Exhibit 10.9
TERMINATION PROTECTION AGREEMENT
WHEREAS, a Termination Protection Agreement (the "Agreement") was entered
into between Xxxx Xxxx ("Executive") and Xxxxxx and Xxxxx Corporation and its
successors and assigns (the "Company") effective October 2, 2006; and
WHEREAS, Company and Executive desire to amend and restate the Agreement,
effective October 2, 2006, to comply with section 409A of the Internal Revenue
Code of 1986, as amended and the final regulations issued thereunder; and
WHEREAS, the Board has approved the terms and provisions of this Agreement
at its meeting on September 5, 2007;
NOW, THEREFORE, the Company and Executive hereby agree as follows:
1. Defined Terms.
Unless otherwise indicated herein, capitalized terms used in this Agreement
which are defined in Schedule A shall have the meanings set forth in Schedule A.
The Company and Executive both agree that the definition of "Change in
Control" listed in Schedule A shall be used for Executive in any and all plans,
programs or agreements in which Executive participates or to which Executive is
a party in lieu of any similar definition used in such plans, programs or
agreements.
2. Effective Date; Term.
This Agreement commenced on October 2, 2006 (the "Effective Date") with an
original term ending October 2, 2009; provided, however, that the term of this
Agreement shall automatically be extended for one additional year beyond October
2, 2006(sic) and for successive one year periods thereafter, unless, not later
than January 30 of the third calendar year preceding the year in which the term
would otherwise automatically extend (e.g., 2007 for the 2010 calendar year,
2008 for the 2011 calendar year, etc.), the Company shall have given written
notice to Executive that it does not wish to extend this Agreement for an
additional year, in which event this Agreement shall continue to be effective
until December 31 of the calendar year immediately preceding the calendar year
in which the term would have otherwise automatically extended; provided,
further, that, notwithstanding any such notice by the Company not to extend, if
a Change in Control occurs during the original or any extended term of this
Agreement, this Agreement shall remain in effect for a period of three (3) years
after such Change in Control.
3. Change in Control Benefits.
Executive shall be entitled to the benefits provided under this Agreement
if a Triggering Event occurs. In the event that Executive's employment is
terminated as a result of death or Disability, Executive shall not be entitled
to the benefits provided in this Section 3; however, Executive and/or
Executive's family shall be entitled to receive benefits at least equal to the
most favorable benefits provided by the Company under its plans, programs and
policies relating to death and/or disability benefits as in effect at any time
during the 90-day period immediately preceding the earlier of the Change in
Control or the Termination Date.
(a) Severance Payment. The Company shall pay Executive the aggregate of the
following amounts in one lump sum on the Payment Date:
(i) to the extent not paid before the Payment Date in accordance with
the Company's ordinary payroll practices, Executive's earned but unpaid base
salary through the date of the Triggering Event at the rate in effect on the
date of such Triggering Event, or if higher, at the highest rate in effect at
any time within the 90-day period preceding the Change in Control;
(ii) to the extent not paid before the Payment Date in accordance with
the terms of the Company's bonus plan, any unpaid annual bonus payable to
Executive in respect of the calendar year ending prior to the Triggering Event
(but not less than the Average Bonus);
(iii) an amount determined by multiplying the Average Bonus by a
fraction, the numerator of which is the number of days elapsed in the calendar
year in which the Triggering Event occurs up to and including the date of such
Triggering Event and the denominator of which is 365;
(iv) a lump sum amount, in cash, equal to three (3) times Executive's
Annual Compensation;
(v) any unpaid earned and/or accrued vacation, and
(vi) interest, for the period beginning on the date of the Triggering
Event and ending on the Payment Date at a rate equal to one hundred twenty (120)
percent of the monthly, compounded applicable federal rate, as in effect under
Section 1274(d) of the Code for the month before the month in which the
Triggering Event occurs.
