| Name of Executive: |
Xxxxxx X. Xxxxxx |
| Position: |
Chief Financial Officer and Treasurer |
| Fiscal Year 2008 Base Salary: |
$165,000 |
| Fiscal Year 2009 Base Salary: |
$225,000 |
Initial Term: |
Effective date through March 31, 2009 |
| Renewal Periods are: |
1 Year |
| Post-Change of Control Renewal Period is: |
2 Years |
Severance Multiplier is: |
1x |
| Post-Change of Control Severance Multiplier is: |
2x |
This
Agreement (“Agreement”) is between the Executive named above
(“Executive”), on the one hand, and Orion Energy Systems, Inc.
(“Orion” and, together with its subsidiaries, the “Company”), on the
other.
WHEREAS,
the Executive is employed by Xxxxx in a key employee capacity and the Executive’s
services are valuable to the conduct of the business of the Company; and
WHEREAS,
Xxxxx and Executive desire to specify the terms and conditions on which Executive will
continue employment on and after the date the Company’s common stock is first sold to
the public pursuant to an effective registration statement filed under the Securities Act
of 1933, as amended (the “IPO”), and under which Executive will receive
severance in the event that Executive separates from service with the Company;
NOW,
THEREFORE, for good and valuable consideration, the parties agree as follows:
1. Effective
Date; Term. This Agreement shall become effective on the
date of the Company’s IPO and continue until the end of the initial
term set forth above. Thereafter, the Agreement shall renew automatically
for successive renewal periods as set forth above unless and until either
party provides written notice to the other party of the intent not to
renew the Agreement at least ninety (90) days prior to the end of any
term. Notwithstanding the foregoing, if a Change of Control occurs prior
to the end of any term, the Agreement shall be automatically extended for
the post- Change of Control renewal period set forth above beginning on
the date of the Change of Control. Expiration of this Agreement will not
affect the rights or obligations of the parties hereunder arising out of,
or relating to, circumstances occurring prior to the expiration of this
Agreement, which rights and obligations will survive the expiration of
this Agreement.
2. Definitions.
For purposes of this Agreement, the following terms shall have the
meanings ascribed to them:
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(a) “Accrued
Benefits” shall mean the following amounts, payable as described
herein: (i) all base salary for the time period ending with the
Termination Date; (ii) reimbursement for any and all monies advanced
in connection with the Executive’s employment for reasonable and
necessary expenses incurred by the Executive on behalf of the Company for
the time period ending with the Termination Date; (iii) any and all
other cash earned through the Termination Date and deferred at the
election of the Executive or pursuant to any deferred compensation plan
then in effect; and (iv) all other payments and benefits to which the
Executive (or in the event of the Executive’s death, the Executive’s
surviving spouse or other beneficiary), including those provided pursuant
to Exhibit A, is entitled on the Termination Date under the terms of any
benefit plan of the Company, excluding severance payments under any
Company severance policy, practice or agreement in effect on the
Termination Date. Payment of Accrued Benefits shall be made promptly in
accordance with the Company’s prevailing practice with respect to
clauses (i) and (ii) or, with respect to clauses (iii) and (iv),
pursuant to the terms of the benefit plan or practice establishing such
benefits.
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(b) “Base
Salary” shall mean the Executive’s annual base salary with
the Company as in effect from time to time.
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(c) “Board” shall
mean the board of directors of Orion or a committee of such Board
authorized to act on its behalf in certain circumstances, including the
Compensation Committee of the Board.
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(d) “Cause” shall
mean a good faith finding by the Board that Executive has (i) failed,
neglected, or refused to perform the lawful employment duties related to
his or her position or as from time to time assigned to him (other than
due to Disability); (ii) committed any willful, intentional, or grossly
negligent act having the effect of materially injuring the interest,
business, or reputation of the Company; (iii) violated or failed to comply
in any material respect with the Company’s published rules,
regulations, or policies, as in effect or amended from time to time; (iv)
committed an act constituting a felony or misdemeanor involving moral
turpitude, fraud, theft, or dishonesty; (v) misappropriated or embezzled
any property of the Company (whether or not an act constituting a felony
or misdemeanor); or (vi) breached any material provision of this Agreement
or any other applicable confidentiality, non-compete, non-solicit, general
release, covenant not-to-sue, or other agreement with the Company.
