EXHIBIT 10.14
"CHANGE IN CONTROL" AGREEMENT
THIS AGREEMENT is made between Xxxxxx X. Xxxxxxxxx & Co., a Delaware
corporation (the "Company"), and ________________________ (the "Executive"),
dated this 7th day of October, 1998.
WITNESSETH THAT:
WHEREAS, the Company wishes to attract and retain well-qualified executive
personnel and to assure both itself and the Executive of continuity of
management in the event of any actual or threatened change in control of the
Company;
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Change in Control. A "change in control of the Company" shall be deemed
to have occurred if: (a) any person or group, as defined in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as amended, is or
becomes the beneficial owner, directly or indirectly of securities of the
Company representing 50 percent or more of the combined voting power of the
Company's outstanding securities then entitled to vote for the election of
directors; or (b) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors and
any new directors whose election by the Board or nomination for election by
the Company's Stockholders was approved by at least two-thirds of the
directors then still in office who either were directors at the beginning
of the period or whose election was previously so approved cease for any
reason to constitute at least a majority thereof; or (c) the Stockholders
of the Company shall approve the sale of all or substantially all of the
assets of the Company or any merger, consolidation, issuance of securities
or purchase of assets, the result of which would be the occurrence of any
event described in clause (a) or (b) above.
2. Termination. "Termination" shall mean either (a) termination by the
Company of the employment of the Executive with the Company for any reason
other than death, physical or mental incapacity, or cause (as defined
below) within 24 months following a Change in Control of the Company, or
(b) resignation of the Executive within 24 months following a Change in
Control of the Company upon the occurrence of any of the following events:
(i) a material change in the nature or scope of the Executive's
authorities, powers, functions, or duties;
(ii) a reduction in Executive's total compensation;
(iii) any relocation of Executive's principal place of employment more
than 35 miles from Executive's location immediately prior to the
change in control;
(iv) the breach by the Company of any other provision of this Agreement;
or
(v) a good faith determination by the Executive that, as a result of a
change in control of the Company Executive's position is materially
affected so that Executive is unable to exercise the authorities,
powers, functions or duties attached to Executive's position.
"Cause" means gross misconduct or willful and material breach of this
Agreement by the Executive. No act, or failure to act, on the Executive's
part shall be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the action
or omission was in the best interest of the Company.
3. Severance and Benefit Payments.
a. In the event of termination of the Executive as defined in Section 2
hereof, the Company shall pay the Executive a lump-sum severance
allowance equal to salary and bonus payments for a 24 calendar month
period calculated on the basis of a salary rate which shall not be
less than Executive's annual salary immediately prior to termination,
or if greater, not less than Executive's annual salary immediately
prior to the change in control of the Company and an annual bonus
amount which shall not be less than the Executive's annual bonus
immediately prior to termination, or if greater, not less than
Executive's bonus immediately prior to the change of control of the
Company. The lump-sum severance allowance shall not be adjusted on a
present value basis.
b. The amount of the severance allowance payment described in this
Section 3 shall be determined and such payment shall be made as soon
as it is reasonably practicable but in no event later than 7 days
after the date of such termination.
c. The severance allowance payment to be provided pursuant to this
Section 3 shall be in addition to, and shall not be reduced by, any
other amounts or benefits provided by separate agreement with the
Executive, or plan or arrangement of the Company or its subsidiaries,
unless specifically stipulated in an agreement which constitutes an
amendment to this Agreement.
d. In the event of termination of Executive as defined in Section 2
hereof, with respect to each welfare benefit plan, including, without
limitation, medical, dental, life and disability insurance plans, for
the period beginning on Executive's termination and ending on the
earlier of (i) two years following Executive's termination, or (ii)
the date Executive becomes covered by a welfare benefit plan or
program maintained by an entity other than the Company which provides
coverage or benefits at least equal, in all respects, to such welfare
benefit plan, Executive shall continue to participate in such welfare
benefit plan on the same basis and at the same cost to Executive as
was the case immediately prior to the Change in Control (or, if more
favorable to Executive, as was the case at any time thereafter), or,
if any benefit or coverage cannot be provided under a welfare benefit
plan because of applicable law or contractual provisions, the Company
shall provide Executive with substantially similar benefits and
coverage for such period. Immediately following the expiration of the
continuation period required by the preceding sentence, Executive
shall be entitled to continued group health benefit plan coverage (so-
called "COBRA coverage") in accordance with Section 4980B of the
Internal Revenue Code of 1986, as amended, (the "Code"), it being
intended that COBRA coverage shall be consecutive to the benefits and
coverage provided for in the preceding sentence. Executive's
eligibility for, and premium contribution level, under each welfare
benefit plan and any similar or successor plans or programs maintained
or contributed to by the Company, shall be determined by adding two
years to Executive's age and years of service at Executive's
termination.
(e) In the event of the termination of Executive as defined in Section 2
hereof, the Company shall pay to Executive any unpaid salary or other
compensation of any kind earned with respect to any period prior to
Executive's termination (including a proportionate share of any bonus
for a part of a year in which termination as defined in Section 2
hereof occurs) and a lump sum cash payment for accumulated but unused
vacation earned through Executive's termination.