Notwithstanding the foregoing, if the unpaid base salary or any
portion thereof or the unpaid annual bonus or any portion thereof is subject to
a deferral election or the bonus is subject to Section 409A of the Code, such
amount shall be paid in accordance with the terms of such election and/or the
terms of the plan pursuant to which such amount was deferred.
(b) Health Care Coverage. The Company shall provide medical, prescription
drug and dental coverage at the Company's expense to Executive and, as
applicable, Executive's family members eligible for such coverage until the
third anniversary of the Termination Date and for 18 months thereafter at
Executive's expense. Executive's cost shall be determined on the same basis as
the premium cost is determined for COBRA coverage. The level of coverage to be
provided shall be no less than the level of coverage provided immediately before
the earlier of the Termination Date or the Change in Control. With respect to
amounts subject to Section 409A of the Code, the Reimbursement and In-Kind
Benefit Rule shall apply. If Executive becomes employed by a new employer, the
coverages provided by Company under this Section 3(b) shall become secondary to
those coverages provided by Executive's new employer.
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(c) Other Welfare Benefits. The Company shall provide disability, group
term life and accidental death and dismemberment insurance at the Company's
expense to Executive until the third anniversary of his Termination Date. The
level of coverage to be provided shall be no less than the level of coverage
provided immediately before the earlier of the Termination Date or the Change in
Control. To the extent that any such benefit is subject to Section 409A of the
Code and to the Delayed Payment Date, Executive shall be responsible for the
payment of all expenses, including, but not limited to, the cost of the premiums
for such coverage until the Delayed Payment Date. The Company shall reimburse
Executive on the Delayed Payment Date for all such costs and expenses incurred
prior to such Delayed Payment Date, provided proof of payment has been provided
and shall assume the obligation to pay all future costs and expenses until the
third anniversary of the Termination Date. The Reimbursement and In-Kind Benefit
Rule shall apply to amounts subject to Section 409A of the Code.
(d) Full Vesting of All Stock Options and Restricted Shares.
Notwithstanding any provision to the contrary in the Company's equity incentive
plans (the "Equity Plans") or any award agreement under the Equity Plans, (i)
any outstanding, unexercisable stock options or unvested restricted shares shall
become fully exercisable and vested as of the Termination Date and (ii) all
stock options, whether or not such stock options first become exercisable
pursuant to this Agreement, shall remain exercisable until the earlier of (A)
the tenth anniversary of the original date of grant or (B) the latest date upon
which the option could have expired by its original terms under any
circumstances; provided, however, that this sentence shall not restrict the
Company's ability to adjust or settle outstanding stock options pursuant to the
terms of the Equity Plans, so long as Executive is treated in any such
adjustment or settlement no less favorably than any other employee of the
Company.
(e) Retirement Benefits. Executive shall be entitled to receive retirement
benefits in accordance with the provisions of the Company's Executive Retirement
Plan.
(f) Outplacement Services. The Company shall pay the reasonable expenses
incurred with respect to executive outplacement services by any one qualified
outplacement agency selected by Executive and reasonably satisfactory to the
Company from the Termination Date until the first anniversary of the Termination
Date.
(g) Grantor Trust. Within ninety (90) days following execution of this
Agreement, the Company shall establish a grantor trust, known as a rabbi trust,
which shall provide for the Company to make an irrevocable contribution to fully
fund the cash payments provided for under this Agreement in the event of a
Change in Control. Notwithstanding the foregoing, such funding shall not be
required if it would result in the imposition of additional tax under Section
409A(b)(5) of the Code.
4. Mitigation.
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 shall not
reduce the amounts otherwise payable under this Agreement. No amounts payable
under this Agreement shall be subject to reduction or offset in respect of any
claims which the Company (or any other person or entity) may have against
Executive.
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5. Code Section 4999 Tax Gross-Up.