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(e) “Change
of Control” shall mean and be limited to any of the following:
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(i) any
Person (other than (A) the Company or any of its subsidiaries, (B) a trustee
or other fiduciary holding securities under any employee benefit plan of
the Company or any of its subsidiaries, (C) an underwriter temporarily
holding securities pursuant to an offering of such securities or (D) a
corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of stock
in the Company (“Excluded Persons”)) is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates after the
IPO Date, pursuant to express authorization by the Board that refers to
this exception) representing twenty percent (20%) or more of either the
then outstanding shares of common stock of the Company or the combined
voting power of the Company’s then outstanding voting securities; or
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(ii) the
following individuals cease for any reason to constitute a majority of the
number of directors of the Company then serving: (A) individuals who, on
the IPO Date, constituted the Board and (B) any new director (other than a
director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A
under the Act) whose appointment or election by the Board or nomination
for election by the Company’s shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either
were directors on the IPO Date, or whose appointment, election or
nomination for election was previously so approved (collectively the “Continuing
Directors”); provided, however, that individuals who are
appointed to the Board pursuant to or in accordance with the terms of an
agreement relating to a merger, consolidation, or share exchange involving
the Company (or any direct or indirect subsidiary of the Company) shall
not be Continuing Directors for purposes of this Agreement until after
such individuals are first nominated for election by a vote of at least
two-thirds (2/3) of the then Continuing Directors and are thereafter
elected as directors by the shareholders of the Company at a meeting of
shareholders held following consummation of such merger, consolidation, or
share exchange; and, provided further, that in the event the
failure of any such persons appointed to the Board to be Continuing
Directors results in a Change of Control, the subsequent qualification of
such persons as Continuing Directors shall not alter the fact that a
Change of Control occurred; or
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(iii) the
consummation of a merger, consolidation or share exchange of the Company
with any other corporation or the issuance of voting securities of the
Company in connection with a merger, consolidation or share exchange of
the Company (or any direct or indirect subsidiary of the Company), in each
case, which requires approval of the shareholders of the Company, other
than (A) a merger, consolidation or share exchange which would result in
the voting securities of the Company outstanding immediately prior to such
merger, consolidation or share exchange continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or any parent thereof) at least fifty percent (50%) of
the combined voting power of the voting securities of the Company or such
surviving entity or any parent thereof outstanding immediately after such
merger, consolidation or share exchange, or (B) a merger, consolidation or
share exchange effected to implement a recapitalization of the Company (or
similar transaction) in which no Person (other than an Excluded Person) is
or becomes the Beneficial Owner, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its Affiliates
after the IPO Date, pursuant to express authorization by the Board that
refers to this exception) representing twenty percent (20%) or more of
either the then outstanding shares of common stock of the Company or the
combined voting power of the Company’s then outstanding voting
securities; or
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(iv) the
consummation of a plan of complete liquidation or dissolution of the Company
or a sale or disposition by the Company of all or substantially all of the
Company’s assets (in one transaction or a series of related
transactions within any period of 24 consecutive months), in each case,
which requires approval of the shareholders of the Company, other than a
sale or disposition by the Company of all or substantially all of the
Company’s assets to an entity at least seventy-five percent (75%) of
the combined voting power of the voting securities of which are owned by
Persons in substantially the same proportions as their ownership of the
Company immediately prior to such sale.
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Notwithstanding the foregoing, no
“Change of Control” shall be deemed to have occurred if there is consummated any
transaction or series of integrated transactions immediately following which the record
holders of the common stock of the Company immediately prior to such transaction or series
of transactions continue to own, directly or indirectly, in the same proportions as their
ownership in the Company, an entity that owns all or substantially all of the assets or
voting securities of the Company immediately following such transaction or series of
transactions.
For purposes of this
Section 2(e):
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(i) the
term “Person” shall mean any individual, firm, partnership,
corporation or other entity, including any successor (by merger or
otherwise) of such entity, or a group of any of the foregoing acting in
concert;
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(ii) the
terms “Affiliate” and “Associate” shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations of the Act;
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(iii) the
term “Act” means the Securities Exchange Act of 1934, as amended;
and
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(iv) a
Person shall be deemed to be the “Beneficial Owner” of any
securities which:
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a)
such Person or any of such Person’s Affiliates or Associates has the
right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, securities tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase; |
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b)
such Person or any of such Person’s Affiliates or Associates,
directly or indirectly, has the right to vote or dispose of or has “beneficial
ownership” of (as determined pursuant to Rule l3d-3 of the
General Rules and Regulations under the Act), including pursuant to any
agreement, arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security under this clause b) as a result of an
agreement, arrangement or understanding to vote such security if the
agreement, arrangement or understanding: (A) arises solely from a
revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations under the Act and (B) is not
also then reportable on a Schedule l3D under the Act (or any
comparable or successor report); or |
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c)
are beneficially owned, directly or indirectly, by any other Person with
which such Person or any of such Person’s Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described in clause b) above) or disposing of any voting securities
of the Company. |
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(f) “COBRA”shall
mean the provisions of Code Section 4980B.
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(g) “Code” shall
mean the Internal Revenue Code of 1986, as amended, as interpreted by
rules and regulations issued pursuant thereto, all as amended and in
effect from time to time. Any reference to a specific provision of the
Code shall be deemed to include reference to any successor provision
thereto.
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(h) “Competitive
Business Activity” shall mean the design and manufacture of
lighting systems and controls for industrial, commercial and agricultural
facilities.
