
the Termination Date (or thereafter) by the Corporation,
including, but not limited to, any stock option, restricted
stock or retirement plan, shall remain in effect through the
date of the Change of Control Event, and for such period
thereafter as is necessary to carry out such provisions and
provide the benefits payable thereunder, and may not be
altered in a manner which adversely affects Executive without
Executive's express prior written approval.
4. ACCELERATION OF EQUITY RIGHTS.
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Effective as of the date of a Change of Control Event, the
Corporation shall cause Executive's outstanding stock options
which are not immediately exercisable to vest and become
immediately exercisable and the restrictions on any equity and
equity rights held by Executive which are scheduled to lapse
solely through the passage of time to lapse.
5. EXCISE TAX GROSS-UP.
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If Executive becomes entitled to one or more payments (with a
"payment" including, without limitation, the vesting of an option
or other non-cash benefit or property) pursuant to any plan,
agreement or arrangement of the Corporation (together, "Severance
Payments") which are or would be subject to the tax imposed by
Section 4999 of the Code (or any similar tax that may be imposed)
(the "Excise Taxes"), the Corporation shall pay to Executive an
additional amount ("Gross-Up Payment") such that, after the
payment by Executive of all taxes (including without limitation
all income and employment tax and Excise Tax and treating as a tax
the lost tax benefit resulting from the disallowance of any
deduction of Executive by virtue of the inclusion of the Gross-Up
Payment in Executive's adjusted gross income), and interest and
penalties with respect to such taxes, imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal
to the Excise Taxes imposed upon the Severance Payments.
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For purposes of determining whether any of the Severance Payments
will be subject to the Excise Tax and the amount of such Excise
Tax:
(i) The Severance Payments shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of
the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax, unless, and
except to the extent that, in the written opinion of
independent compensation consultants, counsel or
auditors of nationally recognized standing
("Independent Advisors") selected by the Corporation
and reasonably acceptable to Executive, the
Severance Payments (in whole or in part) do not
constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code in excess of
the base amount within the meaning of Section
280G(b)(3) of the Code or are otherwise not subject
to the Excise Tax;
(ii) The amount of the Severance Payments which shall be
treated as subject to the Excise Tax shall be equal to
the lesser of (A) the total amount of the Severance
Payments or (B) the total amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the
Code (after applying clause (i) above); and
(iii) The value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Independent
Advisors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed (A) to pay federal income taxes at the
highest marginal rate of federal income taxation for the calendar
year in which the Gross-Up Payment is to be made; (B) to pay any
applicable state and local income taxes at the highest marginal
rate of taxation for the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state
and local taxes if paid in such year (determined without regard to
limitations on deductions based upon the amount of Executive's
adjusted gross income); and (C) to have otherwise allowable
deductions for federal, state, and local income tax purposes at
least equal to those disallowed because of the inclusion of the
Gross-Up Payment in Executive's adjusted gross income. In the
event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time the
Gross-Up Payment is made, Executive shall repay to the Corporation
at the time that the amount of such reduction in Excise Tax is
finally determined (but, if previously paid to the taxing
authorities, not prior to the time the amount of such reduction is
refunded to Executive or otherwise realized as a benefit by
Executive) the portion of the Gross-Up Payment that would not have
been paid if such Excise Tax had been applied in initially
calculating the Gross-Up Payment, plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed
the amount taken into account hereunder at the time the Gross-Up
Payment is made (including by reason of any payment the existence
or amount of which cannot be determined at the time of the
Gross-Up Payment), the Corporation shall make an additional
Gross-Up Payment in respect of such excess (plus any interest and
penalties payable with respect to such excess) at the time that
the amount of such excess is finally determined.
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The Gross-Up Payment provided for above shall be paid on the 30th
day (or such earlier date as the Excise Tax becomes due and
payable to the taxing authorities) after it has been determined
that the Severance Payments (or any portion thereof) are subject
to the Excise Tax; PROVIDED, HOWEVER, that if the amount of such
Gross-Up Payment or portion thereof cannot be finally determined
on or before such day, the Corporation shall pay to Executive on
such day an estimate, as determined by the Independent Advisors,
of the minimum amount of such payments and shall pay the remainder
of such payments (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code), as soon as the amount thereof
can be determined. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Corporation to
Executive, payable on the fifth day after demand by the
Corporation (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code). If more than one Gross-Up
Payment is made, the amount of each Gross-Up Payment shall be
computed so as not to duplicate any prior Gross-Up Payment.
The Corporation shall have the right to control all proceedings
with the Internal Revenue Service that may arise in connection
with the determination and assessment of any Excise Tax and, at
its sole option, the Corporation may pursue or forego any and all
administrative appeals, proceedings, hearings, and conferences
with any taxing authority in respect of such Excise Tax (including
any interest or penalties thereon); PROVIDED, HOWEVER, that the
Corporation's control over any such proceedings shall be limited
to issues with respect to which a Gross-Up Payment would be
payable hereunder, and Executive shall be entitled to settle or
contest any other issue raised by the Internal Revenue Service or
any other taxing authority. Executive shall cooperate with the
Corporation in any proceedings relating to the determination and
assessment of any Excise Tax and shall not take any position or
action that would materially increase the amount of any Gross-Up
Payment hereunder.