(a) In the event that any payment or benefit received or to be received by
Executive pursuant to the terms of this Agreement (the "Contract Payments") or
otherwise in connection with Executive's termination of employment or contingent
upon a change in ownership or control pursuant to any plan or arrangement or
other agreement with the Company (or any affiliate), ("Other Payments" and,
together with the Contract Payments, the "Payments") would be subject to the
excise tax (the "Excise Tax") imposed by Section 4999 of the Code, as determined
as provided below, the Company shall pay to Executive, at the time specified in
Section 5(b) below, an additional amount (the "Gross-Up Payment") such that the
net amount retained by Executive, after deduction of the Excise Tax on the
Payments and any federal, state and local income or other tax and excise tax
upon the payment provided for by this Section 5(a), and any interest, penalties
or additions to tax payable by Executive with respect thereto, shall be equal to
the total value of the Payments at the time such Payments are to be made. For
purposes of determining whether any of the Payments will be subject to the
Excise Tax and the amounts of such Excise Tax, (1) the total amount of the
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,
except to the extent that, in the opinion of independent tax counsel selected by
the Company's independent auditors and reasonably acceptable to Executive ("Tax
Counsel"), a Payment (in whole or in part) does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, or such "excess
parachute payments" (in whole or in part) are not subject to the Excise Tax, (2)
the amount of the Payments that shall be treated as subject to the Excise Tax
shall be equal to the lesser of (A) the total amount of the Payments or (B) the
amount of "excess parachute payments" within the meaning of Section 280G(b)(1)
of the Code (after applying clause (1) hereof), and (3) the value of any
non-cash benefits or any deferred payment or benefit shall be determined by Tax
Counsel in accordance with the principles of Sections 280G(d)(3) and (4) of the
Code. For purposes of this Section 5, any additional tax under Section 409A of
the Code shall not be taken into account for purposes of determining the amount
of any payment due to or on behalf of Executive.
(b) The Gross-Up Payments provided for in Section 5(a) hereof shall be made
upon the earlier of (i) the payment to Executive of any Payment or (ii) the
imposition upon Executive or payment by Executive of any Excise Tax, provided,
however, if the Gross-Up Payment is subject to the Delayed Payment Date, on the
Delayed Payment Date, if later. In no event shall any amount due to Executive
under this Section 5 be paid later than the end of the Executive's taxable year
following Executive's taxable year in which such taxes are remitted..
(c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 10 business days after Executive is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Executive shall not
pay such claim prior to the expiration of the 30-day period following the date
on which Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:
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(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company and reasonably satisfactory to Executive;
(iii) cooperate with the Company in good faith in order to
effectively contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, but not limited to, additional interest and penalties and
related legal, consulting or other similar fees) incurred in connection with
such contest and shall indemnify and hold Executive harmless, on an after-tax
basis, for any Excise Tax or other tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses. All such costs and expenses incurred due to a tax audit or
litigation addressing the existence of or amount of a tax liability under this
Section 5 shall be paid by the Company within thirty (30) days of the date
payment of such expenses is due or if such payment is subject to the Delayed
Payment Date, on the Delayed Payment Date, if later, but in any event not later
than (A) December 31 of the year following the year in which the taxes are
remitted to the taxing authority, or (B) where as a result of such audit or
litigation no taxes are remitted, December 31 of the year following the year in
which the audit is complete or there is a final and nonappealable settlement or
other resolution of the litigation. Any Gross-Up Payment as a result of any
Excise Tax or other tax (including interest and penalties with respect thereto)
imposed shall be paid at the time of imposition of such Excise Tax or other tax
or if such amount is subject to the Delayed Payment Date, on the Delayed Payment
Date, if later.