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(i) “Disability” shall
mean, subject to applicable law, a total and permanent disability
consisting of a mental or physical disability which precludes the disabled
Executive from performing the material and substantial duties of his
employment. Payment of benefits for total disability under a disability
insurance policy shall be conclusive as to the existence of total
disability, although such payments are not required in order to establish
total disability for purposes of this Agreement. The Executive has a “total
and permanent disability” if he is precluded by mental or physical
disability for 180 days during any twelve (12) month period. For purposes
of this Agreement, an Executive shall be deemed totally and permanently
disabled at the end of such 180th day. In case of a disagreement as to
whether an Executive is totally and permanently disabled and, at the
request of any party, the matter shall be submitted to arbitration as
provided for herein, and judgment upon the award may be entered in any
court having jurisdiction thereof. Any costs of such proceedings
(including the reasonable legal fees of the prevailing party) shall be
borne by the non-prevailing party to such arbitration.
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(j) “General
Release” shall mean a release of all claims that Executive, and
anyone who may succeed to any claims of Executive, has or may have against
Orion, its board of directors, any of its subsidiaries or affiliates, or
any of their employees, directors, officers, employees, agents, plan
sponsors, administrators, successors (including the Successor),
fiduciaries, or attorneys, including but not limited to claims arising out
of Executive’s employment with, and termination of employment from,
the Company, but excluding claims for (i) severance payments and benefits
due pursuant to this Agreement and (ii) any salary, bonus, equity, accrued
vacation, expense reimbursement and other ordinary payments or benefits
earned or otherwise due with respect to the period prior to the date of
any Separation from Service. The General Release shall be in a form that
is reasonably acceptable to the Company or the Board.
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(k) “Good
Reason” shall mean the occurrence of any of the following without
the consent of Executive: (i) a material diminution in the Executive’s
Base Salary; (ii) a material diminution in the Executive’s authority,
duties or responsibilities; (iii) a material diminution in the authority,
duties or responsibilities of Xxxx Xxxxxxxxx; (iv) a material diminution
in the budget over which the Executive retains authority; (v) a material
change in the geographic location at which the Executive must perform
services; or (vi) a material breach by Orion of any provisions of this
Agreement or any option agreement with the Company to which the Executive
is a party.
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(l) “Separation
from Service” shall mean Executive’s termination of
employment from Orion and each entity that is required to be included in
Orion’s controlled group of corporations within the meaning of Code
Section 414(b), or that is under common control with Orion within the
meaning of Code Section 414(c); provided that the phrase “at
least 50 percent” shall be used in place of the phrase ” at
least 80 percent” each place it appears therein or in the regulations
thereunder (collectively, “409A affiliates”). Notwithstanding
the foregoing:
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(i) If
Executive takes a leave of absence for purposes of military leave, sick leave
or other bona fide leave of absence, Executive will not be deemed to have
incurred a Separation from Service for the first six (6) months of the
leave of absence, or if longer, for so long as Executive’s right to
reemployment is provided either by statute or by contract.
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(ii) Subject
to paragraph (i), Executive shall incur a Separation from Service when the
level of bona fide services provided by Executive to Orion and its 409A
affiliates permanently decreases to a level of twenty percent (20%) or
less of the level of services rendered by Executive, on average, during
the immediately preceding 12 months of employment.
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(iii) If,
following Executive’s termination of employment, Executive continues to
provide services to the Company or a 409A Affiliate in a capacity other
than as an employee, Executive will not be deemed to have Separated from
Service as long as Executive is providing bona fide services at a rate
that is greater than twenty percent (20%) of the level of services
rendered by Executive, on average, during the immediately preceding 12
months of service.
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(m) “Severance
Payment” shall mean the Executive’s Base Salary at the time
of the Termination Date plus the average of the annual bonuses earned by
the Executive with respect to each of the three completed fiscal years of
the Company preceding the year in which the Termination Date occurs (or such
lesser number of fiscal years for which the Executive was employed by the
Company, with any partial year’s bonus being annualized with respect
to such fiscal year) multiplied by the severance multiplier set forth above;
provided thatif Executive’s Termination Date occurs on
or following a Change of Control, the multiplier described above shall be
increased to the post-Change of Control severance multiplier set forth
above and any reduction in Executive’s Base Salary since the date of
the Change of Control shall be ignored.
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(n) “Successor” shall
mean the person to which this Agreement is assigned upon a Sale of
Business within the meaning of Section 10.
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(o) “Termination
Date” shall mean the date of the Executive’s termination of
employment from the Company, as further described in Section 4.
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3. Employment
of Executive
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(i) Executive
shall serve in the position set forth above in a full-time capacity. In
such position, Executive shall have such duties and authority as is
customarily associated with such position and shall have such other titles
and duties, consistent with Executive’s position, as may be assigned
from time to time by the Board.
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(ii) Executive
will devote Executive’s full business time and best efforts to the
performance of Executive’s duties hereunder and will not engage in any
other business, profession or occupation for compensation or otherwise
which would conflict or interfere with the rendition of such services
either directly or indirectly, without the prior written consent of the
Board; provided that nothing herein shall preclude Executive,
subject to the prior approval of the Board, from accepting appointment to
or continue to serve on any board of directors or trustees of any business
organization or any charitable organization; further provided in
each case, and in the aggregate, that such activities do not conflict or
interfere with the performance of Executive’s duties hereunder or
conflict with Section 7.
