Exhibit 10.31
Xxxxx Xxxxxx, Inc.
000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
January 1, 2000
Dear :
In recognition of your contributions to Xxxxx Xxxxxx, Inc. ("HSI" or
the "Company") and the Company's desire to assure your continued services in the
event of a pending or actual Change in Control (as hereinafter defined) of HSI,
the Company's Board of Directors is pleased to offer you the Change in Control
protection outlined in this letter agreement ("Agreement"). This Agreement
amends and restates in its entirety any and all prior agreements between you and
the Company relating to the subject matter hereof.
1. Term Of Agreement. The term of this Agreement shall commence on the
date of this letter (the "Effective Date") and end on June 30, 2001 (the
"Original Term"). The Original Term may be renewed from time to time for a term
or terms to be determined by the Company, in its sole discretion (the "Renewal
Terms"). "Term" shall mean the Original Term and all Renewal Terms.
Notwithstanding the foregoing, if a Change in Control occurs during the Term,
the Term shall not expire earlier than two years from the date the Change in
Control occurs.
2. Entitlement to Cash Bonus. Provided (a) you are then employed by the
Company or (b) you were employed by the Company until your employment was
terminated by the Company without Cause or by you for Good Reason, in either
case, (i) within ninety (90) days prior to the effective date of the Change in
Control, or (ii) after the first public announcement of the pendency of the
Change in Control, upon the effective date of the
Change in Control you shall be entitled to a cash payment equal to the Change in
Control Price (as defined), as determined as of such payment date, times ,
such payment to be paid to you no later than 10 days after the effective date of
the Change in Control ("Bonus Payment Date"). In the event that the Change in
Control Price increases in the 50-day period after the Bonus Payment Date
occurs, you shall be entitled to receive an additional payment equal to the
product of such increase in the Change in Control Price times ,
such amount payable to you no later than 60 days from the Bonus Payment Date.
3. Entitlement to Severance Benefits.
(a) Cash Severance Benefit. In the event your employment is
terminated (a "Termination") by the Company without Cause or by you for
Good Reason, in either case within two years following a Change in
Control, you shall be entitled to receive the sum of the following,
payable in a cash lump sum no later than 15 days after the Termination
date: (i) Base Salary through the Termination date; (ii) a pro rata annual
incentive award at target for the year in which the Termination occurs,
and (iii) an amount equal to 300% of the sum of your Base Salary plus your
target annual cash bonus. In addition, notwithstanding the foregoing, in
the event your employment is terminated by the Company without Cause or by
you for Good Reason, in either case (i) within ninety (90) days prior to
the effective date of a Change in Control, or (ii) after the first public
announcement of the pendency of the Change in Control, such termination
shall, upon the effective date of a Change in Control, be deemed to be a
"Termination" covered under the preceding sentence of this Section 3(a),
and you shall be entitled to the amounts provided for under the preceding
sentence.
(b) Other Severance Benefits. In the event you are entitled to the
amounts provided for in Section 3(a) hereof, and notwithstanding anything
to the contrary contained in any stock option or restricted stock
agreement, you shall also be entitled to the following: (i) immediate
vesting of all outstanding stock options to the fullest extent permitted
under the applicable stock option plan; (ii) elimination of all
restrictions on any restricted or deferred stock awards outstanding at the
time of Termination, (iii) immediate vesting of all restricted or deferred
stock awards and non-qualified retirement benefits, (iv) settlement of all
deferred compensation arrangements in accordance with any then applicable
deferred compensation plan or election form (iv) continued participation
in all HSI's welfare benefit plans at the same benefit level at which you
were participating on the Termination date for a
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period of 36 months unless and until the date or dates you receive
substantially equivalent coverage from a subsequent employer.