(d) The Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct Executive to
pay the tax claimed and xxx for a refund or contest the claim in any permissible
manner, and Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that
if the Company directs Executive to pay such claim and xxx for a refund, the
Company shall reimburse the Executive the amount of the claimed tax within five
(5) days of remittance of such amount to the Internal Revenue Service or, if
such reimbursement is subject to the Delayed Payment Date, on the Delayed
Payment Date, if later and shall indemnify and hold Executive harmless, on an
after-tax basis, from any Excise Tax or other tax (including interest or
penalties with respect thereto) imposed with respect to such reimbursement and
such additional amount shall be paid at the time of imposition of such Excise
Tax or other tax or if such amount is subject to the Delayed Payment Date, on
the Delayed Payment Date, if later; and provided, further, that if Executive is
required to extend the statute of limitations to enable the Company to contest
such claim, Executive may limit this extension solely to such contested amount.
The Company's control of the contest 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, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority. In addition, no position
may be taken nor any final resolution be agreed to by the Company without
Executive's consent if such position or resolution could reasonably be expected
to adversely affect Executive (including any other tax position of Executive
unrelated to the matters covered hereby).
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(e) As a result of any uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Company or the Tax
Counsel hereunder, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made ("Underpayment"), consistent with
the calculations required to be made hereunder. In the event that the Company
exhausts its remedies and Executive thereafter is required to pay to the
Internal Revenue Service an additional amount in respect of any Excise Tax, the
Company or the Tax Counsel shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall promptly be paid by the Company to
or for the benefit of Executive, subject, however, to the requirements of
Section 5(b) regarding time of payment.
(f) If, after the receipt by Executive of the Gross-Up Payment or an amount
reimbursed by the Company under Section 5(d) in connection with the contest of
an Excise Tax claim, Executive receives any refund with respect to such claim,
Executive shall promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If
after the receipt by Executive of an amount reimbursed by the Company in
connection with an Excise Tax claim, a determination is made that Executive
shall not be entitled to any refund with respect to such claim and the Company
does not notify Executive in writing of its intent to contest the denial of such
refund prior to the expiration of 30 days after such determination, such
reimbursement shall not be required to be repaid.
6. 409A Gross-Up Payment.
(a) Subject to the requirements stated in this Section 6, in the event that
amounts hereunder become subject to the additional tax and interest under
Section 409A of the Code ("409A additional tax") as a result of a plan document
failure or an operational failure caused solely by the action or inaction of the
Company (and not at the request of Executive), the Company shall pay to
Executive an amount equal to such 409A additional tax and any additional taxes
imposed upon Executive due to the Company's payment of such 409A additional tax
(a "409A Gross-Up Payment"). In no event, however, shall any amounts become
payable under this Section 6 as a result of compensation required to be included
in gross income by reason of Section 409A(b)(3) of the Code. Subject to the
notification requirements set forth in Section 6(b) in the event the 409A
additional tax is not remitted by withholding, the 409A Gross-Up Payment shall
be paid to Executive within five business days of the date such taxes are
remitted to the applicable taxing authority, or, if the 409A Gross-Up Payment is
subject to the Delayed Payment Date, on the Delayed Payment Date, if later. In
no event shall any amount due to Executive under this Section 6 be paid later
than the end of Executive's taxable year following Executive's taxable year in
which such taxes are remitted.
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(b) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the 409A Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than (10) ten business days after Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, or if the Company notifies
Executive at the time of payment of the 409A Gross-Up Payment under Section 6(a)
that it desires to contest the application of the 409A additional tax (in either
case, a "claim"), Executive shall (i) give the Company any information
reasonably requested by the Company relating to such claim, (ii) take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including ,without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company, (iii) cooperate with the Company in good faith in order
effectively to contest such claim, and (iv) permit the Company to participate in
any proceeding relating to such claim; provided, however, that the Company shall
bear and pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify and hold
Executive harmless, on an after-tax basis, for any income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. All such costs and expenses
incurred due to a tax audit or litigation addressing the existence of or amount
of a tax liability under this Section 6 shall be paid by the Company within
thirty (30) days of the date payment of such expenses is due or, if such payment
is subject to the Delayed Payment Date, on the Delayed Payment Date, if later,
but in any event not later than (A) December 31 of the year following the year
in which the taxes are remitted to the taxing authority, or (B) where as a
result of such audit or litigation no taxes are remitted, December 31 of the
year following the year in which the audit is complete or there is a final and
nonappealable settlement or other resolution of the litigation. Without
limitation on the foregoing provisions of this Section 6(b), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim, and
Executive shall prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of Executive with respect to which such contested amount is claimed
to be due is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which a 409A
Gross-Up Payment would be payable hereunder, and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
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(c) If Executive becomes entitled to receive one or more refunds of all or
any part of the 409A additional tax with respect to which a 409A Gross-Up
Payment was made, Executive shall pay the refund to the Company within five
business days of the receipt of any such refund.