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(b) Base
Salary. Xxxxx shall pay Executive a Base Salary at the respective
annual rates set forth above for Fiscal Year 2008 and Fiscal Year 2009,
payable in regular installments in accordance with the Company’s
usual payroll practices. Executive shall be entitled to such increases in
Executive’s base salary, if any, as may be determined from time to
time by the Board.
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(c) Bonus
Incentives. Executive shall be entitled to participate in such annual
and/or long-term cash and equity incentive plans and programs of Orion as
are generally provided to the senior executives of Orion. On and after a
Change of Control, to assure that Executive will have an opportunity to
earn incentive compensation, the Executive shall be included in a bonus
plan of the Employer which shall satisfy the standards described below
(such plan, the “Bonus Plan”). Bonuses under the Bonus Plan
shall be payable with respect to achieving such financial or other goals
reasonably related to the business of the Company as the Company shall
establish (the “Goals”), all of which Goals shall be attainable,
prior to the end of the post-Change of Control renewal period (as set
forth above), with approximately the same degree of probability as the
most attainable goals under the Company’s bonus plan or plans as in
effect at any time during the 180-day period immediately prior to the
Change of Control (whether one or more, the “Company Bonus Plan”)
and in view of the Company’s existing and projected financial and
business circumstances applicable at the time. The amount of the bonus
(the “Bonus Amount”) that Executive is eligible to earn under
the Bonus Plan shall be no less than 100% of the Executive’s target
award provided in such Company Bonus Plan (such bonus amount herein
referred to as the “Targeted Bonus”), and in the event the Goals
are not achieved such that the entire Targeted Bonus is not payable, the
Bonus Plan shall provide for a payment of a Bonus Amount equal to a
portion of the Targeted Bonus reasonably related to that portion of the
Goals which were achieved. Payment of the Bonus Amount shall not be
affected by any circumstance occurring subsequent to the end of the
post-Change of Control renewal period, including termination of Executive’s
employment.
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(d) Employee
Benefits. Executive shall be entitled to participate in the Company’s
employee benefit plans (other than annual and/or long-term incentive
programs, which are addressed in subsection (c)) as in effect from time to
time on the same basis as those benefits are generally made available to
other senior executives of Orion. On and after a Change of Control,
Executive shall be included: (i) to the extent eligible thereunder (which
eligibility shall not be conditioned on Executive’s salary grade or
on any other requirement which excludes persons of comparable status to
the Executive unless such exclusion was in effect for such plan or an
equivalent plan immediately prior to the Change in Control of the
Company), in any and all plans providing benefits for the Company’s
salaried employees in general (including but not limited to group life
insurance, hospitalization, medical, dental, and long-term disability
plans) and (ii) in plans provided to executives of the Company of
comparable status and position to Executive (including but not limited to
deferred compensation, split-dollar life insurance, supplemental
retirement, stock option, stock appreciation, stock bonus, cash bonus and
similar or comparable plans); provided, that, in no event
shall the aggregate level of benefits under the plans described in clause
(i) and the plans described in clause (ii), respectively, in which
Executive is included be less than the aggregate level of benefits under
plans of the Company of the type referred to in such clause, respectively,
in which Executive was participating immediately prior to the Change in
Control.
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(e) Business
Expenses. The reasonable business expenses incurred by Executive in
the performance of Executive’s duties hereunder shall be reimbursed by
the Company in accordance with Company policies.
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(f) Other
Perquisites. Executive shall be entitled to receive the other benefits
and perquisites set forth in Exhibit A.
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4. Termination
of Employment. Executive’s employment with the Company
will terminate during the term of the Agreement, and this Agreement will
terminate on the date of such termination, as follows:
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(a) Executive’s
employment will terminate upon Executive’s death.
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(b) If
Executive is Disabled, and if within thirty (30) days after Xxxxx notifies
the Executive in writing that it intends to terminate the Executive’s
employment, the Executive shall not have returned to the performance of
the Executive’s duties hereunder on a full-time basis, Xxxxx may
terminate the Executive’s employment, effective immediately following
the end of such thirty-day period.
