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EXHIBIT 10 (fffff)
Change in Control Benefit Agreement
This Agreement, made this 11th day of October, 1996, by and between
Norand Corporation (the "Company") and N. Xxxxxx Xxxxxx (the "Executive");
WITNESSETH THAT:
WHEREAS, the Executive has been awarded options the vesting of which
may be accelerated upon a Change in Control and the Company has determined that
it is appropriate to provide the Executive with certain additional benefits in
the event of a Change in Control;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, and for other good and valuable consideration receipt
whereof is hereby acknowledged, the Company and the Executive hereby agree as
follows:
1. Change in Control. For purposes of this Agreement, a "Change
in Control" shall be deemed to have occurred if:
(a) any "Person", as such term is used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act")
(other than the Company, any corporation owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock
of the Company, and any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or
such proportionately owned corporation), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 promulgated under
the Exchange Act), directly or indirectly, of securities of
the Company representing 40% or more of the combined voting
power of the Company's then outstanding securities having the
right to vote for the election of directors;
(b) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 60% of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person acquires more than 15% of the
Company's then outstanding securities having the right to vote
for the election of directors; or
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(c) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets (or any transaction having a similar effect).
Once a Change in Control has occurred for purposes of this Agreement, no future
events will constitute a Change in Control for purposes of this Agreement.
2. Gross-up Payment. The following provisions shall apply in the
event that it is determined that acceleration of the vesting of the stock
option awarded to the Executive on September 24, 1996 (the "Stock Option") upon
a Change in Control would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"):
(a) In the event it shall be determined that acceleration of the
vesting of the Stock Option upon a Change in Control would be
subject to the excise tax imposed by Section 4999 of the Code,
determined without regard to any other payment, benefit or
distribution (or combination thereof) by the Company, any
affiliates of the Company, or one or more trusts established
by the Company or any of its affiliates for the benefit of its
employees, to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to
the terms of this Agreement, or otherwise), the Executive
shall be entitled to receive a payment from the Company (a
"Gross-Up Payment") in an amount equal to the sum of the
following amounts:
(i) the amount of the excise tax attributable solely to
the accelerated vesting of the Stock Option (referred
to as the "Excise Tax") and the amount of any
additional excise tax under section 4999 of the Code
imposed with respect to additional payments, if any,
made pursuant to this paragraph (a);
(ii) any interest or penalties incurred by the Executive
with respect to the Excise Tax and other payments, if
any, made pursuant to this paragraph (a); and
(iii) any taxes, including income taxes, incurred by the
Executive on the Excise Tax and other payments, if
any, made pursuant to this paragraph (a).
(b) Subject to the provisions of paragraph (c) below, all
determinations required to be made under this Section 2,
including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by
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a nationally recognized certified public accounting firm as
may be designated by the Company (the "Accounting Firm") which
shall provide detailed supporting calculations both to the
Company and the Executive within fifteen (15) business days of
the acceleration of the vesting of the Stock Option, or such
earlier time as is requested by the Company. All fees and
expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this
Section 2, shall be paid by the Company to the Executive
within five (5) days after the receipt of the Accounting
Firm's determination. If the Accounting Firm determines that
no Excise Tax is payable by the Executive, it shall so
indicate to the Executive in writing. Any determination by
the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm 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 pursuant to
paragraph (c) and the Executive thereafter is required to make
a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by the Company to
or for the benefit of the Executive.
(c) The 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 Gross-Up Payment.
Such notification shall be given as soon as practicable but no
later than ten (10) business days after the 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. The Executive shall not pay
such claim prior to the expiration of the thirty (30) day
period following the date on which it 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 the Executive in writing prior to the
expiration of such period that it desires to contest such
claim, the Executive shall:
(i) give the Company any information 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;
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(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 additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
paragraph (c), 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 the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible
manner, and the 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 the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on
an interest-free basis, and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that if the Executive
is required to extend the statute of limitations to enable the Company
to contest such claim, the 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 the 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.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to paragraph (c), the Executive
becomes entitled to receive any refund with respect to such
claim, the Executive shall (subject to the Company's complying
with the requirements of paragraph (c)) 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 the Executive of an amount advanced by
the Company pursuant to paragraph (c), a determination is made
that the Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of
refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven
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EXHIBIT10 (fffff)
and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
3. Miscellaneous.
(a) Amendment and Termination. This Agreement may be amended or
modified at any time with the written consent of the Company
and the Executive; provided, however, that prior to a Change
in Control, the Company may modify the payments and benefits
to be provided pursuant to this Agreement without the consent
of the Executive; and provided further that, the payments and
benefits provided pursuant to Section 1 may not be amended for
2 years following a Change in Control in a manner which
reduces the amount of any benefit that may be payable or
provided to the Executive or pursuant to this Agreement.
(b) Applicable Law. All questions pertaining to the validity,
construction and administration of this Agreement shall be
determined in conformity with the internal laws of the State
of Iowa.
(c) Notices. Every notice authorized or required under this
Agreement shall be deemed delivered to the Company (i) on the
date it is personally delivered to the Secretary of the
Company at its principal executive offices, or (ii) three
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EXHIBIT 10(fffff)
business days after it is sent by registered or certified
mail, postage prepaid, addressed to the Secretary at such
offices; and shall be deemed delivered to the Executive (i) on
the date it is personally delivered to him, or (ii) three
business days after it is sent by registered or certified
mail, postage prepaid, addressed to him at the last address
shown for him on the records of the Company.
(d) Withholding. All payments and benefits provided pursuant to
this Agreement shall be subject to customary withholding taxes
and other employment taxes as required with respect to
compensation paid by an employer to an employee.
(e) Executed Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be treated as the
original.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first set forth above.
NORAND CORPORATION
By Xxxxx Xxxxxxxxxx
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Its Director, Human Resources
and Organizational Development
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EXECUTIVE
N. Xxxxxx Xxxxxx
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N. Xxxxxx Xxxxxx
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