6. MITIGATION.
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Executive shall not be required to mitigate damages or the amount
of any payment provided for under this Agreement by seeking other
employment or otherwise, and compensation earned from such
employment or otherwise, and compensation earned from such
employment or otherwise shall not reduce the amounts payable under
this Agreement. No amounts payable under this Agreement shall be
subject to reduction or offset in respect of any claims which the
Corporation (or any other person or entity) may have against
Executive.
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7. INDEMNIFICATION; DIRECTORS' AND OFFICERS' LIABILITY INSURANCE.
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Executive shall, after the Termination Date, retain all rights to
indemnification under applicable law or under the Corporation's
Certificate of Incorporation or By-Laws, as they may be amended or
restated from time to time. In addition, the corporation shall
maintain Directors' and Officers' liability insurance on behalf of
Executive, at the level in effect immediately prior to the
Termination Date, for two years following the Termination date,
and throughout the period of any applicable statute of
limitations.
8. TERMINATION FOR CAUSE.
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Nothing in this Agreement shall be construed to prevent the
Corporation from terminating Executive's employment for Cause. If
Executive is terminated for Cause, the Corporation shall have no
obligation to make any payments under this Agreement, except for
payments that may otherwise be payable under then existing
employee benefit plans, programs and arrangements of the
Corporation.
9. DISPUTES.
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Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in New
York, New York, or, at the option of Executive, in the county and
state where Executive then resides, in accordance with the Rules
of the American Arbitration Association then in effect, except
that if Executive institutes an action relating to this Agreement,
Executive may, at Executive's option, bring that action in a court
of competent jurisdiction. Judgment may be entered on an
arbitrator's award relating to this Agreement in any court having
jurisdiction.
10. COSTS OF PROCEEDINGS.
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The Corporation shall pay all costs and expenses, including
attorneys' fees and disbursements, at least monthly, of Executive
in connection with any legal proceeding (including arbitration)
instituted by the Executive for breach of any provision of this
Agreement by the Corporation in which the Executive is the
prevailing party. If Executive does not prevail on such claim for
breach, Executive shall pay all costs and expenses, including
attorney's fees and disbursements, of Executive, including
repayment to the Corporation of any amounts paid to or on behalf
of Executive pursuant to the preceding sentence. The Corporation
shall pay pre-judgment interest on any money judgment obtained by
Executive as a result of such a proceeding, calculated at the
prime rate of Chemical Bank, N.A., as in effect from time to time,
from the date that payment should have been made to Executive
under this Agreement.
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11. NOTICE.
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Any notice required or permitted to be given by this Agreement
shall be effective only if in writing, delivered personally
against receipt therefor or mailed by certified or registered
mail, return receipt requested, to the parties at the address
herein after set forth, or at such other places that either party
may designate by notice to the other.
Notice to the Corporation shall be addressed to:
Xxxxx & Co., Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: President
Notice to Executive shall be addressed to him or her at the
Corporation, with a copy to his or her home address at:
A copy of any notice to Executive shall also be sent to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Notices shall be deemed effectively given five (5) days after
deposited in a post office box under the exclusive control of the
United States Postal Service.
12. ASSIGNMENT.
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Except as otherwise provided herein, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the
Corporation and Executive and their respective heirs, legal
representatives, successors and assigns. If the Corporation shall
be merged into or consolidated with another entity, the provisions
of this Agreement shall be binding upon and inure to the benefit
of the entity surviving such merger or resulting from such
consolidation. The Corporation will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets
of the Corporation by agreement in form and substance satisfactory
to Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession
had taken place. The provisions of this Section 12 shall continue
to apply to each subsequent employer of Executive hereunder in the
event of any subsequent merger, consolidation or transfer of
assets of such subsequent employer.
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13. WITHHOLDING.
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Notwithstanding the provisions of Section 6 hereof, the
Corporation may, to the extent required by law, withhold
applicable federal, state and local income and other taxes from
any payments due to Executive hereunder.
14. APPLICABLE LAW.
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This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts
made and to be performed therein.
15. ENTIRE AGREEMENT; AMENDMENT.
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This Agreement constitutes the entire agreement between the
parties and, except as expressly provided herein, supersedes all
other prior agreements concerning the effect of a Change of
Control Event on the relationship between the Corporation and
Executive. This Agreement may be changed only by a written
agreement executed by the Corporation and Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the ___ day of __________, 1999.
XXXXX & CO., INC.
By
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Xxxxxx X. Xxxxxxx
Chairman & CEO
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Executive
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SCHEDULE A
CERTAIN DEFINITIONS
As used in this Agreement, and unless the context requires a
different meaning, the following terms, when capitalized, have the
meaning indicated:
"BASE SALARY" means Executive's annual rate of base salary in
effect on the date of the Change of Control Event or the
Termination Date, whichever is higher.