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(c) Orion
may terminate Executive’s employment with or without Cause (other
than as a result of Disability which is governed by subsection (b))
by providing written notice to Executive that indicates in reasonable
detail the facts and circumstances alleged to provide a basis for such
termination. If the termination is without Cause, Executive’s
employment will terminate on the date specified in the written notice of
termination. If the termination is for Cause, the Executive shall have
thirty (30) days from the date the written notice is provided, or such
longer period as Orion may determine to be appropriate, to cure any
conduct or act, if curable, alleged to provide grounds for termination of
Executive’s employment for Cause. If the alleged conduct or act
constituting Cause is not curable, Executive’s employment will
terminate on the date specified in the written notice of termination. If
the alleged conduct or act constituting Cause is curable but Executive
does not cure such conduct or act within the specified time period,
Executive’s employment will terminate on the date immediately
following the end of the cure period. Notwithstanding the foregoing, a
determination of Cause shall only be made in good faith by the Board, and
after a Change of Control, by the Board of Directors of the Successor,
which may terminate Executive for Cause only after providing Executive (i)
written notice as set forth above, (ii) the opportunity to appear before
such board and provide rebuttal to such proposed termination, and (iii)
written notice following such appearance confirming such termination and
certifying that the decision to terminate Executive for Cause was approved
in good faith by at least sixty-six percent (66%) of the members of such
board, excluding Executive. Unless otherwise directed by Xxxxx, from and
after the date of the written notice of proposed termination, Executive
shall be relieved of his or her duties and responsibilities and shall be
considered to be on a paid leave of absence pending any final action by
the Board or the Board of Directors of the Successor confirming such
proposed termination.
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(d) Executive
may terminate his or her employment for or without Good Reason by
providing written notice of termination to Orion that indicates in
reasonable detail the facts and circumstances alleged to provide a basis
for such termination. If Executive is alleging a termination for Good
Reason, Executive must provide written notice to Orion of the existence of
the condition constituting Good Reason within ninety (90) days of the
initial existence of such condition, and Orion must have a period of at
least thirty (30) days following receipt of such notice to cure such
condition. If such condition is not cured by Orion within such thirty-day
period, Executive’s termination of employment from the Company shall
be effective on the date immediately following the end of such cure
period.
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5. Payments
upon Termination.
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(a) Entitlement
to Severance. Subject to the other terms and conditions of this
Agreement, Executive shall be entitled to the Accrued Benefits, and to the
severance benefits described in subsection (c), in either of the following
circumstances while this Agreement is in effect:
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(i) Executive’s
employment is terminated by Orion without Cause, except in the case of
death or Disability; or
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(ii) Executive
terminates his or her employment with the Company for Good Reason.
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If
Executive dies after receiving a notice by Xxxxx that Executive is being terminated
without Cause, or after providing notice of termination for Good Reason, the
Executive’s estate, heirs and beneficiaries shall be entitled to the Accrued Benefits
and the severance benefits described in subsection (c) at the same time such amounts would
have been paid or benefits provided to Executive had he or she lived. |
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(b) General
Release Requirement. As an additional prerequisite for receipt of the
severance benefits described in subsection (c), Executive must execute,
deliver to Orion, and not revoke (to the extent Executive is allowed to do
so) a General Release.
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(c) Severance
Benefits; Timing and Form of Payment. Subject to the limitations
imposed by Section 6, if Executive is entitled to severance benefits,
then:
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(i) Company
shall pay Executive the Severance Payment in a lump sum within ten (10)
days following the Executive’s Separation from Service, or if later,
the date on which the General Release is no longer revocable, or if later,
the date on which the amount payable under Section 6 is determined, but in
no event may be payment be made more than 2½ months after the year
in which Executive’s Separation from Service occurs;
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(ii) At
the same time that the Severance Payment is made, Company shall pay Executive
a lump sum amount equal to the Executive’s annual target cash bonus
opportunity (if any) as established by the Board or the Compensation
Committee of the Board for the fiscal year in which the Separation from
Service occurs, multiplied by a fraction, the numerator of which is the
number of days that have elapsed during the annual performance period to
the date of the Executive’s Separation from Service and the
denominator of which is 365; and
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(iii) Executive
shall be entitled to pay premiums for COBRA continuation coverage for the
length of such coverage at the same rate as is being charged to active
employees for similar coverage.
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All
payments shall be subject to payroll taxes and other withholdings in accordance with the
Company’s (or the applicable employer of record’s) standard payroll practices
and applicable law. |
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(d) Other
Termination of Employment. If Executive’s employment terminates for
any reason other than those described in subsection (a), the Executive (or the
Executive’s estate in the event of his or her death), shall be entitled to
receive only the Accrued Benefits. Executive must be terminated for Cause
pursuant to and in accordance with Section 4(c) of this Agreement in order for
the consequences of such a Cause termination to apply to Executive under any
stock option or similar equity award agreement with the Company to which
Executive is then a party. The Company’s obligations under this Section 5
shall survive the termination of this Agreement.
