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EXHIBIT 10.5(b)
INCENTIVE COMPENSATION AGREEMENT dated as of March 14, 2000 (this "Agreement")
between:
(a) TELEX COMMUNICATIONS GROUP, INC., a Delaware corporation (the "Company");
(b) XXX X. XXXXXXX ("Xxxxxxx").
Certain capitalized terms used in this Agreement shall have the meanings given
such terms on Schedule A hereto, unless otherwise defined herein.
Witnesseth:
Whereas, the Company has requested that Xxxxxxx serve as President of the
Company; and
Whereas, in order to inducement Xxxxxxx to serve as the President of the
Company, the Company proposes to executed and deliver this Agreement.
Now, therefore, in consideration of the mutual benefits to be derived and the
representations and warranties, conditions and promises herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Triggering Event Incentive Payment.
(a) Upon the occurrence of a Triggering Event, Xxxxxxx shall be entitled
to receive from the Company a payment in cash (the "Triggering Event
Incentive Payment") in an amount determined by multiplying (i) an
amount equal to the Greenwich Proceeds less $141 million and an
allocable portion of the amount of the Triggering Event Incentive
Payment, by (ii) the Applicable Percentage.
(b) The "Applicable Percentage" shall be determined as set forth below
based on the indicated Greenwich Proceeds:
Greenwich Proceeds Applicable Percentage
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Not greater than $200 million 1%
Greater than $200 million 2%
The calculation of the Triggering Event Incentive Payment is
illustrated on Schedule B hereto.
(c) A "Triggering Event" shall be deemed to have occurred if the Company
shall have effected any of the following transactions:
(i) (A) a merger or consolidation of the Company resulting in the
holders of the Common Stock of the Company as of immediately
prior to such transaction ceasing to own as of immediately
after the transaction more than 80% of the Common Stock of the
Company or its successor; or (B) a sale of all or
substantially all of the assets of the Company, including
without limitation a sale by
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the Company of more than 80% of the Common Stock of Telex
Communications, Inc.;
(ii) a sale or transfer by Greenwich I, LLC and/or Greenwich II,
LLC (other than transfers by Greenwich II, LLC to any
"Permitted Assignee" (as defined in the Stockholders and
Registration Rights Agreement as amended and restated as of
May 6, 1997), and other than transfers by Greenwich I, LLC to
any Person who would be a Permitted Assignee of Greenwich I,
LLC under the same definition if applied to Greenwich I, LLC),
together with sales and transfers by any Permitted Assignees,
in one or more transactions, of shares of the Common Stock
which represents more than 50% of shares of the Common Stock
owned by them as of the date hereof; or
(iii) a recapitalization of the Company resulting in a distribution
of cash or property to the holders of the Common Stock (a
"Recapitalization") and Greenwich Proceeds in an amount
greater than the sum of $141 million and an allocable portion
of the amount of the Triggering Event Incentive Payment that
would be payable upon the occurrence of such Triggering Event.
(d) "Greenwich Proceeds" shall mean the aggregate purchase price,
or exchange or conversion consideration, or distributions of cash or
property, received by Greenwich I, LLC and Greenwich II, LLC
(together "Greenwich"), in the Triggering Event, in respect of the
Common Stock and the Series A Pay-in-Kind Preferred Stock, par value
$0.01 per share (the "PIK Preferred Stock"), of the Company owned by
Greenwich). In the event that a Triggering Event shall occur
subsequent to the occurrence of a Recapitalization (where such
previous Recapitalization did not itself constitute a Triggering
Event), Greenwich Proceeds in the Triggering Event shall include also
any distributions of cash or property to Greenwich in respect of the
Common Stock or the PIK Preferred Stock made in connection with the
prior Recapitalization. In the event of the occurrence of another
Triggering Event subsequent to a Recapitalization which was a
Triggering Event, the Triggering Event Incentive Payment and the
Applicable Percentage shall be recalculated and adjusted, on a
cumulative basis taking into account the prior Recapitalization
Triggering Event and all such other distributions. In the event that
the purchase price or exchange or conversion consideration paid, or
the distributions received, in the transaction includes securities or
assets, the value of such securities or assets for purposes of
determining the Greenwich Proceeds shall be determined by the Board
of Directors of the Company in its reasonable judgment. In such
determination, all of the members of the Board of Directors may
participate notwithstanding that any such director might be
Affiliated or associated with, or have any financial or other
interest or relationship with or in, Greenwich and the vote of such
director shall be counted in such determination.