(c) Section 280(G) Gross-Up Protection. In the event you become
entitled to payments, all or a portion of which become subject to tax
imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any other similar tax, but excluding any income
tax of any nature)("Excise Tax"), HSI shall pay you an additional amount
("Gross-Up Payment") such that the amount retained by you after reduction
for any Excise Tax (including penalties or interest thereon) equals the
amount to be paid to you by HSI hereunder prior to the imposition of such
Excise Tax. The amount of the Gross-Up Payment shall be calculated by
HSI's independent auditors. In the event that such Gross-Up Payment is
finally determined to be less than the amount necessary to provide that
the amount to be retained by you after reduction for any Excise Tax
(including penalties or interest thereon) equals the amount to be paid to
you by HSI hereunder prior to the imposition of such Excise Tax, HSI shall
pay an additional amount to you in respect of such deficiency (including
any interest and penalties). In the event that such Gross-Up Payment is
finally determined to exceed the amount necessary to provide that the
amount to be retained by you after reduction for any Excise Tax (including
penalties or interest thereon) equals the amount to be paid to you by HSI
hereunder prior to the imposition of such Excise Tax, you must promptly
repay the entire amount of such excess Gross- Up Payment to HSI.
(d) No Mitigation; No Offset. In the event of any Termination, you
shall be under no obligation to seek other employment and no amounts due
to you under this Agreement shall be subject to offset due to any
remuneration attributable to subsequent employment that you may obtain.
(e) Exclusivity of Severance Payments; Release. In the event you are
entitled to the amounts provided for in Section 3(a) hereof, you shall not
be entitled to any other severance payments or severance benefits from HSI
or any payments by HSI on account of any claim by you of wrongful
termination, including claims under any federal, state or local human and
civil rights or labor laws. Termination payments and benefits made to you
are conditioned upon your execution of a release agreement, in a form
reasonably satisfactory to HSI, releasing any and all claims arising out
of your employment (other than enforcement of this Agreement), any rights
under HSI's incentive compensation and employee benefit plans, and any
claim for any non-employment related tort for personal injury.
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4. Definitions.For purposes of this Agreement, the following terms
shall have the meanings ascribed to them.
(a) "Base Salary" means the annualized rate of pay in effect on the
Termination date, provided that if a reduction in Base Salary is the basis
for a Termination for Good Reason, then "Base Salary" shall mean the rate
of pay in effect immediately prior to such reduction.
(b) "Cause" shall exist if: (i) you are convicted of, or plead nolo
contendere to, any felony which materially and adversely impacts HSI's
financial condition or reputation, (ii) you engage in conduct that
constitutes willful gross neglect or willful gross misconduct in carrying
out your duties which materially and adversely impacts HSI's financial
condition or reputation, or (iii) you violate Section 5 of this Agreement.
(c) A "Change in Control" shall be deemed to occur upon any of the
following: (i) acquisition by any one "person" (as such term is defined in
ss.3(a)(9) of the Securities and Exchange Act of 1934, as amended, and
used in ss.13(d) and 14(d) thereof, including "group" as defined in
ss.13(d) thereof) of 33% or more of the Company's voting shares without
the prior express approval of the Company's Board of Directors; (ii)
acquisition by any one "person" or "group" (as referred to in the
preceding sentence) of more than 50% of HSI's voting shares; (iii)
directors elected to the Board over any 24 month period not nominated by
the HSI Executive Committee represent 30% or more of the total number of
directors constituting the Board at the beginning of the period (or such
nomination results from an actual or threatened proxy contest); (iv) any
merger, consolidation or other corporate combination upon the completion
of which HSI shares do not represent more than 50% of the combined voting
power of the resulting entity; and (v) upon the sale of all or
substantially all of the consolidated assets of HSI, other than a
distribution to shareholders.
(d) "Change in Control Price" shall mean an amount in cash, not more
than $40, equal to the higher of (i) the amount of cash and fair market
value of property that is the highest price per share paid (including
extraordinary dividends) in any transaction triggering the Change in
Control or any liquidation of shares following a sale of substantially all
assets of the Company, or (ii) the highest fair market value per share at
any time during the 60-day period preceding and 60-day period following
the Change in Control.