7. Employment Status; No Effect Prior to Change in Control; Termination for
Cause.
(a) Executive and the Company acknowledge and agree that prior to a Change
in Control, Executive's employment is "at will" and may be terminated at any
time, by the Company with or without Cause or by Executive with or without Good
Reason, subject to applicable law. In the event Executive's employment is
terminated for any reason prior to a Change in Control, other than an
Anticipatory Termination Triggering Event, Executive shall have no rights to any
payments or benefits under this Agreement and after any such termination, this
Agreement shall be of no further force or effect.
(b) In the event Executive is terminated for Cause following a Change in
Control, Executive shall have no rights to any payments or benefits under this
Agreement.
8. Indemnification; Director's and Officer's Liability Insurance.
Until the sixth anniversary of the Termination Date and for so long
thereafter as any claim for indemnification asserted on or prior to such date
has not been fully adjudicated (the "Indemnification Period"), the Company shall
indemnify, defend, and hold harmless Executive against all losses, damages,
costs, expenses (including attorneys' fees) or liabilities (including attorneys'
fees) with respect to bona fide claims regarding actions or omissions or alleged
actions or omissions arising out of or relating to performance by Executive of
services for, or in the capacity of Executive as director, officer or employee
of, the Company or any affiliate of the Company which have occurred on or prior
to the Termination Date to the same extent and on the same terms and conditions
(including with respect to advancement of expenses) as permitted under
applicable law and the Company's certificate of incorporation and by-laws as in
effect immediately prior to the earlier of the Termination Date or the Change in
Control. In addition, the Company shall maintain Director's and Officer's
liability insurance (from an insurance company rated not less than A by A.M.
Best Company) and, if Executive served or has served as a fiduciary of any
pension or benefit plan, ERISA fiduciary insurance, on behalf of Executive, at
the level in effect immediately prior to the earlier of the Termination Date or
the Change in Control, for the Indemnification Period.
9. Confidential Information.
Executive acknowledges that any confidentiality agreement entered into by
Executive and the Company remains in full force and effect and survives the
termination of his or her employment with the Company; provided that nothing
contained in such agreement or this Section 9 shall prevent Executive from being
employed by a competitor of any of the Company or utilizing Executive's general
skills, experience, and knowledge, including those developed while employed by
any of the Company or its affiliates.
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10. Disputes.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Memphis, Tennessee or,
at the option of Executive, in the county where Executive then resides, in
accordance with the Rules of the American Arbitration Association then in
effect, except that Executive may, at Executive's option, bring that action in a
court of competent jurisdiction, even if the Company has earlier instituted an
action hereunder. Judgment may be entered on an arbitrator's award relating to
this Agreement in any court having jurisdiction.
11. Costs of Proceedings.
The Company shall pay for all costs and expenses of Executive, at least
monthly, including attorneys' fees and disbursements, in connection with any
legal proceeding (including arbitration), whether instituted by the Company or
by Executive during Executive's lifetime, relating to the interpretation or
enforcement of any provision of this Agreement, except that if Executive
instituted the proceeding and the judge, arbitrator or other individual
presiding over the proceeding affirmatively finds that Executive instituted the
proceeding in bad faith, then Executive shall be required to pay all costs and
expenses of Executive, including attorney's fees and disbursements, and shall
not be entitled to reimbursement and shall reimburse the Company for any amounts
previously paid by the Company to Executive for such costs and expenses. The
Reimbursement and In-Kind Benefit Rule shall apply and if any payment is subject
to the Delayed Payment Date, it shall not be paid prior to the Delayed Payment
Date.