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10
6. Limitations
on Severance Payments and Benefits. Notwithstanding any other provision
of this Agreement, if any portion of the Severance Payment or any other payment
under this Agreement, or under any other agreement with or plan of the Company
(in the aggregate “Total Payments”), would constitute an “excess
parachute payment,” then the Total Payments to be made to Executive shall
be reduced such that the value of the aggregate Total Payments that Executive
is entitled to receive shall be One Dollar ($1) less than the maximum amount
which Executive may receive without becoming subject to the tax imposed by Code
Section 4999 or which the Company may pay without loss of deduction under Code
Section 280G(a); provided that the foregoing reduction in the
amount of Total Payments shall not apply if the After-Tax Value to Executive of
the Total Payments prior to reduction in accordance herewith is greater than
the After-Tax Value to Executive if Total Payments are reduced in accordance
herewith. For purposes of this Agreement, the terms “excess parachute
payment” and “parachute payments” shall have the meanings
assigned to them in Code Section 280G, and such “parachute payments” shall
be valued as provided therein. Present value for purposes of this Agreement
shall be calculated in accordance with Code Section 1274(b)(2). Within twenty
(20) business days following delivery of the notice of termination or notice by
Orion to Executive of its belief that there is a payment or benefit due
Executive that will result in an excess parachute payment as defined in Code
Section 280G, Executive and Orion, at Orion’s expense, shall obtain the
opinion (which need not be unqualified) of nationally recognized tax counsel
selected by Xxxxx’s independent auditors and acceptable to Executive in
Executive’s sole discretion, which opinion sets forth: (A) the amount
of the Base Period Income, (B) the amount and present value of Total
Payments, (C) the amount and present value of any excess parachute
payments without regard to the limitations of this Section 6, (D) the After-Tax
Value of the Total Payments if the reduction in Total Payments contemplated
under this Section 6 did not apply, and (E) the After-Tax Value of the Total
Payments taking into account the reduction in Total Payments contemplated under
this Section 6. As used in this Section 6, the term “Base Period Income” means
an amount equal to Executive’s “annualized includible compensation
for the base period” as defined in Code Section 280G(d)(1). For purposes
of such opinion, the value of any noncash benefits or any deferred payment or
benefit shall be determined by Orion’s independent auditors in accordance
with the principles of Code Sections 280G(d)(3) and (4), which determination
shall be evidenced in a certificate of such auditors addressed to Orion and
Executive. For purposes of determining the After-Tax Value of Total Payments,
Executive shall be deemed to pay federal income taxes and employment taxes at
the highest marginal rate of federal income and employment taxation in the
calendar year in which the Termination Payment is to be made and state and
local income taxes at the highest marginal rates of taxation in the state and
locality of Executive’s domicile for income tax purposes on the date the
Termination Payment is to be made, net of the maximum reduction in federal
income taxes that may be obtained from deduction of such state and local taxes.
Such opinion shall be dated as of the Termination Date and addressed to Orion
and Executive and shall be binding upon the Company and Executive. If such
opinion determines that there would be an excess parachute payment and that the
After-Tax Value of the Total Payments taking into account the reduction
contemplated under this Section is greater than the After-Tax Value of the
Total Payments if the reduction in Total Payments contemplated under this
Section did not apply, then the Termination Payment hereunder or any other
payment determined by such counsel to be includible in Total Payments shall be
reduced or eliminated as specified by Executive in writing delivered to Orion
within five business days of Executive’s receipt of such opinion or, if
Executive fails to so notify Orion, then as Orion shall reasonably determine,
so that under the bases of calculations set forth in such opinion there will be
no excess parachute payment. If such legal counsel so requests in connection
with the opinion required by this Section, Executive and Orion shall obtain, at
Xxxxx’s expense, and the legal counsel may rely on in providing the
opinion, the advice of a firm of recognized executive compensation consultants
as to the reasonableness of any item of compensation to be received by
Executive. Notwithstanding the foregoing, the provisions of this Section 6,
including the calculations, notices and opinions provided for herein, shall be
based upon the conclusive presumption that the following are reasonable:
(1) the compensation and benefits provided for in Section 3 and (2)
any other compensation, including but not limited to the Accrued Benefits,
earned prior to the date of Executive’s Separation from Service by the
Executive pursuant to the Company’s compensation programs if such payments
would have been made in the future in any event, even though the timing of such
payment is triggered by the Change in Control or the Executive’s
Separation from Service. If the provisions of Code Sections 280G and 4999
are repealed without succession, then this Section 6 shall be of no
further force or effect.
7. Covenants
by Executive.
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(a) Confidentiality
and Non-Disclosure. During Executive’s employment with the Company and
for a period of two years following Executive’s Separation from Service,
he or she agrees that he or she will not, except in furtherance of the business
of the Company, disclose, furnish, or make available to any person or use for
the benefit of himself or herself or any other person any confidential or
proprietary information or data of the Company including, but not limited to,
trade secrets, customer and supplier lists, pricing policies, operational
methods, marketing plans or strategies, product development techniques or
plans, business acquisition or disposition plans, new personnel employment
plans, methods of manufacture, technical process, and formulae, designs and
design projects, inventions and research projects and financial budgets and
forecasts except (i) information which at the time is available to others in
the business or generally known to the public other than as a result of
disclosure by Executive not permitted hereunder, and (ii) when required to do
so by a court of competent jurisdiction, by any governmental agency or by any
administrative, legislative or regulatory body; provided that in this
instance Executive shall make reasonable efforts to inform the Company of any
such request prior to any disclosure so as to permit the Company a meaningful
opportunity to seek a protective order or similar adjudication. Upon
termination of his or her employment with the Company, Executive will
immediately return to the Company all written or electronically stored
confidential or proprietary information in whatever format it is contained.
