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EXHIBIT 10.28
REEBOK INTERNATIONAL LTD.
CHANGE OF CONTROL AGREEMENT
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AGREEMENT, made this 1st day of January, 1997 by and between Xxxxxx Xxxxx
("Executive") and Reebok International Ltd. (the "Company"),
WITNESSETH
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its shareholders
for the Company to agree to provide benefits under circumstances described below
to Executive; and
WHEREAS, the Board recognizes that the possibility of a change of control
of the Company, followed by a termination of the Executive's employment or a
reduction in his responsibility or compensation, is unsettling to the Executive
and wishes to make arrangements at this time to help assure his continuing
dedication to his duties to the Company and its shareholders, notwithstanding
any attempts by outside parties to gain control of the Company; and
WHEREAS, the Board believes it important, should the Company receive
proposals from outside parties, to enable the Executive, without being
distracted by the uncertainties of his own employment situation, to perform his
regular duties,
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
1. In the event that any individual, corporation, partnership, company, or
other entity (a "Person"), which term shall include a "group" (within the
meaning of section 13(d) of the Securities Exchange Act of 1934 (the "Act")),
begins a tender or exchange offer, circulates a proxy to the Company's
shareholders, or takes other steps to effect a "Change of Control" (as defined
in paragraph 3 below), Executive agrees that he will not voluntarily leave the
employ of the Company and will render the services contemplated in the recitals
to this Agreement until such Person has terminated the efforts to effect a
Change of Control or until a Change of Control has occurred.
2. If, within 12 months following a Change of Control, Executive's employment
with the Company terminates (i) on an involuntary basis, other than as a result
of the death, total disability or retirement of the Executive at or after his
normal retirement date and other than for "Cause" (as defined in para-
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graph 4 below), or (ii) on a voluntary basis following any downgrading of
Executive's responsibilities or compensation or removal of or reduction in title
from that in effect immediately preceding the Change in Control, then, subject
to Executive's willingness to remain in the employ of the Company or its
successor for at least six months after the Change of Control to assist in the
transition and further subject to Section 5 below:
a. the Company will pay to Executive within 30 days of such termination
of employment a lump-sum cash payment equal to 400% of the aggregate
of his current annual base salary and his cash bonus for the most
recent calendar year ended before the Change of Control; and
b. all of Executive's outstanding stock options, restricted shares and
other similar incentive interests and rights will become immediately
and fully vested and exercisable; and
c. Executive, together with his dependents, will continue following
such termination of employment to participate fully, at no cost to
him or them, in all accident and health plans maintained or
sponsored by the Company immediately prior to the Change of Control,
or receive substantially the equivalent coverage (or the full value
thereof in cash) from the Company, until the first anniversary of
such termination; and
d. the Company will promptly reimburse Executive for any and all legal
fees and expenses incurred by him as a result of such termination of
employment, including without limitation all fees and expenses
incurred to enforce the provisions of this Agreement.
3. A Change of Control will occur for purposes of this Agreement if (i) any
Person who does not currently own directly or indirectly 5% or more of the
combined voting power of the Company's outstanding securities becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act) of securities of the
Company representing more than 30% (or, if higher, the aggregate percentage of
the combined voting power of the Company's then-outstanding securities held by
or for the benefit of Xxxx Xxxxxxx and his family) of the combined voting power
of the Company's then-outstanding securities, (ii) there is a change of control
of the Company of a kind which would be required to be reported under Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Act (or a similar item
in a similar schedule or form), whether or not the Company is then subject to
such reporting requirement, (iii) the Company is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board in office immediately prior to such
transaction or event constitute less than a majority of the Board thereafter, or
(iv) individuals who,
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at the date hereof, constitute the Board (the "Continuing Directors") cease for
any reason to constitute a majority thereof, PROVIDED, HOWEVER, that any
director who is not in office at the date hereof but whose election by the Board
or whose nomination for election by the Company's shareholders was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the date hereof or whose election or nomination for election
was previously so approved shall be deemed to be a Continuing Director for
purposes of this Agreement.
Notwithstanding the foregoing provisions of this paragraph 3, a "Change of
Control" will not be deemed to have occurred if the initiation of any of the
events described in the preceding paragraph is by or with the concurrence of the
Company (acting by its Continuing Directors), nor shall a Change of Control be
deemed to have occurred solely because of (i) the acquisition of securities of
the Company (or any reporting requirement under the Act relating thereto) by an
employment benefit plan maintained by the Company for its employees or (ii)
the occurrence of a leveraged buy-out or recapitalization of the Company in
which Executive participates as an equity investor.
4. "Cause" means only: commission of a felony by the Executive or conviction
of the Executive for a crime involving moral turpitude.