12. Successors and Assigns.
Except as otherwise provided herein, this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the Company and Executive and
their respective heirs, legal representatives, successors and assigns. If the
Company 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 Company shall
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 Company, 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 Company 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 in the event of any
subsequent merger, consolidation or transfer of assets of such subsequent
employer.
13. Withholding.
Notwithstanding the provisions of Sections 4, 5 and 6 hereof, the Company
may, to the extent required by law, withhold applicable federal, state and local
income and other taxes from any payments due to Executive hereunder.
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14. Compliance with Code Section 409A.
This Agreement is intended to comply with the requirements of Section 409A
of the Code and shall be construed and interpreted in accordance therewith in
order to avoid the imposition of additional tax thereunder.
15. Applicable Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Tennessee, without reference to principles of conflicts of
law, applicable to contracts made and to be performed therein.
16. Entire Agreement.
This Agreement constitutes the entire agreement between the parties
regarding severance benefits following a Change in Control and supersedes and
overrides any prior agreement entered into between the Company and Executive
regarding severance benefits following a Change in Control between the Company
and Executive. This Agreement may be changed only by a written agreement
executed by the Company and Executive.
17. Notice.
Notices and all other communications provided for in this Agreement shall
be in writing and shall be deemed to have been duly given when personally
delivered, delivered by a nationally recognized overnight delivery service, or
sent by certified mail, return receipt requested, postage prepaid, addressed to
the respective addresses last given by each party to the other, provided that
all notices to the Company shall be directed to the attention of the Board with
a copy to the Secretary of the Company. All notices and communications shall be
deemed to have been received on the date of delivery thereof or on the third
business day after the mailing thereof, except that notice of change of address
shall be effective only upon receipt.
18. Severability.
The provisions of this Agreement shall be deemed severable, and the
invalidity or unenforceability of any provision hereof shall not affect the
validity or enforceability of the other provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the ____
day of _____________________, 2007.
XXXXXX & XXXXX CORPORATION
By:
------------------------
Name
Title
---------------------------
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:
"Annual Compensation" means the sum of (i) Executive's annual rate of base
salary in effect on the date of the Change in Control or, if higher, the
Termination Date, (ii) the Average Bonus and (iii) Executive's perquisite
allowance for the calendar year immediately prior to the calendar year in which
the earlier of the Termination Date or the Change in Control occurs.
"Anticipatory Termination Triggering Event" means the Executive's
Separation from Service for a reason other than death or Disability before a
Change in Control provided Executive's employment is terminated by the Company
or its affiliates without Cause and Executive reasonably demonstrates that such
Separation from Service was at the request or suggestion of any individual or
entity that is or was attempting to effectuate a Change in Control within the 12
months following such Separation from Service.
"Average Bonus" means the greater of (i) Executive's target bonus for the
calendar year immediately prior to the calendar year in which the earlier of the
Termination Date or the Change in Control occurs or (ii) the highest bonus paid
or payable to Executive in respect of any of the five (5) calendar years
(annualized with respect to any such calendar year for which Executive has been
employed for only a portion thereof) immediately prior to the calendar year in
which the earlier of the Termination Date or the Change in Control occurs.
"Average Long Term Incentive Award" means the sum of (i) the average
Black-Scholes value (as determined by the accountant employed by the Company
immediately prior to the Change in Control) of the annual stock options granted
to Executive during the three calendar years immediately prior to the calendar
year in which the earlier of the Termination Date or the Change in Control
occurs and (ii) the average value of the annual restricted stock awards
(determined by reference to the closing values of the restricted shares on the
dates on which they were granted) granted to Executive during the three calendar
years immediately prior to the calendar year in which the earlier of the
Termination Date or the Change in Control occurs.