2. Not an Employment Agreement; Etc.
(a) Nothing contained in this Agreement shall constitute an agreement of
employment between the Company and Xxxxxxx or shall establish any
entitlement of Xxxxxxx to employment by the Company.
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(b) The rights of Xxxxxxx under this Agreement shall terminate,
and his entitlement to the Triggering Event Incentive Payment shall
be automatically forfeited: (i) as of the date of the voluntary
resignation by Xxxxxxx as President, the death of Xxxxxxx or the
removal of Xxxxxxx as President for Cause or because of Xxxxxxx'x
Disability; or (ii) upon the occurrence of any Insolvency Event with
respect to Xxxxxxx. However, if a Triggering Event occurs within one
year following the death of Xxxxxxx or the removal of Xxxxxxx because
of Xxxxxxx'x Disability, and if the Triggering Event Incentive
Payment would have been payable to Xxxxxxx but for his death, then
the estate of Xxxxxxx shall be entitled to receive the Triggering
Event Incentive Payment.
3. Miscellaneous.
(a) This Agreement contains the entire agreement between the parties
hereto with respect to the Triggering Event Incentive Payment and
supersedes all prior arrangements or understandings with respect
thereto.
(b) The descriptive headings of this Agreement are for convenience only
and shall not control or affect the meaning or construction of any
provision of this Agreement.
(c) All notices or other communications which are required or permitted
under this Agreement shall be in writing and sufficient if delivered
personally or sent by facsimile transmission, internationally
recognized over-night courier or registered or certified mail,
postage prepaid, addressed as follows:
If to the Company: with a copy to:
0000 Xxxxxxx Xxxxxx Xxxxx Dechert Price & Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000 00 Xxxxxxxxxxx Xxxxx
Attention: Xxxx Xxxxx New York. New York 10112
General Counsel Attention: Xxxxxx X. Xxxxxx
Fax: 000-000-0000 Fax: (000) 000-0000
If Xxxxxxx:
0000 Xxxx Xxxxx Xxxxx
Xxxx Xx. Xxxx, Xxxxxxxxx 00000
Fax : 000-000-0000
Any such notices or communications shall be deemed to have been
received: (i) if delivered personally or sent by facsimile
transmission (with transmission confirmed in a writing) or nationally
recognized overnight courier; or (ii) if sent by registered or
certified mail, on the date on which such mailing was received by the
party to whom it was addressed. Any party may by notice as aforesaid
change the address to which notices or other communications to it are
to be delivered or mailed.
(d) This Agreement shall be governed by and construed in accordance with
the Laws of the State of New York (other than the choice of law
principles thereof).
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(e) Any action, suit or other proceeding initiated by any party hereto
against the others under or in connection with this Agreement may be
brought in any Federal or state court in the State of New York, as
the party bringing such action, suit or proceeding shall elect,
having jurisdiction over the subject matter thereof. The parties
hereto hereby submit themselves to the jurisdiction of any such court
for the purpose of any such action and agree that service of process
on them in any such action, suit or proceeding may be effected by the
means by which notices are to be given to it under this Agreement.
(f) The parties hereto acknowledge that the award of damages for any
breach of the obligations undertaken by the parties hereto may be
insufficient and inadequate and that the parties hereto shall be
entitled to obtain specific performance of the obligations of the
other parties under this Agreement or other injunctive relief, in
addition to damages.
(g) Except as provided in the last sentence of Section 2(b) hereof, the
rights of Xxxxxxx under this Agreement are personal to Xxxxxxx, and
may not be assignable by Xxxxxxx, and any purported assignment by
Xxxxxxx shall be void.
(h) Any waiver of any term or condition of this Agreement, or any
amendment or supplementation of this Agreement, shall be effective
only if in writing. A waiver of any breach or failure to enforce any
of the terms or conditions of this Agreement shall not in any way
affect, limit or waive a party's rights under this Agreement at any
time to enforce strict compliance thereafter with every term or
condition of this Agreement.
(i) In the event that any provision contained in this Agreement shall be
determined to be invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such
provision in every other respect and the remaining provisions of this
Agreement shall not, at the election of the party for whose benefit
the provision exists, be in any way impaired.
(j) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement or the terms hereof to produce or
account for more than one of such counterparts.
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In witness whereof, the undersigned have executed this Agreement as of the date
first above written.