5. a. Notwithstanding any other provision of this Agreement, and except as
provided in subparagraph (b) below, the payments or benefits to
which Executive will be entitled under this Agreement will be
reduced to the extent necessary so that Executive will not be liable
for the federal excise tax levied on certain "excess parachute
payments" under section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code").
b. The limitation of subparagraph (a) will not apply if:
i. the difference between (i) the present value of all payments
to which Executive is entitled under this Agreement determined
without regard to subparagraph (a) above, less (ii) the present
value of all federal, state and other income and excise taxes for
which Executive is liable as a result of such payments; exceeds
ii. the difference between (i) the present value of all payments
to which Executive is entitled under this Agreement calculated as if
the limitation of subparagraph (a) above applies, less (ii) the
present value of all federal, state and other income and excise
taxes for which Executive is liable as a result of such reduced
payments.
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Present values will be determined using the interest rate specified in section
280G of the Code and will be the present values as of the date specified in such
section 280G and the regulations thereunder.
c. Whether payments to the Executive are to be reduced pursuant to
subparagraph (a) above, and the extent to which they are to be so
reduced, will be determined by the Executive whose determination
shall be final and binding upon the Company. Executive may, at the
expense of the Company, hire an accounting firm, law firm or
employment consulting firm selected by Executive to assist him in
such determination.
d. If a reduction is made pursuant to subparagraph (a) above, Executive
will have the right to determine which payments and benefits will be
reduced.
6. If the Company is at any time before or after a Change of Control merged
or consolidated into or with any other corporation or other entity (whether or
not the Company is the surviving entity), or if substantially all of the assets
thereof are transferred to another corporation or other entity, the provisions
of this Agreement will be binding upon and inure to the benefit of the
corporation or other entity resulting from such merger or consolidation or the
acquirer of such assets, and this paragraph 6 will apply in the event of any
subsequent merger or consolidation or transfer of assets.
In the event of any merger, consolidation, or sale of assets described
above, nothing contained in this Agreement will detract from or otherwise limit
Executive's right to participate or privilege of participation in any stock
option or purchase plan or any bonus, profit sharing, pension, group insurance,
hospitalization, or other incentive or benefit plan or arrangement which may be
or become applicable to executives of the corporation resulting from such merger
or consolidation or the corporation acquiring such assets of the Company.
In the event of any merger, consolidation or sale of assets described
above, references to the Company in this Agreement shall unless the context
suggests otherwise be deemed to include the entity resulting from such merger or
consolidation or the acquirer of such assets of the Company.
7. All payments required to be made by the Company hereunder to Executive or
his dependents, beneficiaries, or estate will be subject to the withholding of
such amounts relating to tax and/or other payroll deductions as may be required
by law.
8. There shall be no requirement on the part of the Executive to seek other
employment or otherwise mitigate damages in order to be entitled to the full
amount of any payments and benefits to which Executive is entitled under this
Agreement, and the amount of such
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payments and benefits shall not be reduced by any compensation or benefits
received by Executive from other employment.
9. Nothing contained in this Agreement shall be construed as a contract of
employment between the Company and the Executive, or as a right of the Executive
to continue in the employ of the Company, or as a limitation of the right of the
Company to discharge the Executive with or without Cause; the Executive may,
subject to the terms and conditions of this Agreement, have the right to receive
upon termination of his employment the payments and benefits provided in this
Agreement and shall not be deemed to have waived any rights he may have either
at law or in equity in respect of such discharge.
10. No amendment, change, or modification of this Agreement may be made except
in writing, signed by both parties.
Payments made by the Company pursuant to this Agreement shall be in lieu
of severance payments, if any, which might otherwise be available to Executive.
The provisions of this Agreement shall be binding upon and shall inure to
the benefit of Executive, his executors, administrators, legal representatives
and assigns, and the Company and its successors.
The validity, interpretation, and effect of this Agreement shall be
governed by the laws of The Commonwealth of Massachusetts.
The Company shall have no right of set-off or counterclaims, in respect of
any claim, debt, or obligation, against any payments to Executive, his
dependents, beneficiaries or estate provided for in this Agreement.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
No right or interest to or in any payments or benefits hereunder shall be
assignable by the Executive; provided, however, that this provision shall not
preclude him from designating one or more beneficiaries to receive any amount
that may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the person or
persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to his
estate. The term "beneficiaries" as used in this Agreement shall mean a
beneficiary or beneficiaries so designated to receive any such amount, or if no
beneficiary has
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been so designated, the legal representative of the Executive's estate.
No right, benefit, or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt, or obligation, or to
execution, attachment, levy, or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void, and of no effect.
IN WITNESS WHEREOF, Reebok International Ltd. and Executive have each
caused this Agreement to be duly executed and delivered as of the date set forth
above.
REEBOK INTERNATIONAL LTD.
By: /s/ XXXX XXXXXXX
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Xxxx Xxxxxxx
Chairman and Chief Executive
Officer
Agreed:
/s/ XXXXXX XXXXX
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Xxxxxx Xxxxx