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(b) Non-Competition/Non-Solicitation.
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(i) During
Executive’s employment with the Company and for a period of two years
following Executive’s Separation from Service, Executive agrees not to
directly or indirectly engage, or assist any business or entity, in Competitive
Business Activity in any capacity, including without limitation as an employee,
officer, or director of, or consultant or advisor to, any person or entity
engaged directly or indirectly in a business which engages in Competitive
Business Activity, in North America or anywhere that Orion or its Successor
does business at the time of Executive’s termination of employment,
without the written consent of the Board.
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(ii) During
Executive’s employment with the Company and for a period of two years
following Executive’s Separation from Service, Executive agrees not to, in
any form or manner, directly or indirectly, on his or her own behalf or in
combination with others (1) solicit, induce or influence any customer,
supplier, lender, lessor or any other person with a business relationship with
the Company to discontinue or reduce the extent of such business relationship,
or (2) recruit, solicit or otherwise induce or influence any employee of the
Company to discontinue their employment with the Company.
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(c) Disclosure
and Assignment to the Company of Inventions and Innovations.
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(i) Executive
agrees to disclose and assign to the Company as the Company’s exclusive
property, all inventions and technical or business innovations, including but
not limited to all patentable and copyrightable subject matter (collectively,
the “Innovations”) developed, authored or conceived by Executive
solely or jointly with others during the period of Executive’s employment,
including during Executive’s employment prior to the date of this
Agreement, (1) that are along the lines of the business, work or investigations
of the Company to which Executive’s employment relates or as to which
Executive may receive information due to Executive’s employment with the
Company, or (2) that result from or are suggested by any work which Executive
may do for the Company or (3) that are otherwise made through the use of
Company time, facilities or materials. To the extent any of the Innovations is
copyrightable, each such Innovation shall be considered a “work for hire.”
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(ii) Executive
agrees to execute all necessary papers and otherwise provide proper assistance
(at the Company’s expense), during and subsequent to Executive’s
employment, to enable the Company to obtain for itself or its nominees, all
right, title, and interest in and to patents, copyrights, trademarks or other
legal protection for such Innovations in any and all countries.
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(iii) Executive
agrees to make and maintain for the Company adequate and current written
records of all such Innovations;
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(iv) Upon
any termination of Executive’s employment, employee agrees to deliver to
the Company promptly all items which belong to the Company or which by their
nature are for the use of Company employees only, including, without
limitation, all written and other materials which are of a secret or
confidential nature relating to the business of the Company.
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(v) In
the event Company is unable for any reason whatsoever to secure Executive’s
signature to any lawful and necessary documents required, including those
necessary for the assignment of, application for, or prosecution of any United
States or foreign application for letters patent or copyright for any
Innovation, Executive hereby irrevocably designates and appoints Company and
its duly authorized officers and agents as Executive’s agent and
attorney-in-fact, to act for and in Executive’s behalf and stead to
execute and file any such applications and to do all other lawfully permitted
acts to further the assignment, prosecution, and issuance of letters patent or
registration of copyright thereon with the same legal force and effect as if
executed by Executive. Executive hereby waives and quitclaims to Company any
and all claims, of any nature whatsoever, which Executive may now have or may
hereafter have for infringement of any patent or copyright resulting from any
such application.
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(d) Remedies
Not Exclusive. In the event that Executive breaches any terms of this
Section 7, Executive acknowledges and agrees that said breach may result
in the immediate and irreparable harm to the business and goodwill of the
Company and that damages, if any, and remedies of law for such breach may be
inadequate and indeterminable. The Company, upon Executive’s breach of
this Section 7, shall therefore be entitled (in addition to and without
limiting any other remedies that the Company may seek under this Agreement or
otherwise at law or in equity) to (1) seek from any court of competent
jurisdiction equitable relief by way of temporary or permanent injunction and
without being required to post a bond, to restrain any violation of this Section 7,
and for such further relief as the court may deem just or proper in law or
equity, and (2) in the event that the Company shall prevail, its reasonable
attorneys fees and costs and other expenses in enforcing its rights under this
Section 7.
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(e) Severability
of Provisions. If any restriction, limitation, or provision of this Section 7
is deemed to be unreasonable, onerous, or unduly restrictive by a court of
competent jurisdiction, it shall not be stricken in its entirety and held
totally void and unenforceable, but shall remain effective to the maximum
extent possible within the bounds of the law. If any phrase, clause or
provision of this Section 7 is declared invalid or unenforceable by a
court of competent jurisdiction, such phrase, clause, or provision shall be
deemed severed from this Section 7, but will not affect any other
provision of this Section 7, which shall otherwise remain in full force
and effect. The provisions of this Section 7 are each declared to be
separate and distinct covenants by Executive.
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8. Notice.