"Board" means the Company's Board of Directors.
"Cause" shall mean Executive's termination of employment due to:
(a) Executive's conviction of, or plea of guilty or nolo contendere
to, a felony; or
(b) the willful engaging by Executive in gross misconduct which is
materially and demonstrably injurious to the Company.
For a termination of employment to be for Cause: (i) Executive must receive
a written notice which indicates in reasonable detail the facts and
circumstances claimed to provide a basis for the termination of Executive's
employment for Cause; (ii) Executive must be provided with an opportunity to be
heard no earlier than 30 days following the receipt of such notice (during which
notice period Executive has the opportunity to cure and has failed to cure or
resolve the behavior in question); and (iii) there must be a good faith
determination of Cause by at least three-quarters of the non-employee outside
director members of the Board.
"Change in Control" For the purpose of this Agreement, a "Change in
Control" shall, without limitation, be deemed to have occurred if:
(a) A third person, including a "group" as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), becomes the beneficial owner, directly or indirectly, of 25% or
more of the combined voting power of the Company's outstanding voting securities
ordinarily having the right to vote for the election of directors of the
Company; or
(b) Individuals who, as of the date hereof, constitute the Board cease
for any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least three-quarters of the directors comprising the Board as of the date
hereof (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of directors of the Company) shall be, for
purposes of this Agreement, considered as though such person were a member of
the Board as of the date hereof; or
(c) The consummation of (i) any consolidation, share exchange, merger
or amalgamation of the Company as a result of which the individuals and entities
who were the respective beneficial owners of the outstanding common stock of the
Company and the voting securities of the Company immediately prior to such
consolidation, share exchange, merger or amalgamation do not beneficially own,
immediately after such consolidation, share exchange, merger or amalgamation,
directly or indirectly, 50% or more, respectively, of the common stock and
combined voting power of the voting securities entitled to vote of the company
resulting from such consolidation, share exchange, merger or amalgamation; or
(ii) any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all the assets or earning power
of the Company; or
(d) The approval by the shareholders of a plan of complete liquidation
or dissolution of the Company.
(e) For purposes of any plan or agreement that refers to a definition
of Change in Control in Section 2 of the Employment Agreement, the above
definition of Change in Control shall be deemed to be the reference definition.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Xxxxxx & Xxxxx Corporation and its successors and assigns.
"Delayed Payment Date" means the first business day following the six-month
anniversary of the Termination Date. A payment or benefit shall not be subject
to the Delayed Payment Date if (i) the payment or benefit is not subject to
Section 409A of the Code, (ii) the payment event with respect to the payment or
benefit, for purposes of Section 409A of the Code, is other than Separation from
Service, or (iii) on the Termination Date, no stock of the Company (or any other
entity considered a single employer with the Company under Treas. Reg.
ss.1.409A-1(g) or any successor thereto) is publicly traded on an established
securities market or otherwise.
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"Disability" means total disability or permanent disability as determined
under the Company's long-term disability plan in which Executive participates,
as it exists from time to time; provided, however, if Executive does not
participate in the Company's long-term disability plan, then "Disability" means
an illness or injury which prevents Executive from performing his or her duties,
as they existed immediately prior to the illness or injury, on a full time basis
for 180 consecutive business days, and is determined to be total and permanent
disability by a physician selected by the Company and acceptable to Executive or
Executive's legal representative.