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(e) "Confidential Information" shall mean all information concerning
the business of HSI relating to any of their products, product
development, trade secrets, customers, suppliers, finances, and business
plans and strategies. Excluded from the definition of "Confidential
Information" is information (i) that is or becomes part of the public
domain, other than through your breach of this Agreement, or (ii)
regarding HSI's business or industry properly acquired by you in the
course of your career as an employee in HSI's industry and independent of
your employment by HSI. For this purpose, information known or available
generally within the trade or industry of HSI shall be deemed to be known
or available to the public.
(f) "Good Reason" shall mean your termination of your employment
based upon one or more of the following events (except as a result of a
prior termination): (i) any change in your position or responsibilities or
assignment of duties materially inconsistent with your status prior to the
Change in Control; (ii) following a business combination related to a
Change in Control, a failure to offer you a position in the combined
business entity, having authority equivalent in scope to the authority in
the position held by you in the Company immediately prior to such business
combination; (iii) any decrease in your Base Salary, target annual
incentive or long- term incentive opportunity; (iv) any breach of the
terms of this Agreement by HSI after receipt of written notice from you
and a reasonable opportunity to cure such breach; (v) HSI fails to obtain
any successor entity's assumption of its obligations to you hereunder; or
(vi) the Company requiring you to perform your services as an employee on
an ongoing basis at a location more than 75 miles distant from the
location at which you perform your services as of the date immediately
prior to the Change in Control.
5. Non-Disclosure; Non-Solicitation; Non-Disparagement.
(a) During the Term and thereafter, you shall not, without HSI's
prior written consent disclose to anyone (except in good faith in the ordinary
course of business) or make use of any Confidential Information except in the
performance of your duties hereunder or when required to do so by law. In the
event that you are so required by law, you shall give prompt written notice to
HSI sufficient to allow HSI the opportunity to object to or otherwise resist
such order.
(b) During the Term and for a period of 24 months thereafter, you
shall not, without HSI's prior written consent, solicit for employment, whether
directly or indirectly,
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any person who (i) at the time is employed by HSI or any affiliate, or (ii) was
employed by HSI or any affiliate within three months prior to such solicitation.
(c) You agree that, during the Term and thereafter (including
following any Termination for any reason) you will not make statements or
representations, or otherwise communicate, directly or indirectly, in writing,
orally, or otherwise, or take any action which may, directly or indirectly,
disparage or be damaging to HSI or its respective officers, directors,
employees, advisors, businesses or reputations. Notwithstanding the foregoing,
nothing in this Agreement shall preclude you from making truthful statements or
disclosures that are required by applicable law, regulation or legal process.
6. Resolution of Disputes. Any controversy or claim arising out of or
relating to this Agreement or any breach or asserted breach hereof shall be
resolved by binding arbitration, to be held at an office closest to HSI's
principal offices in accordance with the rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the arbitrator(s)
may be entered in any court of competent jurisdiction. Pending the resolution of
any arbitration or court proceeding, HSI shall continue payment of all amounts
and benefits due you hereunder. All reasonable costs and expenses of any
arbitration or court proceeding (including fees and disbursements of counsel)
shall be promptly paid on your behalf by HSI; provided, however, that no such
expense reimbursement shall be made if and to the extent the arbitrator(s)
determine(s) that any of your litigation assertions or defenses were in bad
faith or frivolous.
7. Effect of Agreement on Other Benefits. Except as specifically
provided in this Agreement, the existence of this Agreement shall not be
interpreted to prohibit or restrict your participation in any other employee
benefit or other plans or programs in which you currently participate.
8. Not an Employment Agreement. This Agreement is not a contract of
employment between you and HSI. HSI may terminate you at any time, subject to
the terms hereof or any other agreement that might exist between you and HSI.
9. Assignability; Binding Nature. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors, heirs
(as applies to you) and permitted assigns. HSI agrees that in the event of a
sale or transfer of assets, it shall, as a condition of such sale, require such
assignee or transferee to expressly assume HSI's liabilities, obligations and
duties hereunder.
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10. Governing Law/Jurisdiction. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of New York without
reference to principles of conflict of laws.
Please acknowledge your acceptance of the terms of this Agreement by
executing below and returning a copy to HSI.
XXXXX XXXXXX, INC.
By:
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Name:
Title:
Accepted:
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