Any notice, request, demand or other communication required or permitted herein
will be deemed to be properly given when personally served in writing or when
deposited in the United States mail, postage prepaid, addressed to Executive at
the address appearing at the end of this Agreement and to the Company with
attention to the Chief Executive Officer of Orion and the General Counsel of
Orion. Either party may change its address by written notice in accordance with
this paragraph.
9. Set
Off; Mitigation. The Company’s obligation to pay Executive
the amounts and to provide the benefits hereunder shall be subject to set-off,
counterclaim or recoupment of amounts owed by Executive to the Company.
However, Executive shall not be required to mitigate the amount of any payment
provided for pursuant to this Agreement by seeking other employment or
otherwise.
10. Benefit
of Agreement. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective executors,
administrators, successors and assigns. If Orion experiences a Change of
Control, or otherwise sells, assigns or transfers all or substantially all of
its business and assets to any person or if Orion merges into or consolidates
or otherwise combines (where Orion does not survive such combination) with any
person (any such event, a “Sale of Business”), then Orion shall
assign all of its right, title and interest in this Agreement as of the date of
such event to such person, and Orion shall cause such person, by written
agreement in form and substance reasonably satisfactory to Executive, to
expressly assume and agree to perform from and after the date of such
assignment all of the terms, conditions and provisions imposed by this
Agreement upon the Company. Failure of Orion to obtain such agreement prior to
the effective date of such Sale of Business shall be a breach of this Agreement
constituting “Good Reason” hereunder, except that for purposes of
implementing the foregoing the date upon which such Sale of Business becomes
effective shall be the Termination Date. In case of such assignment by Xxxxx
and of assumption and agreement by such person, as used in this Agreement,
“Orion” shall thereafter mean the person which executes and delivers
the agreement provided for in this Section 10 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law, and this
Agreement shall inure to the benefit of, and be enforceable by, such person.
Executive shall, in his or her discretion, be entitled to proceed against any
or all of such persons, any person which theretofore was such a successor to
Orion, and Xxxxx (as so defined) in any action to enforce any rights of
Executive hereunder. Except as provided in this Section 10, this Agreement
shall not be assignable by Xxxxx. This Agreement shall not be terminated by the
voluntary or involuntary dissolution of Orion.
11. Arbitration.
Any controversy or claim arising out of or relating to this Agreement or the
breach of this Agreement that cannot be mutually resolved by the Executive and
the Company, including any dispute as to the calculation of the Executive’s
Benefits, Base Salary, Bonus Amount or any Severance Payment hereunder, shall
be submitted to arbitration in Milwaukee, Wisconsin, in accordance with the
procedures of the American Arbitration Association. The determination of the
arbitrator shall be conclusive and binding on the Company and the Executive,
and judgment may be entered on the arbitrator’s award in any court having
jurisdiction.
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12. Applicable
Law and Jurisdiction. This Agreement is to be governed by and
construed under the laws of the United States and of the State of Wisconsin
without resort to Wisconsin’s choice of law rules. Each party hereby
agrees that the forum and venue for any legal or equitable action or proceeding
arising out of, or in connection with, this Agreement will lie in the
appropriate federal or state courts in the State of Wisconsin and specifically
waives any and all objections to such jurisdiction and venue.
13. Captions
and Paragraph Headings. Captions and paragraph headings used
herein are for convenience only and are not a part of this Agreement and will
not be used in construing it.
14. Invalid
Provisions. Subject to Section 7(e), should any provision
of this Agreement for any reason be declared invalid, void, or unenforceable by
a court of competent jurisdiction, the validity and binding effect of any
remaining portion will not be affected, and the remaining portions of this
Agreement will remain in full force and effect as if this Agreement had been
executed with said provision eliminated.
15. No
Waiver. The failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a waiver
of such party’s rights or deprive such party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
16. Entire
Agreement. This Agreement contains the entire agreement of the
parties with respect to the subject matter of this Agreement except where other
agreements are specifically noted, adopted, or incorporated by reference. This
Agreement otherwise supersedes any and all other agreements (including with
respect to the definition of Cause and the process for Cause termination, any
stock option or similar equity award agreements with the Company to which
Executive may now or hereafter be a party), either oral or in writing, between
the parties hereto with respect to the employment of Executive by Company, and
all such agreements shall be void and of no effect. Each party to this
Agreement acknowledges that no representations, inducements, promises, or
agreements, oral or otherwise, have been made by any party, or anyone acting on
behalf of any party, which are not embodied herein, and that no other
agreement, statement, or promise not contained in this Agreement will be valid
or binding.
17. Modification.
This Agreement may not be modified or amended by oral agreement, but only by an
agreement in writing signed by Xxxxx and Executive.
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18. Counterparts.
This Agreement may be signed in counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.
EXECUTIVE
/s/ Xxxxxx X. Xxxxxx
Signature
Xxxxxx X. Xxxxxx
Printed Name
February 15, 2008
Date
_____________________________________
Address
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: President and
Chief Executive Officer
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