"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:
(i) any reduction in Executive's annual base salary;
(ii) any failure to pay Executive an annual bonus, in cash, at least
equal to the Average Bonus;
(iii) any failure by the Company to grant Executive with long term
incentives annually that are at least equal to the value of the Average Long
Term Incentive Award, where the value of the long term incentives granted to
Executive in any year are determined by the accountants employed by the Company
immediately prior to the Change in Control using a valuation method consistent
with the methodology used to value the Average Long Term Incentive Award;
(iv) Executive's duties, titles, responsibilities or authority
(including offices and reporting relationships) are diminished in comparison to
the duties, titles and responsibilities or authority enjoyed by Executive
immediately prior to the Change in Control, other than as a result of an
insubstantial and inadvertent action which is remedied by the Company promptly
after receipt of notice thereof by Executive;
(v) any material reduction in Executive's and/or Executive's family's
eligibility to participate and his/her/their level of benefit in each of the
Company's welfare benefit plans, including, without limitation, all medical,
prescription, dental, disability, salary continuance, group life, accidental
death and travel accident insurance plans and programs of the Company in
comparison to the highest level of eligibility and level of benefit enjoyed by
Executive and Executive's family during the 90 day period preceding the Change
in Control;
(vi) any material reduction, in the aggregate, in Executive's ability
to participate in all incentive, savings and retirement plans or programs
applicable to other key executives (including the Company's restricted stock and
stock option plans), to a level less favorable to Executive than the highest
level enjoyed by Executive in such plans or programs during the 90 day period
preceding the Change in Control;
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(vii) the Company's requiring Executive to be based at any office or
location which is located more than 35 miles from the location where Executive
was based immediately prior to the Change in Control;
(viii) any material reduction of any fringe benefits, including any
car allowance enjoyed by Executive during the ninety (90) day period immediately
prior to the Change in Control;
(ix) any material reduction in the level of Executive's entitlement to
a particular office or office size or to particular furnishings or to
secretarial or other assistance as enjoyed by Executive during the ninety (90)
day period immediately prior to the Change in Control;
(x) any reduction in the level of Executive's entitlement to paid
vacation as enjoyed by Executive during the ninety (90) day period immediately
prior to the Change in Control;
(xi) any termination of employment by Executive within the thirty-day
period immediately following the twelve-month anniversary of the Change in
Control; or
(xii) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform the Agreement, as contemplated
in Section 12 of this Agreement.
Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances constituting Good Reason
hereunder. For purposes of the Agreement, any good faith determination of "Good
Reason" made by Executive shall be conclusive.
"Payment Date" means (i) the Delayed Payment Date, if (A) the payment is
subject to Section 409A of the Code, (B) the payment event for purposes of
Section 409A of the Code is Separation from Service, and (C) on the Termination
Date stock of the Company (or any other entity considered a single employer with
the Company under Treas. Reg. ss.1.409A-1(g) or any successor thereto) is
publicly traded on an established securities market or otherwise, or (ii) in any
other case, a date within ten (10) days of the Termination Date.
"Reimbursement and In-Kind Benefit Rule" means, with respect to in-kind
benefits provided or expenses eligible for reimbursement which are subject to
Section 409A of the Code, that (i) the benefits provided or the amount of
expenses eligible for reimbursement during any calendar year shall not affect
the benefits provided or expenses eligible for reimbursement in any other
calendar year, except as otherwise provided in Treas. Reg. ss.
1.409A-3(i)(1)(iv)(B), and (ii) the reimbursement of an eligible expense shall
be made as soon as practicable after Executive requests such reimbursement, but
not later than the December 31 following the calendar year in which the expense
was incurred and if the payment is subject to the Delayed Payment Date, not
earlier than the Delayed Payment Date.
"Separation from Service" means Executive's separation from service with
the Company and its affiliates within the meaning of Treas. Reg. ss. 1.409A-1(h)
or any successor thereto.
"Separation from Service Triggering Event" means the Executive's Separation
from Service for a reason other than death or Disability on the date of or
within three years following a Change in Control provided Executive's employment
is terminated by the Company or its affiliates without Cause or by Executive for
Good Reason.
"Termination Date" means the date of Executive's Separation from Service.
"Triggering Event" means the earlier to occur of (i) a Separation from
Service Triggering Event, or (ii) an Anticipatory Termination Triggering Event.
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