TELEX COMMUNICATIONS GROUP, INC. XXXXXXX:
By:
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Xxxxx X. Xxxxxxx, Xx. Xxx X. Xxxxxxx
Chairman of the Board of Directors
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SCHEDULE A TO INCENTIVE COMPENSATION AGREEMENT
Certain Definitions
For purposes of this Agreement, the following terms shall have the following
meanings:
"Affiliate" shall mean as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person and, if such Person is an individual, shall mean also any member of the
immediate family (including parents, spouse, children and grandchildren) of such
individual and any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is controlled by any
such member or trust. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of the management or policies (whether through the ownership of
securities or partnership or other ownership interests, by contract or
otherwise); and any Person which owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 10% or more of a partnership or other
ownership interest of any other Person will be deemed to control such
corporation or other Person.
"Agreement" shall mean this Agreement, as it may be amended or supplemented at
any time and from time to time after the date hereof.
"Applicable Percentage" shall have the meaning given such term in Section 1(b)
hereof.
" Cause", when used with respect to the removal of Xxxxxxx as President of the
Company, shall have the meaning given such term in the Employment Agreement
dated as of August 26, 1998 between the Company and Xxxxxxx.
"Common Stock" shall mean the Common Stock, par value $0.0005 per share, of the
Company, together with any shares of the capital stock of the Company issued in
substitution therefor.
"Company" shall mean Telex Communications Group, Inc. and any successor Telex
Communications Group, Inc. whether by merger, law or otherwise.
"Disability", when used with respect to the removal of Xxxxxxx as President of
the Company, shall have the meaning given such term in the Employment Agreement
dated as of August 26, 1998 between the Company and Xxxxxxx.
"Greenwich" and "Greenwich Proceeds" shall have the meaning given such term in
Section 1(e) hereof.
"Insolvency Event" shall mean and include any of the following affecting
Xxxxxxx: bankruptcy; reorganization; insolvency proceeding; receivership;
appointment of a trust or conservatorship; foreclosure on or seizure of assets;
enforcement of any lien, mortgage, collateral assignment or similar agreement or
security interest on any assets; liquidation or dissolution; suspension or
withdrawal of any banking or loan privileges or arrangements; or any similar
proceeding or action affecting Xxxxxxx or any of the assets of Xxxxxxx.
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"Xxxxxxx" shall have the meaning given such term at the beginning of this
Agreement.
"Person" shall mean shall mean: any corporation, partnership, joint venture,
trust, unincorporated association or organization, business, enterprise, or
other entity; any individual; and any Government.
"PIK Preferred Stock" shall have the meaning given such terms in Section 1(d)
hereof.
"Recapitalization" shall have the meaning given such terms in Section 1(c)(iii)
hereof.
"Related Persons" when used with respect to any other Person shall mean and
include: members of the family of such Person (including without limitation
natural and adopted children, parents, grand-parents, siblings and children of
siblings); the estate of such Person upon such Person's death; descendents of
such Person; and trusts or similar entities created for the benefit of such
Person or any Related Person.
"Triggering Event" shall have the meaning given such term in Section 1(c)
hereof.
"Triggering Event Incentive Payment" shall have the meaning given such term in
Section 1(a) hereof.
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SCHEDULE B TO INCENTIVE COMPENSATION AGREEMENT
FORMULA FOR CALCULATION OF XXXXXXX INCENTIVE COMPENSATION
G = Greenwich Proceeds
P = The percentage of the outstanding Common Stock of Telex held by
Greenwich as of immediately prior to the Triggering Event
J = Incentive Payment to Xxxxxxx
BASIC FORMULA ASSUMING G IS NOT GREATER THAN $200 MILLION:
J = (G - 141,000,000 - (P x J)) x 0.01
or
J = (0.01G - 1,410,000) (1 + (0.01 x P))
For example, if the Greenwich Proceeds before calculation of the Triggering
Event Incentive Payment is $200 million, and assuming that the percentage of the
outstanding Common Stock of Telex held by Greenwich is 96.1227%, then the
Triggering Event Incentive Payment would be $584,382.76.
BASIC FORMULA ASSUMING G IS GREATER THAN $200 MILLION:
J = (G - 141,000,000 - (P x J)) x 0.02
or
J = (0.02G - 1,410,000) (1 + (0.02 x P))
For example, if the Greenwich Proceeds before calculation of the Triggering
Event Incentive Payment is $250 million, and assuming that the percentage of the
outstanding Common Stock of Telex held by Greenwich is 96.1227%, then the
Triggering Event Incentive Payment would be $2,138,881.00.