4. Make-Whole Payments.
a. Anything in this Agreement to the contrary notwithstanding, in the
event that any payment or distribution by or on behalf of the Company
to or for the benefit of Executive (whether paid or payable or
distributed to distributable pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments
required under this Section 4) (the "Payments") is determined to be an
"excess parachute payment" pursuant to Section 280G of the Code or any
successor or substitute provision of the Code, with the effect that
Executive is liable for the payment of the excise tax described in
Code Section 4999 or any successor or substitute provision of the
Code, or any interest or penalties are incurred by Executive with
respect to such Payments (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (the "Gross-Up Payment") in an amount such that
after payment by Executive of all taxes imposed upon the Gross-Up
Payment, including, without limitation, federal, state, local or other
income taxes, FICA taxes, and additional Excise Tax (and any interest
and penalties imposed with respect to such taxes), Executive retains a
portion of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
b. Subject to the provisions of Section 4(c), all determinations required
to be made under this Section 4, 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 the public accounting firm that serves as the Company's
auditors (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the company and Executive within 15
business days of the receipt of notice from the Company or Executive
that there have been Payments, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting
the Change in Control, Executive shall designate another nationally
recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). 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 4, shall be paid by the Company to
Executive within five days after the receipt by the Company and
Executive of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by Executive, it shall
furnish Executive with a written opinion that failure to report the
Excise Tax on Executive's applicable federal income tax return would
not result in the imposition of a negligence or similar penalty. Any
determination by the Accounting Firm shall be binding upon the Company
and Executive, except as provided in paragraph (c) below.
c. 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
the Internal Revenue Service or another agency will claim that a
greater Excise Tax is due, and thus a greater amount of Gross-Up
Payment should have been made by the Company than that determined
pursuant to paragraph (b) above (an "Underpayment"). In the event that
Executive is required to make a payment of any such Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that
has occurred, if any, and such Underpayment shall be promptly paid by
the Company to or for the benefit of the Executive. Executive shall
notify the Company in writing of any claim by the Internal Revenue
Service or other agency that, if successful, would require the payment
by the company of the Gross-Up Payment or an Underpayment.
5. Mitigation and Set Off. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise. The Company shall not be entitled to set off
against the amounts payable to the Executive under this Agreement any
amounts owed to the Company by the Executive, any amounts earned by the
Executive in other employment after termination of Executive's employment
with the Company, or any amounts which might have been earned by the
Executive in other employment had Executive sought such other employment.
6. Other Agreements. The Company and Executive are parties to an Executive
Agreement which both parties hereby reconfirm and acknowledge. Such
Executive Agreement is not in any way modified, superseded or amended by
the execution and delivery of this Agreement.
7. Arbitration of All Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof, except with respect to
Section 4, shall be settled by arbitration in the City of Chicago in
accordance with the laws of the State of Illinois by three arbitrators
appointed by the parties. If the parties cannot agree on the appointment,
one arbitrator shall be appointed by the Company and one by the Executive,
and the third shall be appointed by the first two arbitrators. If the
first two arbitrators cannot agree on the appointment of a third
arbitrator, then the third arbitrator shall be appointed by the Chief Judge
of the United States Court of Appeals for the Seventh Circuit. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of
arbitrators which shall be as provided in this Section 7. Judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. In the event that it shall be necessary or desirable
for the Executive to retain legal counsel or incur other costs and expenses
in connection with enforcement of Executive's rights under this Agreement,
Executive shall be entitled to recover from the Company Executive's
reasonable attorneys' fees and costs and expenses in connection with
enforcement of Executive's rights (including the enforcement of any
arbitration award in court). Payment shall be made to the Executive by the
Company at the time these attorneys' fees and costs and expenses are
incurred by the Executive. If, however, the arbitrators should later
determine that under the circumstances the Executive could have had no
reasonable expectation of prevailing on the merits at the time Executive
initiated the arbitration based on the information then available to
Executive, Executive shall repay any such payments to the Company in
accordance with the order of the arbitrators. Any award of the arbitrators
shall include interest at a rate or rates considered just under the
circumstances by the arbitrators.
8. Notices. Any notices, requests, demands, and other communications provided
for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the
Executive at the last address Executive has filed in writing with the
Company or, in the case of the Company, at its principal executive offices.
9. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien upon any amounts
provided under this Agreement; and no benefits payable hereunder shall be
assignable in anticipation of payment either by voluntary or involuntary
acts, or by operation of law. Nothing in this paragraph shall limit the
Executive's rights or powers which Executive's executor or administrator
would otherwise have.
10. Governing Law. The Agreement shall be construed and enforced according to
the Employee Retirement Income Security Act of 1974 ("ERISA"), and the laws
of the State of Illinois, other than its laws respecting choice of law, to
the extent not pre-empted by ERISA.
11. Amendment. This Agreement may be amended or canceled by mutual agreement
of the parties in writing without the consent of any other person and, so
long as the Executive lives, no person, other than the parties hereto,
shall have any rights under or interest in this Agreement or the subject
matter hereof.
12. Term. This Agreement shall terminate when the Executive has left the
employ of the Company for any reason prior to a Change in Control of the
Company.
13. Successors to the Company. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the Company and
any successor of the Company.
14. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect.
IN WITNESS WHEREOF, the Executive has hereunto set Executive's hand and,
pursuant to proper authorization, the Company has caused these presents to be
executed in its name on its behalf by an appropriate corporate officer, and its
corporate seal to be hereunto affixed and attested by its Secretary or Assistant
Secretary, all as of the day and year first above written.
THE EXECUTIVE XXXXXX X. XXXXXXXXX & CO.
_____________________________ _________________________________
Attest:
SEAL
_________________________________