"CAUSE" means either of the following:
(a) Executive's willful malfeasance or nonfeasance having a
material adverse effect on the Corporation; PROVIDED,
that any action or refusal by Executive shall not
constitute "Cause" if, in good faith, Executive believed
such action or refusal to be in, or not opposed to, the
best interests of the Corporation or if Executive shall
be entitled, under applicable law or under an
Corporation's Certificate of Incorporation or By-Laws, as
they may be amended or restated from time to time, to be
indemnified with respect to such action or refusal.
(b) Executive's conviction of a felony.
"CHANGE OF CONTROL EVENT" means any of the following:
(a) a change is proposed by the stockholders of the
Corporation as to the number of members, or incumbent
membership of the Corporation's Board of Directors such
that the incumbent members of said Board of Directors
immediately prior to such change would not longer
constitute at least a majority of the Board of Directors
after such change, and such proposal is enacted; or the
Board of Directors as constituted immediately prior to
any action by the Corporation's stockholders with respect
to such proposal determines that such proposal, if
enacted, would constitute a change in control of the
Corporation, and such proposal is enacted;
(b) any determination is made by the Board of Directors of
the Corporation that there has been a change in the
control of the Corporation because a person (as such
term us used in Section 13(d) of the Securities
Exchange Act of 0000, (xxx "Xxxxxxxx Xxx")), together
with such person's affiliates (as such term is defined
in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act), has become, at any date after
the date of this Agreement, and is not on the date
hereof, the beneficial owner (as such term is defined
in Rule 13d-3 of the General rules and Regulations
under the Exchange Act), directly or indirectly of 10%
or more of the voting power of the Corporation's
then outstanding securities;
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(c) any person (other than (i) any employee stock
ownership trust or similar entity created by the
Corporation for the benefit of its employees, (ii) an
underwriter participating in a public offering of
stock of the Corporation or (iii) an entity owned
by the Corporation's stockholders in substantially
the same proportions as their ownership of stock of
the Corporation prior to an acquisition of stock
of the Corporation by such entity in connection
with a reorganization), together with its affiliates,
has become, at any date after the Effective Date, and
is not on the date hereof, the beneficial owner,
directly or indirectly, of 33% or more of the voting
power of the Corporation's then outstanding
securities entitled generally to vote for the election
of the Corporation's directors; or
(d) the approval by the stockholders of the Corporation of
(i) the sale of all or substantially all the assets of
the Corporation, (ii) a liquidation of the Corporation or
(iii) the merger or consolidation of the Corporation with
any other corporation, unless the incumbent members of
the Board of Directors of the corporation as constituted
immediately prior to such merger of consolidation shall
constitute at least a majority of the directors of the
surviving parent (as such term is defined in Rule 12b-2
of the General Rules and Regulations under the Exchange
Act) of such corporation.
Any determination of the occurrence of any Change of Control Event made in good
faith by the Board of Directors of the Corporation, on the basis of information
available at the time to it, shall be conclusive and binding for all purposes of
this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CORPORATION" means Xxxxx & Co., Inc. and its subsidiaries
and affiliates and, after a Change of Control Event, any successor or
successor thereto.
"CALENDAR YEAR" means January 1st to December 31st.
"GOOD REASON" means any of the following actions, without
Executive's express prior written approval, other than due to Executive's
Permanent Disability or death:
(a) any substantial diminution without the consent of
Executive, in Executive's titles, duties,
responsibilities, status or reporting relationship from
the positions, duties, responsibilities, status or
reporting relationship existing immediately prior to a
Change of Control Event;
(b) the removal of Executive from, or any failure to
re-elect Executive to, any of the positions Executive
holds immediately prior to a Change of Control Event;
(c) the failure of the Corporation to pay Executive's Base
Salary when due;
(d) any reduction of Executive's Base Salary or reduction of
Executive's Target Bonus;
(e) a material reduction in Executive's employee or fringe
benefits;
(f) the change of Executive's principal place of employment
to a location outside of the New York metropolitan area;
or
(g) any material breach by the Corporation of any provision
of this Agreement.
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"PERMANENT DISABILITY" means Executive's inability, by reason
of any physical or mental impairment, to substantially perform
the significant aspects of his regular duties which inability
is reasonably contemplated to continue for at least one (1)
year from its incurrence.
"TARGET BONUS" means the annual bonus payable to Executive for
the Corporation's Fiscal Year in which a Change of Control
Event occurs, calculated on the assumption that Executive and
those subsidiaries, divisions or business units within the
Corporation of whose performance Executive's bonus depends
achieve the applicable target performance goals established
under the applicable bonus plan with respect to that year. If
no target performance goals for the year in which the Change
of Control Event occurs have been set prior to the Change of
Control Event, the Target Bonus shall be determined by
substituting, in the previous sentence, the prior year for the
year in which a Change of Control Event occurs.
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